- Hellofresh wants to go more for ready meals.
HelloFresh, the meal kit manufacturer, is shifting its focus more towards ready-to-eat meals due to dwindling demand for meal kits. According to the CEO of the Berlin-based company, Dominik Richter, in a letter to shareholders obtained by financial news agency dpa-AFX, the "ReadyToEat" business (RTE) is expected to contribute the most to absolute profit growth in the long run.
The company's operating profit in the second quarter decreased significantly but not as much as experts had feared. Investors initially reacted positively to the news about the focus on ready-made meals. "Given the economic attractiveness per customer unit is at least as appealing as meal kits, we expect the margins of the RTE product category to reach at least the level of meal kits," Richter said.
However, the company is more cautious about the outlook for the meal kit segment. According to a separate announcement for the second quarter, the market for this product group is "consolidating to a new size." In the shareholder letter, the board explained that it aims to reduce costs and increase automation. Planned investments are also being reviewed.
HelloFresh continues to struggle with the consumer slowdown, and demand is not recovering as expected after the end of the COVID-19 pandemic. During the pandemic, when restaurants were closed, and people were forced to stay home due to restrictions, the meal kit business gave the company a significant boost. However, as the pandemic ended, people started dining out again and turned away from HelloFresh.
Despite the decline in demand for meal kits, the shift towards ready-to-eat meals isexpected to boost HelloFresh's profit growth in the long term.Investors are optimistic about the economic attractiveness of ready-made meals, as the margins are expected to match, if not surpass, those of meal kits.
