Blue Apron's business model is broken

More and more customers are abandoning Blue Apron's meal kits. 

Blue Apron's customer base shrank 6 percent in the third quarter ended Sept. 30 from a year earlier and 9 percent from the previous quarter. Average revenue per customer was down from $251 in the prior year quarter to $245.

Blue Apron blamed the customer declines on cuts to marketing costs. Blue Apron said it will continue to shrink its marketing spending in the fourth quarter, which will likely lead to less revenue, Chief Financial Officer Brad Dickerson said on a call with investors.

According to new data from Second Measure, a company that analyzes billions of anonymized debit and credit card purchases, Blue Apron’s market share declined 17 percentage points in September from 57.5 percent a year earlier, while most other meal kit services gained market share in the $5 billion U.S. meal kit market.

For the third quarter ended Sept. 30, Blue Apron generated $210.6 million in revenue. That's up 3 percent from the year-ago quarter, but down from the $238.1 million posted last quarter. The company posted a third quarter loss of $87.2 million, or 47 cents per share. In the year-ago quarter, the company lost $37.4 million or 56 cents per share.

“We're pleased to share that all Blue Apron customers now have access to our expanded product offering and that the transition of volume to our new Linden, New Jersey fulfillment center is complete,” said Matt Salzberg, Chief Executive Officer, Blue Apron Holdings, Inc. “We are now focused on optimizing our operations so that we can drive progress on our product roadmap in order to further our mission to make incredible home cooking accessible to everyone.”

Blue Apron maintained its net revenue expectation to be in the range of $380 million to $400 million for the second half of the year. It increased the expected net loss to range from $131 million to $138 million, up from $121 million to $128 million.