It’s been a bumpy ride for many startup businesses offering meal kit delivery services — where they send customers pre-portioned ingredients to cook specific recipes at home each week.
The cost of attracting and retaining customers, and the logistical challenge that is delivering fresh produce, has proven a cost too big for many such startups leading to closures and failure across the globe. Some more successful, later stage meal kit businesses also appear to be struggling. One of the first high profile meal kits, Blue Apron, listed on the New York Stock Exchange last year but has performed poorly ever since with shares worth just over$1 today, down from an IPO price of $10.
But the food tech category is still attracting investors and some later stage startups are reporting successful growth. There also appears to be a shift in the angle some of these startups are taking towards the health and fitness market.
In the UK this week, two such startups announced funding rounds worth a combined £24 million.
Gousto raised £18 million ($22.95 million) in Series E funding, including investment from British Instagram health and fitness influencer Joe Wicks in addition to existing investors Unilever Ventures, Hargreave Hale, BGF Ventures, MMC Ventures, and Angel CoFund.
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Gousto’s new dose of capital will primarily be used to boost the company’s machine learning and automation and follows a £28.5 million round in March 2018 that was used to double the outfit’s factory capacity. It recently debuted an AI-based recipe recommendation service that helps customers find the perfect dishes.
This brings Gousto’s total funding to £75 million. The startup has set a lofty goal of aiding UK families in cooking 400 million nutritious meals by 2025. Gousto reports delivering more than 1.5 million meals per month and counts families as two-thirds of its customer base. It claims to offer the most choice (over 30 weekly recipes), most delivery options (7 days a week), with the shortest lead times (3 days) at low price points (from £2.98 per meal).
Instagram superstar Joe Wicks, also known as The Body Coach, is a British fitness coach, author, and TV personality specializing in fitness and nutrition. The fit celebrity teamed up with Gousto to offer a Joe Wicks range of meals and recipes for its diet-conscious customers that launches this month.
“It was clear from when I first approached Gousto that they were a purpose-driven business, with a passion for getting more people cooking and in turn improving the health of the nation. As a customer before becoming an investor, I know that Gousto is having a lasting and hugely positive impact on the way families consume and eat food. I’m delighted to join forces and offer my knowledge to a company who has brought huge and much needed innovation to an industry,” Wicks said in a press release announcing the funding.
Launched in 2015, Mindful Chef also focuses on offering nutritionally-balanced meals including low-carb, gluten-free, and dairy-free options featuring locally sourced ingredients. Its new round of capital will be used to expand its customer base in the UK and to capitalize on the rapidly expanding meal kit space that some outlets have projected to double in the next decade.
With reported annual sales of around £10 million and a 178% increase in sales over the last year, the outlet features 16 recipes starting at £4 ($5.10) per meal that users can choose from each week. Mindful Chef also has a celebrity backer on board. Tennis champion Andy Murray is an investor and the company has received celebrity endorsements from Olympians Tom Daley and Victoria Pendleton as well as musician Pixie Lott.
Blue Apron & Weight Watchers
US meal kit company Blue Apron is also focusing on the fitness market. This week it announced a new partnership with Weight Watchers offering six recipes that follow the diet company’s weight management program. The Blue Apron recipes can be accounted for in the Weight Watchers app to help users stay on track with their diets. Weight Watchers has just shy of 3 million members in North America, which could prove to be a lucrative new market for Blue Apron as its stock prices recently fell below $1 for the first time.