Photo Credit: SITS Girls/Flickr.com

As per a report by Slice Intelligence, the growth rates for food subscription services is slowing down. Back in 2015, food subscription services like Blue Apron and HelloFresh were seeing growth of nearly 200% each quarter. Those growth rates have dropped to under 60% in the last quarter of 2016.

HelloFresh’s Financials

The idea for Berlin-based HelloFresh came to founders Dominik Richter and Thomas Griesel back in 2012. The two wanted to set up a food at home business to provide healthy food and cooking options to Londoners. Through adequate market research, the two narrowed down on the markets of Berlin, Amsterdam and London as their first markets and began offering locally sourced and pre-portioned ingredients to help consumers prepare home-cooked meals each week. The idea took off and by the end of the year, HelloFresh had expanded into the US.

HelloFresh’s subscription service starts from as low as $8.74 a meal, which serves up to two adults and two children. Its revenues have grown significantly in the past few years. For the nine months ended September 2016, revenues grew 121% to €438.3 million (~$467.63 million). But the company continues to suffer losses. For the same period, it reported a loss of €77.2 million (~$82 million), up from €63.6 million (~$67.9 million) a year ago.

The company has been venture funded so far with $364 million raised from investors including Baillie Gifford, Rocket Internet, Insight Venture Partners, Phenomen Ventures, HV Holtzbrinck Ventures, Investment AB Kinnevik, and Vorwerk Direct Selling Ventures. Its last round of funding was held in December last year when it raised €85 million in a round led by Baillie Gifford. HelloFresh did not disclose the valuation in the round. Reports suggest that the round valued it at nearly $2 billion, significantly lower than its 2015 valuation of $2.9 billion. The reducing valuation probably indicates the market’s growing impatience with its continued losses and declining growth rates. In a surprising move, HelloFresh’s biggest investor Rocket Internet stayed away from the round. Rocket Internet has not disclosed the reasons for the abstinence. The company itself has been having troubles, so that could also be the reason for this abstinence.