HelloFresh is a meal kit delivery service that sends weekly ingredients and recipe cards, allowing users to make their meals easier at home. The HelloFresh business model involves providing people with convenient, wholesome, and easy-to-follow meal recipes without the need for planning or trips to the grocery store.
With an estimated 7.5 million users and a global net revenue of approximately €6 billion, HelloFresh is a giant food service subscription company. Since its inception, HFG has expanded its operations and is now available in 14 countries.
In this article, we’ll dive deeper into HelloFresh’s business model, including how the company makes money, its revenue streams, partners, cost structure, and other essential facts and figures behind the meal kit global giant.
Contents
A brief history of HelloFresh
HelloFresh was founded in 2011 in Berlin, Germany, by Dominik Richter and Thomas Griesel. Dominik and Thomas, both former athletes, were keen to break into the world of entrepreneurship from an early stage.
Once the company hit the ground running, the period between 2012 and 2016 saw HelloFresh raise more than $300 million in venture capital. Some of their key investors included Insight Partners, Qatar Investment Authority, and Rocket Internet.
In 2012, HelloFresh launched in the Netherlands, and in 2013, it expanded to the United Kingdom and the United States. Since then, the company has grown rapidly and now operates in multiple countries across Europe, North America, and Australia.
In 2017, HelloFresh successfully raised €277 million in its IPO, which rocketed its valuation to €1.7 billion at the time. The IPO was issued on the Frankfurt Stock Exchange in Germany.
Since then, HelloFresh has been growing every year. Between 2020 and 2021, the company went into the inorganic expansion via multiple acquisitions, including Factor 75, a health and wellness, ready-to-eat meal delivery service. They also acquired YouFoods, an Australian-based ready-to-eat meal manufacturer.
HelloFresh is a household name today who delivered more than 100 million orders, containing close to 1 billion million meals to their customers in 2021. The HelloFresh Group also operates in more than 16 countries with more than 6 million active customers, generating more than €6 billion.
HelloFresh is known for its focus on convenience and variety, offering a wide range of recipes and flexible subscription options to meet the needs of different types of customers.
Who Owns HelloFresh
Because HelloFresh became a publicly traded company in 2017, the company is not owned by a single person or an entity. It is owned by shareholders who’ve acquired shares in the company through their respective stock markets.
That said, Baillie Gifford and Co are the largest shareholders of HelloFesh, with a 10.62% stake in the company. Other notable names to note include Dominik Ritcher (CEO and Co-Founder), Thomas Griesel (CEO International and Co-founder), and John H. Rittenhouse, Chairman (Supervisory Board).
HelloFresh Mission Statement
HelloFresh has yet to disclose any official mission statement, but generally, they are on a mission to change the way people eat forever.
How HelloFresh works
HelloFresh works by providing people with pre-portioned ingredients coupled with step-by-step recipes. They deliver these items straight to your door, eliminating the need for tedious trips to the grocery store.
According to one study, the average American spends more than $2,200 on food that eventually ends up in the bin. This is because it’s fairly easy to buy more than you need, which eventually leads to wastage.
HelloFresh aims to solve such problems as it’s a flexible subscription meal kit delivery service. As a customer, you can tailor the meal kit to suit your needs. You can achieve this by choosing your preferred dietary requirements, how many people you’re cooking for, and how many recipes you’d like for each week.
HelloFresh has made the whole process of registering and selecting your meal plans incredibly easy and straightforward.
Here’s a brief overview of how it works:
- You’ll start by signing up for HelloFresh. Fortunately, the HelloFresh Group constantly offers sign-up deals that make it cheaper;
- You’ll then select your plan. Here, you’ll choose your preferred plan for the number of people you’ll be eating with, i.e., two, four, five, etc.;
- Enter your name and other essential details, such as your shipping address and phone number;
- You’ll then enter your card number, allowing you to place and complete your order.
How HelloFresh makes money
HelloFresh primarily makes money by selling meal kits to customers through its subscription business model. As a customer, you’ll have various meal options you can choose from and have the ingredients for those meals delivered to your home weekly.
Here are some ways HelloFresh makes money:
Selling pre-proportioned, personalized meal kits
The HelloFresh group makes money primarily by selling personalized meal kits. This company offers a variety of meal plans, including options for different dietary restrictions and preferences. Customers can choose the plan that best suits their needs, such as vegetarian, low-carb, or family-friendly meals.
They charge customers for the meal kit service, which includes the cost of the ingredients, packaging, and delivery. Prices may vary depending on the type of plan, the number of meals, and the customer’s location.
Selling Add-ons
HelloFresh also recently began offering sides and add-on items such as wines and desserts. As a customer, when you order your meal kits, you’ll get several options to add additional items to your order. These can include items like desserts, snacks, or wine. By selling these add-ons, HelloFresh generates more revenue on top of its meal kit sales.
HelloFresh Business Model Canvas
The HelloFresh Business Model can be explained in the following business model canvas:
HelloFresh Customer Segments
HelloFresh customer segments consist of:
- Working busy professionals: Having a 9-5 job coupled with other responsibilities can make it incredibly challenging to make healthy meals at home. For this reason, many busy professionals have opted to use HelloFresh as a convenient way to cook healthy meals;
- Women aged between 30 and 50: According to one study, HelloFresh’s main audience is women aged 30 to 50. Busy moms and young professionals who care about health, nutrition, and overall nutrition;
- Athletes and individuals on a fitness journey: Athletes and individuals on a fitness journey may use HelloFresh to help them stay on track with their dietary goals. The service allows them to easily plan and prepare nutritious meals that align with their specific dietary needs and preferences.
HelloFresh Value Propositions
Hellofresh value propositions consist of:
- HelloFresh offers working professionals a convenient way to prepare and maintain a healthy lifestyle: The HelloFresh Group offers huge convenience to working professionals who might not have time for shopping and planning. Besides, as a customer, you’ll be flexible enough to pause the program at any time, provided you issue a week’s notice;
- HelloFresh offers women who care about health, nutrition, and overall wellness a way to sustain a healthy lifestyle: As mentioned above, HelloFresh’s audience is primarily women aged 30 to 50. This is evident in the influencer campaigns, which are primarily headed by women such as Whitney Wiley and Mindy Kaling. Women who use HelloFresh have a convenient and affordable way to sustain a healthy lifestyle for themselves and their families;
- HelloFresh enables athletes and individuals on a fitness journey a convenient and affordable way to stay on track with their dietary goals: They offer a variety of meal plans, including options for athletes and those on a fitness journey, to help individuals stay on track with their dietary goals.
HelloFresh Channels
HelloFresh channels consist of:
- Website
- Smartphone app (For both iOS and Android)
HelloFresh Customer Relationships
HelloFresh customer relationships consist of:
- Phone
- 24/7 live chat feature at the website
HelloFresh Revenue Streams
HelloFresh revenue streams consist of:
- Selling pre-proportioned, personalized meal-kits
- Selling add-ons and other accompaniments
HelloFresh Key Resources
HelloFresh key resources consist of:
- Recipe development and testing: Recipe development and testing is a crucial aspect of the company’s operations. HelloFresh’s team of in-house chefs and food experts work to create and test new recipes frequently. Once a recipe is finalized, it is added to the HelloFresh menu and made available to customers. They also work on different variations of the recipe to cater to different dietary preferences;
- Distribution, delivery, and logistics: HelloFresh relies heavily on supreme logistics to rely heavily on distribution and logistics to get its products to customers. The company sources ingredients from farmers and suppliers and then packs and ships them to customers on a weekly basis;
- Partnerships: As with many major businesses, partnerships are a key resource as they provide access to a wide range of resources and opportunities. Collaborating with meal planning and recipe websites has also helped HelloFresh reach new customers and provide additional resources for current customers;
- Technology: Technology is a critical resource for HelloFresh as it enables the company to streamline its operations, improve its customer experience, and increase its efficiency;
- Customer service: Because the HelloFresh group is constantly engaging with clients, they have customer service as a key resource, as it allows them to effectively address and resolve any issues or concerns that customers may have.
HelloFresh Key Activities
HelloFresh key activities consist of:
- Marketing and advertising: As with most businesses, creating awareness about the company’s offering is essential, and HelloFresh is no different. One example of HelloFresh’s marketing and advertising campaigns involves using celebrities and famous Hollywood actors, including Mindy Kaling;
- Recipe development: One of the main activities of the HelloFresh group (if not the main activity) is recipe development. This activity allows the company to create viable meal options that customers purchase. HelloFresh’s recipe development team is responsible for creating and testing new recipes that are both delicious and easy to prepare;
- Distribution: Alongside recipe and meal kit preparation, one of the most critical activities at the HelloFresh group involves delivering the meals to customers. The distribution process involves sourcing ingredients from suppliers, packaging and labeling ingredients and recipes, and delivering the meals to customers.
HelloFresh Key Partners
HelloFresh key partners consist of:
- Medallia
- NHL partnerships with the New York Islanders, the Nashville Predators, and the Los Angeles Kings
- Brand Crush
- Ocean Spray
- N2O
- Jamie Oliver Limited
- Sodexo
HelloFresh Cost Structure
HelloFresh falls under a food manufacturer that sells meal kit plans, meaning their cost structure is comparable to similar companies at scale. Some of their costs and overheads include:
- Designing, sourcing, and manufacturing their own products
- Marketing
- Logistics and distribution
- Customer acquisition costs
- Personnel expenses such as salaries and benefits
HelloFresh Competitors
- Sun Basket: Sun Basket and HelloFresh are both meal kit delivery companies that offer customers the convenience of having all the ingredients and recipes needed to make delicious meals at home. They both offer a variety of options to suit the many dietary preferences.
However, Sun Basket differentiates itself by offering a greater focus on sustainable and organic ingredients, and also offers options for paleo and Mediterranean diets. Both companies offer similar pricing and delivery options;
- Blue Apron: Both HelloFresh and Blue Apron offer an easy alternative for customers to cook delicious and healthy meals without a lot of fuss. Blue Apron also offers many diverse meal plans, such as a 2-person plan and a family plan, which makes it a great option for couples and families;
- Instacart: While HelloFresh focuses specifically on meal kit delivery, providing customers with all the ingredients and recipes needed to make delicious meals at home, Instacart offers different options, including the ability to order groceries from a variety of different stores.
HelloFresh SWOT Analysis
Below, there is a detailed swot analysis of HelloFresh:
HelloFresh Strengths
- HelloFresh has a strong brand and reputation in the meal kit delivery industry: This company is clearly the dominant operator in this industry, with an overwhelming market share;
- Strong track record of outstanding leadership and execution: This may include effective decision-making, clear communication, and efficient problem-solving by the leadership team, which can lead to positive outcomes such as increased productivity, profitability, and customer satisfaction;
- Innovative packaging: Boxes and packaging for food items tend to be bulky and overwhelming. But HelloFresh constantly strives to reduce the number of boxes and packaging in innovative ways;
- Strong influencer and social media strategies: As mentioned above, this company is known for using many influencers to market its brand, including Mandy Morre, Audriana Patridge, and Mindy Kaling. This has enabled the company to capture the attention of its creators effectively.
HelloFresh Weaknesses
- Relatively high cost of its products: Customers on a tight budget might find HelloFresh’s products quite costly as they factor in the price of delivery, pushing the prices up;
- Similarity in prices: It’s considerably difficult to develop a competitive advantage in this industry as competitors have similar meal packages;
- Slight Delays: Although HelloFresh has done well to keep its customers satisfied, there is a handful of those who are not, and it’s all because some deliveries take time to deliver while others do not.
HelloFresh Opportunities
- Increasing food diversity: By offering a diverse range of meals, including options for different dietary restrictions and cultural cuisines, HelloFresh can attract customers who are looking for new and exciting meal options. And in doing so, the HFG can also appeal to customers who are looking for meals that align with their dietary preferences or health goals;
- Innovation and technology: There’s always room for innovation for all businesses, and HelloFresh is no different. By constantly experimenting with new product offerings and delivery methods, HFG can stay ahead of trends while attracting customers who are looking for different meal options.
HelloFresh Threats
- There are no formal barriers to entry in this industry: Initially, the company seems to have undergone a competitive face that saw tons of startups flood the market. However, this seems to have settled and entered the consolidation phase. Barriers that exist involve customer acquisition and retention;
- Competition from other meal kit delivery companies and grocery delivery services. Competition seems to come from existing meal kit companies and offline grocery operators.
Conclusion
HelloFresh is a giant in the meal kit delivery industry. The company’s sheer market share and billions of dollars in revenue solidify HelloFresh’s position as the industry leader. Its business model is based on subscription and membership, which allow the company to generate most of its revenue through this revenue.
As per the SWOT analysis, HelloFresh has many strengths that have seen the company solidify its position. Some of these strengths include a strong influencer/ marketing strategy, a track record of top performance, and a global brand presence.
However, HelloFresh still faces a ton of threats in the form of competition and low barriers to entry. Nonetheless, HelloFresh has built a successful business model by providing customers with a convenient and easy way to cook healthy meals at home. Its business model has proven to be a winning formula for both the company and its customers.