Is The Meal-Kit Market A Mission Impossible Or Will It Survive?

On this episode of On Foodable: Industry Pulse, we touch on the topic of meal-kits and whether or not the category will survive in the current state of the industry.

It’s no secret large players like Blue Apron and HelloFresh are failing at becoming profitable.

For example, Blue Apron, the largest U.S.-based, meal-kit focused company, was forced to implement a company-wide realignment in October 2017 laying off about six percent of its employers after the company saw a drop in subscribers among other shortcomings. Today, the company closed in the New York Stock Exchange at $1.83— a very low number in comparison to the company’s $10 IPO price.

Although there is no profitability yet for those types of companies which solely focus on meal-kits, that hasn’t stopped grocers or even restaurant chains from jumping on board to compete.

Earlier this week, Foodable reported on Chick-fil-A’s latest plans to roll out meal-kits in August.

Watch the video above to learn about what might save this category from flopping!

Why the Parent Company of Fat Burger Went the Reg A+ IPO Route 

Why the Parent Company of Fat Burger Went the Reg A+ IPO Route 

On Monday this week, Fat Brands, the multi-brand restaurant franchising company that operates Fat Burger, along with Buffalo's Cafe and Buffalo's Express, filed a Regulation A+ IPO.

If you aren't familiar, you may be asking how is the Reg A+ different than the traditional IPO that other brands like Shake Shack and Habit Burger have filed in the past?

According to the NYSE, a "Regulation A+ (Reg A+) is an alternative to a traditional IPO, which makes it easier for smaller, early stage companies to access capital."

Fat Brands is the 6th company to go the Reg A+ IPO route. 

So why did the company filed this type of IPO versus the traditional IPO model?

“We were in the process of doing a conventional S-1 IPO but we decided to switch over to Reg A+ because of the lower costs for the process and because we have many customers that are fans of our restaurants. We wanted to provide a way for them and for our franchisees to become owners of our stock. Our franchisees are our partners and their involvement is key to our success. Many have told me that they want to be shareholders and the Reg A+ IPO method makes that possible," said Andy Wiederhorn, CEO of Fat Brands.

The IPO was filed officially on Monday to raise $24 million and  2,000,000 shares sold priced at $12 per share.

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Blue Apron Faces Layoffs After Lukewarm IPO

Blue Apron Faces Layoffs After Lukewarm IPO

On Wednesday, Blue Apron announced it will be implementing “a company-wide realignment of personnel to support its strategic priorities.”

Since going public in June of this year, Blue Apron has been hard at work fixing operational issues in order to grow subscriber numbers and also please investors’ expectations.

As Foodable reported in August, the first quarter report for Blue Apron revealed a surprising $238 million in revenue, a disappointing $31.6 million in losses, and a decline in subscribers (from 1 million to 938,000 customers) leading to a drop in shares.

Since then, the company has been forced to shrink its marketing budget, laid off 14 recruiters and launched a podcast in an effort to become more of a lifestyle brand around home cooking.

Now, the meal-kit competitor is faced to lay off approximately 6 percent of its staff across both corporate offices and fulfillment centers—  that figure will “probably amount to more than 250 layoffs” according to “TechCrunch.”

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Will Blue Apron's Lukewarm IPO Be Able to Compete with Amazon?

Will Blue Apron's Lukewarm IPO Be Able to Compete with Amazon?

The meal delivery service, Blue Apron made its debut on the New York Stock Exchange last week, but it looks like Amazon may have spoiled its IPO.

Blue Apron collected $300 million in its lukewarm IPO, but it will need more funding to stay afloat.

The company reported that it made $800 million in annual revenue last year and had 54.9 million in losses. However, it reported that its cash and current borrowing capacity will only support the company for at least a year. This isn't going over well with investors.

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Best-Selling Mexican Tequila Brand Jose Cuervo Takes a Shot at February IPO

After postponing its IPO twice last year when the value of the peso nosedived 15 percent to record lows in the aftermath of Donald Trump's election (undoubtedly in connection to Trump's opposition to the North American Free Trade Agreement and his incitive rhetoric regarding relations with Mexico), tequila brand Jose Cuervo is taking its shot at going public.

This isn't light news to swallow, considering this 200-something-year-old company doesn't just boast 11 generations of tradition — also owning 35 percent of the worldwide tequila market share and 33 percent in the United States' tequila sector in 2013, Jose Cuervo is expected to have a highly successful launch.

In the last few days of January, it was said that the brand was formally marketing deals across multiple cities and that investors can expect a price as early as Wednesday, Feb. 8. According to International Business Times, the company is aiming to raise over $700 million in an initial public offering and is opening up 476.6 million shares between 30 to 34 pesos each, or about $1.41 to $1.60.

Since 2002, sales of tequila in the U.S. have more than doubled in volume, skyrocketing from 7.2 million cases to 14.8 million in 2015, Quartz reported, citing the Distilled Spirits Council of the United States. And with North America making up about 60 percent of Jose Cuervo's sales volumes, it's not surprising that there are lot of eyes on this IPO and a lot of hope for it to go well.

Saludos a Los Muertos! Check out the recipes for all the cocktails on our Instagram page. #diadelosmuertos

A photo posted by Jose Cuervo USA (@josecuervotequila) on

There’s #MCM, #WCW, and #TBT. So why not #TreatYoselfTuesday? Great shot by @danni_mitchell #TreatYoself #TYT

A photo posted by Jose Cuervo USA (@josecuervotequila) on

Still, despite its success with tequila, Jose Cuervo has been working on diversifying its product lines, when just a few years ago it traded its control of tequila maker Don Julio for Bushmills Irish Whiskey.

"We were a company in which 80 percent of our sales were tequila. We wanted to get rid of that independence," Juan Domingo Beckmann, CEO of Casa Cuervo, said to Latin Trade Magazine. Jose Cuervo stated the proceeds would fund its growth, expand its portfolio, and go toward the development of its Mexican hometown, Tequila, which is fitting for this tequila brand.

Yet, the day after Jose Cuervo announced its upcoming IPO, Whitehouse spokesperson Sean Spicer said that a 20-percent border tax on Mexican goods would go toward building the border wall. Later on, he clarified that this was "not a policy proposal," but an example of ways the wall could be paid for. Will the actions of the Trump administration put more salt in Jose Cuervo's shot at an IPO? Or could the 15-percent drop in the peso be a long-term advantage for Cuervo by making its products more affordable in the U.S., as Bloomberg Intelligence analyst Julie Chariell suggested? And why did the brand mark February on the calendar after the November election?

Analyst Gerardo Copca of MetAnalisis, a Mexican-based financial advisory firm, said a factor of its timing was decided on the dialogue relationship between the two countries.

"The governments of Mexico and the United States are going to dedicate themselves to negotiation that creates confidence," he told International Business Times. "Mexico's stock market has shown that recently."

Tequila lovers will soon see how this tequila titan performs when it comes to stock, but no matter which way the dice rolls, it's time to stock up on the glasses and limes. Read More