HelloFresh 2018

Abstract

In 2011, the German start-up HelloFresh, owned by Rocket Internet, was built under the mission to delivery ready-to-cook meals to your door in a box with exact portion of ingredients and the recipes which guide you through the process. During the years, HelloFresh’s revenue worldwide grew from $17 million in 2013 to over $1,000 million by the end of year 2017 with a CAGR of over 300%, making HelloFresh the world’s leading online meal-kit delivery service company. Currently, it runs business in 10 different markets including Germany, Austria, Switzerland, UK, Netherlands, Belgium, Luxembourg, Australia, Canada and USA. And this case simply focuses on its operation and competition in its biggest market, the U.S. The meal-kit delivery market is worth approximately $5 billion in the U.S. in 2017 with a foreseeable future growth at a CAGR of 10-15% until 2024. And HelloFresh currently occupies 35% of the market. Despite the successful ranking in the U.S., HelloFresh has not yet achieved the breakeven after 7 years of operation and the answer is negative in the U.S. market as well. This fact puts any of HelloFresh’s glory into question. Same as any other subscription-based business model, HelloFresh suffers from the high churn rate and large customer acquisition cost. And this effect becomes salient when we consider the 150 existing players in the U.S. online meal box delivery market are making inroads towards each other in the limited customer pool. On top of these, the No.1 player in the E-commerce world, Amazon, saw the latent opportunity in the food & beverage segment and decided to join the battle by acquiring the Whole Foods, an American supermarket chain specializing in selling organic food products. How can HelloFresh response to the challenges in the future becomes a key part of its long-term strategic design.

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