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.
Go deeper (2 min. read)
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