Don Cunningham: The New Economy Arrives in a Box

By Colin McEvoy on June 19, 2017

This column, written by LVEDC President and CEO Don Cunningham, originally appeared in The Morning Call and on the newspaper’s website on June 19, 2017. (Click here to read Cunningham’s previous columns.)

Don Cunningham

Don Cunningham

The new economy arrives every Monday morning at our doorstep — in a box.

Inside is dinner, well sort of.

Inside are a dozen little containers of meats, vegetables, pasta or potatoes and lots of little spices, powders and other stuff that turn into food.

Our job is to turn it into a meal.

It’s called Blue Apron, and it’s a meal-kit delivery service.  The box contains pre-measured and proportioned ingredients and a step-by-step recipe designed to help you prepare complex meals, quickly and easily.

The quickly and easily part depends on your cooking experience, patience, attention to detail and tolerance for following step-by-step directions.  Turns out, I have none of those things. Fortunately, for me, not her, Lynn, my wife, has them all.  Our trial run started as a way to teach me to cook. That hasn’t worked. We did cook one meal together, which was fun. My lack of focus, however, caused considerable delay, leading Lynn to the Confucius-esque conclusion that with just one moron in the kitchen cooking takes three times longer.

It probably was a guy like me that led to the tradition of Spaniards dining at 10 p.m.  In our house, however, it got me banished from the kitchen.

This age of technology and the Internet has caused endless wonder. It also has led to entrepreneurial business development that make life easier, or to put it another way, that promote general laziness and eliminate the need to leave your house.

Blue Apron is one of nearly a dozen meal-kit delivery services that exist or have existed. We also have used Home Chef and Martha and Marley Spoon, yes, the Martha in that is Martha Stewart.  Blue Apron is the first of them to make the big leap and go public, recently filing for an IPO. The company plans to list on the NYSE under the symbol APRN.

The jury is still out on the business model. Several food delivery startups have closed, such as Maple in New York and Sprig in San Francisco, where Munchery also has been reported to struggle. Blue Apron, a New York-based startup founded in 2012, has experienced impressive top-line growth during the past few years with net revenue growing from $77.8 million in 2014 to $795.4 million last year. Last quarter, however, Blue Apron recorded a $52.2 million loss on $244.8 million revenue, compared to a $3 million profit on $172.1 million in Q1 of 2016.

This is likely the result of vastly increased marketing and building a supply chain for the growing company.

The company last year developed a 495,000-square-foot distribution facility in Linden, NJ, a part of the redevelopment of a former General Motors assembly plant into the Legacy Commerce Center, helping to revive an area that had lost thousands of jobs with the GM plant closing.

I suspect that’s the location that serves the Lehigh Valley.

We order three meals a week. Each meal comfortably serves two adults. The total cost is $59.94, or about $10 a person per meal.  The food is fresh, mostly organic and the dishes are good restaurant quality and creative. Amazingly, eating at McDonalds would cost nearly the same.

Blue Apron’s customer base has grown, surpassing 1 million customers last quarter. Order size per customer, however, has declined, driving a need to grow customer base, hence the increase in marketing spend. Investors will answer the business model question with their dollars at the stock offering, which will be watched closely.  Several others are eying IPOs, such as Sun Basket, Delivery Hero and HelloFresh.

In the meantime, we’ve entered a brave new world of convenience, tinged with laziness, and a dash of frugality and discipline.

Part of the reason to embark on the new food-at-the-door deal was portion control. Lynn is half Italian and a great cook. She seems to think, however, that she still lives in a family with seven children or that there are a dozen migrant workers coming in from the fields in Tuscany. For the most part, we’re just two empty nesters at the homestead with a lot of food to eat and weight to gain. This service creates discipline we don’t have, and no leftovers.

On the downside, the amount of packaging is extraordinary. While a boon to the plastic, cardboard and ice pack industry, a small village doesn’t create as much recyclables or waste in a week. And, I can’t help but think that the delivery person hates us. I’m not sure if it comes from the US Postal Service or FedEx. I’ve never seen the box appear but I’m pretty sure the person getting out of the truck and carrying it to the doorstep longs for the old days when they just put stuff in the mailbox.

I’m also sure that my grandmother, who fortunately, in this case, is no longer with us, would hate me. She raised six kids, was a wonderful cook, went to the market nearly every day and made everything from scratch.

Lynn still manages to ring up a sizeable weekly tab at Wegmans and Lehigh Valley restaurants don’t go wanting for our presence, but I’m not sure yet whether even I hate us for this participation in the New Economy.

At least I can feel good about those news jobs at the old GM facility in Linden, NJ. If they just could have been in the Lehigh Valley.

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