Retail

How HelloFresh is growing beyond $200 million in revenue by watching customers closely

Emma Koehn /

HelloFresh Tom Rutledge

HelloFresh Australia founder Tom Rutledge. Source: Supplied

Meal kit provider HelloFresh boldly claims it can dominate the Australian fresh food delivery sector for the long run, as it reports its quarterly growth figures are at record highs and the Australian business is on track to collect “significantly above” $200 million in revenue this year.

Former Masterchef contestant Tom Rutledge was one of the first on the meal delivery scene in Australia, bringing the Berlin-based HelloFresh brand to Australia in 2012.

Along the way, the company has raised around $200 million to expand to expand its warehousing and marketing.

Over the past six years, the local market has seen no shortage of competitors enter both the pre-prepared meal and grocery delivery space, but Rutledge says the HelloFresh brand is showing its strength.

“We now deliver 600,000 meals a week, and our quarterly revenue growth is up 50%,” he tells SmartCompany.

The company is tight-lipped on how many users it currently has in Australia, but globally, HelloFresh has been able to increase its active user base by 61.7% this past quarter compared to this time last year, with 1.88 million customers using the service.

Across the US, Australia, Europe and Canada, HelloFresh collected €295.6 million ($464.2 million) in revenue over the past three months and the company booked $1.45 billion in global revenue in 2017. HelloFresh Australia says it will contribute well over $200 million in revenue this year.

Rutledge says the local business has had several consecutive quarters of profitability, and much of the success in retaining customers has come from watching them closely.

HelloFresh is a recipe-focused service, sending subscribers fresh produce to create pre-planned recipes, which cost between $9 and $12 a serve, depending on the number of portions ordered.

Rutledge says there are two parts to the operations: he and his team retain control over sourcing produce and planning the recipes in Australia, while the business uses the processes and technology set up by the Berlin head office to deliver the service to customers.

This means local customers can both directly shape the product and give HelloFresh insights to “make them stay longer”.

“This is something we have invested a large amount in — we have received over 10 million pieces of feedback,” he says.

These pieces of feedback range from wives sending emails praising the service for revealing that their husbands can actually cook, to customers asking basic, but pretty important, queries about whether it’s safe to cook the recipes in an order other than what’s prescribed on the recipe card.

Seeing this volume of feedback means “we can understand what the customer wants in detail at the product level”, Rutledge says.

These conversations have sparked new recipe creations, while the company has also been able to use its customer base as a source of new potential subscribers. Rutledge says referrals and word-of-mouth contributes strongly to customer growth and user retention.

“On the referrals, there is certainly a virality effect we are seeing there,” he says.

The HelloFresh machine may have been one of the first on the ground in Australia, but from YouFoodz to Marley Spoon and everything in between, other meal delivery competitors are also making their offers known in this space.

Rutledge believes his 400-strong Australian team has an advantage, because the HelloFresh model has many moving parts and is difficult to replicate.

“It’s a question of being able to replicate all elements of the value chain well. On the surface, it looks quite simple, but there is a lot of it and you’re dealing with a lot of perishable ingredients,” he says.

NOW READ: Amazon is already chatting to Aussie grocery suppliers: Is it primed to win the supermarket wars?

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Emma Koehn

Emma Koehn is a former senior journalist at SmartCompany.

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