Blue Apron to streamline supply chain via logistics outsourcing

A leading meal kit provider is shifting to an “asset-light” operational model with a third-party logistical partner.

Blue Apron is entering a long-term operations and logistics relationship with FreshRealm, a provider of fresh meals to retailers nationwide. At the closing of the transaction, Blue Apron will transfer its operational infrastructure to FreshRealm, including fulfillment centers, equipment, know-how and personnel.

By shifting to this asset-light model that removes most of its physical operational infrastructure, Blue Apron plans to focus on branding and product development. Blue Apron will continue to drive its core direct-to-consumer business, including the creation and marketing of its product, customer data, customer support and consumer technology.

Blue Apron also expects to leverage FreshRealm’s expertise and product capabilities of ready-to-heat and ready-to-cook meals. Over time, the company expects to open additional sales channels via this relationship. FreshRealm is currently the manufacturer of Blue Apron’s line of Heat & Eat meals.

The companies have signed a non-binding letter of intent for up to $50 million payable to Blue Apron for the transfer of its operational infrastructure, as well as when transition, efficiency and product milestones are met. Blue Apron does not expect changes to its existing revenue streams.

[Read more: Blue Apron offers delivery of ready-made meals in new markets]

“Over a decade ago, Blue Apron pioneered the U.S. meal kit industry and remains a leader in offering delicious, chef-curated meals to thousands of customers every week. As we continue to evolve, we believe there is an opportunity to simplify our direct role in the fulfillment of our product, allowing us to focus on growing our brand, our customer base and revenue in the long-term,” said Linda Findley, Blue Apron president and CEO. “We expect that this will allow us to focus all our efforts on providing even greater innovation and convenience to our customers as we remain at the forefront of culinary trends. We are confident that we can continue to deliver the same product our customers know and love, while increasing efficiency and accelerating our path to profitability.”

“Today’s meal industry is focused on profitability and expanded product offerings,” said FreshRealm founder and CEO Michael Lippold. “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 FreshRealm continues on the path to be the leading platform to support retailers across multiple channels with a broad and efficient solutions offering.”

Blue Apron expects to issue to FreshRealm warrants in an amount equal to 19.9% of the company’s then-outstanding common stock with an exercise price of $.01 per share on the closing date of the transaction. The companies intend to sign definitive agreements and close the transaction on or about June 9, 2023.