📉 Fewer Meal Kits, Higher Order Value
HelloFresh sold fewer meal kits in Q3, continuing a recent downward trend in this area. However, the German meal delivery company saw a 3.2% increase in average order value, which helped drive a modest 1.4% boost in quarterly sales, reaching $1.9B. This shift toward higher-value orders reflects HelloFresh’s focus on profitability over sheer order volume. Its adjusted EBITDA also outperformed, rising 4.2% to $77M, as the company refined operations to stay efficient amid changing customer preferences.
📈 Ready-to-Eat: The New Growth Driver
The ready-to-eat (RTE) category is increasingly crucial for HelloFresh, with a sales growth of nearly 40% over the past quarter. CEO Dominik Richter noted that RTE meals will be the company’s core growth driver for the next three years, thanks to strong demand and operational advancements. “We are the RTE market leader in the US,” Richter stated. HelloFresh has invested significantly in RTE product development, technology, and manufacturing, with plans to scale up globally to meet demand in more regions.
📊 Marketing for Efficiency, Not Expansion
HelloFresh has shifted its focus from rapid expansion to selective marketing, aiming to increase profitability with existing customer retention and strategic acquisition. With this streamlined approach, “existing customers continue to show robust behavior,” says the company, as it carefully targets new segments. This shift in strategy supports HelloFresh’s drive to maintain sustainable growth while managing operational costs effectively.
📅 Updated 2024 Financial Targets
In light of its new growth strategy, HelloFresh revised its 2024 forecast, now expecting sales to grow by 1 to 1.7%, compared to its previous range of 2 to 8%. Adjusted EBITDA is projected to range from $380M to $390M, reflecting a small increase as the company continues to pivot toward ready-to-eat meals. This adjustment acknowledges lower meal kit demand but highlights rising RTE sales, which are set to define the company’s growth path for the foreseeable future.
Is HelloFresh’s ready-to-eat pivot a winning strategy?
