Blue Apron announces it’s rolling out per meal price hikes less than a year after adding shipping fee to all orders
By Matt Collins Article may include affiliate links
Predictably, the company is pointing to higher costs for food, delivery and labor costs as the reason behind the hike.
“This price increase allows us to maintain our high bar of quality, value, and service that you have come to expect from us,” reads a post announcing the change.
It’s not immediately clear if the change will affect all customers, but the same post says impacted customers have been contacted via email. The company also notes that the email will include the effective date and customers’ online accounts and apps will also automatically reflect the updated pricing when it becomes effective.
This means that the base price for a meal will go from $9.99 per serving to $11.99 per serving, jumping past the $10 mark that many meal kits have seen as a “threshold” to stay under.
However, customers can still keep prices below $10 per meal if they order more servings in a single order.
The $11.99 per serving price only applies to orders of two servings of two recipes (or four servings in total), which is the minimum order.
Ordering more recipes per box or using the company’s four-person recipe options still incurs the price increase, but keeps the price below $10 per serving.
Wine, meanwhile, will go from $10 per bottle to $11 per bottle. Blue Apron sells wine in boxes of six, so the total price will go to $66 from $60 plus $9.99 shipping.
Blue Apron announced it would tack on a $9.99 shipping fee (at the time, essentially the base price of a single meal) to all orders in August 2021, again citing rising costs. The fee was added to both meal kit and wine deliveries, which previously enjoyed free shipping as long as at least three recipes were ordered.
While the price increases appear to be blamed mostly on rising costs, Blue Apron also points out that it’s made “improvements” to its offerings.
“Over the past 10 years, we’ve expanded our menu from 6 menu options a week to over 50, while also giving you the opportunity to receive two meal kit orders each week. Our menu is larger and more diverse than ever, offering more variety and more ways to tailor meals to you. With this price increase, we can continue to deliver on the high bar of quality, value, and service that you have come to expect from us,” the site says.
While it’s likely true that offering more menu options does increase costs since inventory management changes, it’s interesting that the company cites the ability to order multiple boxes (in other words, spend more money with it) would be a reason to increase prices.
Blue Apron currently has the highest shipping fee of any major meal kit program, though HelloFresh’s is close behind at $8.99.
The shipping cost remains the same no matter how much is ordered, so there is an opportunity to lower the effective per meal cost with shipping by order more recipes in one order.
It’s important to note that many meal kit companies prominently featuring “starting at” prices on their websites and marketing, which is typically the lowest cost per meal that can be charged, but this typically requires a minimum order to get this pricing.
Meanwhile, Blue Apron says it does not plan on increasing the prices for its customizations, add-ons, premium upgrades or heat and eat options at this time. These prices vary.
How customers react to this price hike could be a key metric for keeping Blue Apron’s doors open.
Blue Apron’s parent company went public in 2017 and once traded at over $140 a share but its stock has dipped since then, registering in at about $4 a share in recent weeks. The company was only profitable briefly and lost an estimated $18.5 million in the quarter ending June 2021, according to stock records.
Blue Apron could be able to fend off cancellations because food costs have gone up nearly universally across the U.S., so savvy consumers may see that they couldn’t produce meals for much less by shopping themselves.
Some meal kit companies also attempt to sell their value on being able to save on gas and time at the grocery store, though with the pandemic-fueled growth in grocery delivery and pickup, this argument could be losing water, especially when fees associated with these services can be less than $10.
Another common selling point, the reduction of food waste, is appealing to some consumers from both an economical and environmental standpoint, but is a bit harder for many to envision.
Meal kits are also typically ordered more by busy families with dual incomes, so spending a few more dollars per week, especially with prices changing so much nearly everywhere, might also not be a concern for these customers, but it might give lower income or price conscious customers reasons to reconsider — reflecting the overall trend of inflation on necessitates such as food hitting lower income people significantly.
It also remains to be seen if other meal kits will follow suit now that Blue Apron has taken the leap of tinkering with prices.
Other meal kit providers appear to have tried to make up for increasing costs by using less expensive ingredients and heavily promoting the sale of upgrades such as getting a better cut of meal or vegetable instead of potatoes (though, oddly, HelloFresh still sends you the potatoes) and add-ons such as soups, salads, additional sides or desserts as well as “grocery” style stores selling a variety of raw ingredients and prepackaged foods plus simple recipes for lunch and breakfast.
Adding these relatively small and lightweight items, which can also be high margin, isn’t likely to increase shipping or product costs significantly and give the company the chance to increase its order size and help offset losses elsewhere.
Below is the text of the email Blue Apron sent announcing the change:
Nothing makes us happier than knowing our meals are bringing convenience and joy to your table. As you likely know by now, costs are on the rise, including for food suppliers. While we are able to reduce the impact of rising costs to our customers by leveraging our unique supply chain, we are not completely immune to what’s happening across our industry as a whole. Because of this, we’re implementing a small price increase.
Starting on 05/23/22, you will see a $2.00 increase per serving on all of our meal-kit plans, as well as a $1.00 a bottle increase on our wine subscription. We are working to update the pricing displayed in your account as soon as possible, though it may take a few days before this change is reflected within applicable orders.
We’re committed to maintaining a high bar of quality, value, and service for our customers. In the past year, we’ve unlocked even more customization options, enhanced our ever-growing pantry with unique ingredients, and become a carbon neutral company.
We appreciate your decision to cook with us—and while many factors remain outside our control, our team works tirelessly to leverage our position within the industry to bring you great ingredients at competitive prices, while continuing to make mealtime even more special.