The coronavirus pandemic drove some 700,000 new U.S. customers to the online meal-kit company HelloFresh over its fiscal second quarter, a phenomenon its officials likened to three years of growth in three months.
The Berlin-based online retailer said U.S. revenues in the period increased by 114.3% to 525.9 euros (about $618.7 million), while U.S. orders increased by 81.7% and total meals delivered by 98.5%. These figures underscore a massive shift in the amount of meals consumed at home and the percent of customer spending in the food-at-home channel, trends that the retailer says will support what it calls a “total addressable market,” or TAM expansion, and at a lower acquisition cost.
Speaking in a conference call reviewing results, CEO Dominik Richter said the company estimated that dinners consumed at home have increased from about four a week before the pandemic to more than six, and that consumer spending on food—which before than pandemic was about an a 50/50 split between home options and out-of-home options such as restaurants—is now about two-thirds food at home, according to Piper Sandler estimates.
“We think that that some of these trends will remain in the future,” Richter said, according to a Sentieo transcript. “In addition, e-commerce adoption has also been pulled forward in a very short amount of time. What would have taken usually three years happened in three months and with very little customer acquisition costs. A lot of the consumers that have come to us for the first time have started to build habits, which would have taken a lot longer under normal circumstances and with more competing off-line options.”
Internal measures of how fast consumers adopt the habit of meal-kit consumption based on the time it takes them to cook five meals have “compressed enormously,” he added.
“Both of these developments, more being consumed at home and higher adoption in a short and compressed span of time just means that our TAM has gotten significantly bigger, a great opportunity for a player like us who has the best product offering and the best service levels of all meal kit players to benefit disproportionately,” Richter said.
The pandemic has challenged the company, in the meantime, to increase capacity, and it is taking a major step in the U.S. by taking possession last week of a 209,000-square-foot facility in Newnan, Ga., that Richter said would be ramping up in September. That would be the company’s fourth U.S. site, “and should correspondingly give us the potential to increase revenues by about 25% from the current baseline.”