Blue Apron began marketing an initial public offering on Monday, as an already competitive meal-kit industry faces a potential threat from Amazon’s plan to buy Whole Foods.
Blue Apron’s up to $510 million IPO will test whether the growth seen by the meal-kit industry’s greatest players will continue to whet investor appetite, even as costs to acquire new customers mount and possible new competitors with established distribution systems appear.
Amazon, which said on Friday it would buy Whole Foods in a $13.7 billion deal, has dallied with both food delivery, through AmazonFresh, and meal kits, which deliver fresh ingredients and recipes to subscribers. Though its AmazonFresh program is more advanced than its meal kits programs, both are still limited to certain metropolitan areas.
“It’s going to take some time to figure out the impact of the acquisition on food delivery, and there are a lot more available ways to raise money when you’re public than when you’re private,” said Kathleen Smith, a manager of IPO-focused exchange-traded funds at Renaissance Capital.
New York-based Blue Apron, named after the uniform that apprentice chefs wear in France, delivers pre-packaged ingredients and recipes to subscribers’ doorsteps for them to prepare meals at home. It is the largest US meal kit delivery service.
The IPO price range it issued on Wednesday implies a valuation of up to $3.2 billion.
Blue Apron posted a net loss of $54.9 million last year, even as revenue more than doubled to $795.4 million, as it poured money into logistics and marketing. It was valued at as much as $2 billion in a June 2015 private fundraising round.
The timing of the Blue Apron IPO was not affected by the Whole Foods deal, a source close the company said.
Last October, The Post reported that Blue Apron’s distribution warehouse in Jersey City, NJ was grappling with a spate of worker violence.
Blue Apron said in a regulatory filing on Monday that it was looking to sell 30 million Class A shares at between $15 to $17 per share, raising as much as $510 million.
With Amazon gaining access to Whole Foods’ roughly 400-store footprint, the e-commerce juggernaut would command a distribution network dwarfing that of any meal-kit service. Its automated warehouses rely on robots to manage everything from inventory tracking and replacement, making it a formidable player as it cuts costs.