- German-based Hello Fresh has raised its guidance for the third time in 2020, citing ‘strong habit formation’ as customers get hooked on the service in quarantine and a lack of traditional summer vacations.
- The pandemic has required more households to cook within their homes, leading to increased sales for the company.
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As coronavirus cases rise across the US, fuelling an at-home cooking boom, Hello Fresh has been able to raise its financial outlook for the 3rd time in 2020.
In the most recent increase, the company raised its revenue growth guidance from between 55% and 70%, to between 75% and 95%.
This move comes after “customers continuing to spend more time at home, the strong habit formation that has been taking place, especially for new customers and the absence of long vacations abroad in the summer season,” said Dominik S. Richter, CEO, in an earnings call.
In a press release from the company, there has been an “overall an increased ordering pattern and higher retention of its customers on average, including customers which were acquired during the second quarter 2020.” The company has raised its revenue by 122% this year.
In 2019, Hello Fresh’s total adjusted earnings before interest, taxes, depreciation, and amortization (AEBITDA) was 18.3 million euros ($US20.5 million), as reported by CNBC. This year, it’s already at $US154 million euros ($US180 million).
“What would have taken usually 3 years happened in 3 months and with very little customer acquisition costs,” said Richter in the same call.
Before the pandemic, families would cook about four meals a week at home, and now that number has risen to seven, according to data from Hello Fresh, referenced on an earnings call.
In addition to the pandemic requiring more people to cook at home, many of Hello Fresh’s meal-kit competitors have struggled to find their footing, and have not experienced the same amount of growth during the pandemic.
While Blue Apron reported growth in the second quarter, it wasn’t enough to outpace their “decline in users and revenue” as reported by The Wall Street Journal.
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