Why Blue Apron Holding Inc. Stock Was Down Today

What happened

Shares of Blue Apron Holding Inc. (NYSE: APRN) were falling again today as the competitive front in the meal-kit industry heated up again. Following fears about Amazon Prime Day and news that rival Chef'd was going out of business, investors now seem to be fretting over competition from Chick-fil-A and an expansion of one-hour delivery from Whole Foods.

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As a result, the stock closed down 7.4%.

So what

Chick-fil-A, the popular fast food chicken chain, said yesterday that it would test selling meal kits at 150 restaurants in the Atlanta area starting in late August. The company will offer five different recipes including chicken Parmesan, dijon chicken, and chicken enchiladas, and will cost $15.89 for two people.

Considering Chick-fil-A's popularity — the company has higher average unit volumes than any of its competitors — and the distribution channel it has, the test could prove successful and challenge incumbent meal-kit services like Blue Apron.

Separately, Amazon.com announced that it has expanded its one-hour Prime Now delivery from Whole Foods stores in and around New York City and South Florida, making it available to millions of new customers. Since there is likely some overlap between Whole Foods and Blue Apron customers, that could present further problems for the meal-kit service.


Now what

The meal-kit industry continues to be in flux as Chef'd just bowed out and companies like Home Chef and Plated have sold themselves to larger supermarket chains. However, the industry continues to attract new players like Chick-fil-A, and businesses that are able to directly distribute their meal kits to customers may have an advantage over Blue Apron, which explains why the company is currently testing sales of its kits in a handful of Costco stores.

Expect Blue Apron shares to remain volatile ahead of its second-quarter earnings report on Aug. 2.

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