AI-powered Hungryroot increases revenue 47% to $237M in 2022

Hungryroot, which describes itself as an AI-powered personal grocer, grew revenue 47% last year to $237 million while maintaining a 43% gross margin, CEO Ben McKean tells Axios.

Why it matters: The company has grown even as competing meal delivery providers — such as Freshly, which shut down in January — have struggled.

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Details: Hungryroot, which has raised a total of $75 million, is IPO-ready when markets normalize, McKean says.

• The company is planning to either take on a new private equity firm or go public, he says.
• McKean says that the company does not currently need capital, so it is going to wait until depressed valuations recover.
• The current expectation is that market conditions will likely be ripe by 2024, he says.
• While it is building relationships with investment banks, it has not yet selected one, McKean says.

Of note: Wajeeha Ahmed, who spoke to Axios last year about the company's business model, is CFO.

By the numbers: In addition to revenue growing 47% in 2022, Hungryroot grew 142% in 2021, per a previous report by Axios, while in 2019 revenue was $25 million.

• The average basket size for Hungryroot is $125, which is why it is able to generate a profit, McKean says.
• The industry average order value is about $70, which is unprofitable because it doesn't adequately cover costs such as shipping and packaging.
• Orders turn profitable somewhere between $70 and $125, he adds.
• When the company raised $40 million in its last round from L Catterton it was valued at $750 million, according to numerous reports including Bloomberg.

How it works: With Hungryroot's inverted model, the shopper begins with a cart full of items and recipes chosen by an algorithm based on a person's health goals. The customer can then add and subtract items as they see fit.

• "We're not a traditional grocery service. We're not a meal kit. We’re taking the both of best worlds and providing groceries as well as recipes," Ahmed told Axios last July.
• The company went from selling four products in 2016 to 60 by 2019 to 600 currently, McKean says.

What's next: Hungryroot aims to increase average order value to $150, while passing on the savings gained to customers.

• The company also plans to launch an ice cream product in partnership with a popular brand in the space in combination with its own cookie dough, McKean says.
• Refrigerated meals are also now being offered and will be expanded.

Editor's note: This story has been corrected to note Hungryroot will increase average order value to $150 (not $150 million