Meal kit company Blue Apron on Friday finalized its $50 million sale to FreshRealm, saying it paid off its debt and is planning further layoffs as it becomes an “asset-light” company with the goal of profitability.
The acquisition of New York-based Blue Apron by Ventura, California-based meal provider FreshRealm was previously announced last month.
Under the terms of the transaction, Blue Apron transferred its operational infrastructure to FreshRealm, including fulfillment centers, equipment, know-how and related personnel, the company said in a statement.
Blue Apron received $25 million in cash upfront and will get the remainder “upon the achievement of certain milestones,” the statement said.
FreshRealm will be the exclusive supplier of Blue Apron’s meal kits for at least the next 10 years, according to the agreement.
“In moving to an asset-light model, Blue Apron plans to execute further streamlining of its business, which includes reduced headcount and administrative costs, and drive additional cost savings and continued year-over-year cash burn reduction beyond the initiatives disclosed in December 2022,” the companies said. “With the ability to focus on the brand, marketing, product and consumer experience, Blue Apron expects to be more agile, which will facilitate faster decision making, enhance its balance sheet and reduce PTG&A costs. The company believes this will allow it to get to profitability quicker.”
In December, Blue Apron announced it would lay off about 10% of its workforce as it looked to slash $50 million in expenses.
The deal will allow Blue Apron to speed up the growth of new product options, including the addition of new “convenient options,” it said.
Prior to the acquisition, FreshRealm was the manufacturer of Blue Apron’s line of heat-and-eat meals, an ultra-convenient offering distinct from its extensive line of low-preparation meal kits.
“Today’s meal industry is focused on profitability and expanded product offerings,” FreshRealm Founder and CEO Michael Lippold said in a statement when the deal was announced. “From the beginning, FreshRealm has believed this is best achieved through organizations staying within their core competencies. This announcement positions Blue Apron to focus on the customer experience, while Fresh Realm continues on the path to be the leading platform to support retailers across multiple channels with a broad and efficient solutions offering.”
Blue Apron was founded in 2012 and, along with its fellow meal kit providers, was briefly viewed as a potential threat to both grocery stores and restaurants.
But Blue Apron, which went public in 2017, has struggled with a shrinking customer base and supply chain challenges in recent years, receiving a delisting notice from the New York Stock Exchange earlier this year after its share price dipped below $1.
During the fourth quarter, Blue Apron’s orders fell 13%, to 1.46 million, over the year before, and total customer count dropped 11.3% to just under 300,000.
Blue Apron said it would provide a further update on its plans and profitability goals during its next earnings report but did not say when the call would happen.