While revenue more than doubled last year, losses mount.

Meal-kit delivery company Blue Apron Holdings Inc. is hoping it can stand out to public investors in an increasingly crowded marketplace for on-demand food.

The company filed for an initial public offering in the U.S. Thursday, after reportedly delaying listing preparations while it worked to improve financials. While revenue more than doubled last year to $795 million, Blue Apron is still losing money as it fights to win customers from competitors such as HelloFresh AG and Sun Basket Inc. as well as publicly listed giants like Amazon.com Inc. Blue Apron’s own analysis shows it had a 0.7% market penetration in the U.S. as of the fourth quarter of 2016.

Gaining share in the busy U.S. food-delivery market is expensive: Blue Apron spent $144 million on marketing last year, or about 17% of its total operational spending. The company has been working to reduce the cost of acquiring customers, aligning that outlay more closely with the value of long-term subscribers, a person familiar with the matter said last year.

Blue Apron, No. 197 in the Internet Retailer 2017 Top 500, leverages its existing subscribers to acquire new customers through a referral program and says 34% of the new customers the e-retailer acquired in Q1 2017 came through the program. The program lets current customers invite others to get a standard meal delivery (three meals of two servings each) for free.

Founded in 2012 in Long Island City, Queens, Blue Apron sends weekly boxes of pre-portioned ingredients with instructions for customers to cook meals at home. Its smaller box, which costs $59.94, includes recipes such as spicy Korean-style chicken and roasted onion miso ramen. It works with more than 300 food suppliers and acquired meat supplier BN Ranch LLC in February.


Blue Apron currently has three fulfillment centers—in Jersey City, N.J., Arlington, Texas, and Richmond, Calif. It is in the process of building out centers in Linden, N.J. (495,000 square feet), and Fairfield, Calif. (431,000 square feet). After the new centers are complete, Blue Apron anticipates the new centers and the Arlington, Texas, fulfillment center will handle most fulfillment operations.

Blue Apron is leaning on its brand and what it labels “superior products at compelling value” as it seeks to differentiate itself, according to the prospectus filed with the U.S. Securities and Exchange Commission. The company is aiming to add new customers for its standard boxes, as well as broadening its portfolio to cater to a wider range of diets. Competitors like Sun Basket allow subscribers to pick paleo or gluten-free menus.

Blue Apron’s filing gives U.S. investors one of the first comprehensive looks at the financials of a meal-kit delivery company. Its net loss widened to $54.9 million in 2016 from $47 million a year earlier, despite net revenue climbing to $795 million from $340.8 million in the same period, the prospectus shows.

The first risk factor listed in the filing: That Blue Apron may never make a profit. The company also warned potential investors on the high cost of acquiring and retaining subscribers. Marketing costs rose to about 20% of expenses in the first three months of this year, when the company saw a bump in both customers and orders.


At the end of the first quarter, Blue Apron had 1 million customers who made 4.1 orders each—compared with 649,000 customers making 4.5 orders apiece a year earlier. The average order value fell to $57.23 from $59.28 in the same period, while average revenue per customer slipped to $236 from $265. Blue Apron says 92% of revenue in 2016 came from repeat customers.

Blue Apron also released a breakdown of its customer base by age, with 36% of customers falling between the ages of 25-34; and 25% age 35-44. 17% of customers are age 45-54, 13% are 55-64, 6% are 65 or older and 3% are 24 or younger.

Blue Apron filed with an initial offering size of $100 million, which is a placeholder used to calculate fees that will typically change. The company plans to offer its Class A common stock and will have three classes of shares—two of them with voting rights—after the offering.

Blue Apron began interviewing bankers for an IPO in September but delayed picking underwriters until this year, people familiar with the matter said in December. The company has struggled to improve profit margins as much as management wanted in the face of more competition, the people said at the time. A stronger performance was needed to support the $3 billion valuation that the company was targeting in an IPO at the time.


Goldman Sachs Group Inc., Morgan Stanley, Citigroup Inc. and Barclays Plc are leading Blue Apron’s deal.

Blue Apron isn’t the only meal-kit delivery company aiming to go public. Sun Basket, which recently sold a stake to Unilever’s venture arm, hired Bank of America Corp. and Jefferies Group LLC to lead its own IPO.

Both companies will likely have to convince investors about the health of their industry, which has already seen casualties. Sprig Inc. which cooked its own meals in-house and delivered them with drivers, said last week it is shutting down, following fellow food-delivery startups SpoonRocket and Maple. Sprig was burning $850,000 a month and seeking a buyer, people familiar with the matter said in May.