Reader Contest: HelloFresh Death Watch – enter below.
April 2020 update – HelloFresh may have been bailed out by the pandemic – while everything else crashes, delivery services have an opening.
The question will be how HF and others survive the coming credit crunch. Some will make it, some won’t. I don’t think HF is “too big to be allowed to fail.” Amazon probably is.
(Original post 2018)
HelloFresh, a company that cobbles together “fresh” ingredients and delivers them to your door in precisely measured quantities along with a recipe, so you can throw them in the skillet and voila, instant home-cooked dinner!
This is probably the craziest business plan of all history. Yet they are getting millions in investments.
What’s wrong with the model?
(1) Their model relies on a huge customer base. So ask: if you take the trouble to cook your own deluxe dinner, are you going to trust someone else to pick out the ingredients? If so, how often? Do you see all of your friends and family turning over their grocery shopping to low-paid strangers? Seems like a niche market at best.
(2) Their model depends on frequent use. A low-cost, high-volume business like this depends on people using it a lot. For instance, Uber’s business plan assumes we will all abandon driving and let Uber drive us everywhere – people will in any case use the service repeatedly and frequently. But do you see millions of people (A) abandoning shopping, yet (B) wanting to cook their own deluxe pre-packaged dinners night after night?
(3) They can’t deliver high quality food. I’ve been part of collective houses that on several occasions have ordered weekly CSA produce boxes. Each time we wound up cancelling, feeling that we weren’t getting value for our money. Really – how many people want to spend money on fresh food, but have someone else pick it out for you? Again – a niche market.
A Wretched Investment Climate
HelloFresh and its kindred want us to imagine a bunch of fresh-faced, happy young people working in sunny fields to harvest and package the perfect ingredients for your dinner.
Versus my vision – a big warehouse with no windows, filled with low-paid, no-benefit workers who shovel food out of giant vats, spit in it, wrap it in plastic, and ship it off to you.
Or will it be robot workers? At least they’re less likely to spit in our food.
What’s sad is that the global investment climate is so pathetic that desperate investors will pour tens of millions of dollars into a sinkhole like this.
Hello Fresh Death Watch!
I propose a betting pool called the Hello Fresh Death Watch. Guess the date HF will declare bankruptcy – when the company goes belly up, the reader with the closest date wins a duffel bag full of factory-fresh produce of our choice delivered directly to your email!
Send us your favorite date for Hello Fresh to officially declare bankruptcy and stiff its investors! I claim dibs on October 31, 2021.
Email your date to: DirectActionNovel@gmail.com
Thanks to Bill Dewey for the news tip!