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Why Blue Apron Has Partnered with GrubHub

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The deal with GrubHub

Blue Apron (APRN), the online meal kit provider, has partnered with GrubHub (GRUB) to sell its meal kits on GrubHub’s platform. The collaboration will allow consumers to have a meal kit delivered to their doorsteps within 30 minutes. Initially, the service will be available only in select locations in New York City. Blue Apron will change its menus on a weekly basis.

GrubHub is an online food-delivery service that helps customers connect with local restaurants. Blue Apron’s deal with GrubHub is part of its multi-product, multi-channel strategy to expand the reach and availability of its meal kits. As part of its retail expansion, it has already partnered with Costco (COST), providing meal kits at ~80 Costco locations.

Referring to the deal with GrubHub, Blue Apron CEO Brad Dickerson said, “We are thrilled to launch this initial pilot to expand the reach of our brand, and expect to build on this new competency with additional same day, on-demand platforms over the coming months.”

Blue Apron is also improving its product portfolio. It’s exploring multi-course meals that include main entréees, side dishes, appetizers, and more to help customers host guests. It’s also developing a grill-friendly menu.

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What ails Blue Apron?

Blue Apron’s top line has been dented by customer losses and rising competition in the meal kit market. In the first and second quarters of 2018, its customer base declined 24% year-over-year.

Customer losses were attributed to its deliberate cut in marketing spending to speed things up at its fulfillment center. But even though it has now increased its marketing budget, customer growth still seems elusive.

As a result, the stock has had a dismal run. As of October 2, Blue Apron stock has lost 63.5% of its value year-to-date and is trading at $1.47. It fell 8.1% on October 2.

The stock is expected to remain subdued since Blue Apron expects its revenue growth to make a sluggish recovery in 2018 despite its growth strategies.

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