It's the second time Blue Apron has announced job cuts since its initial public offering last year. Blue Apron laid off 6% of its staff in October 2017.
The company said Tuesday that the most recent job cuts would cost it about $1.6 million in severance charges during the fourth quarter but it would also save $16 million in personnel expenses next year.
Blue Apron needs every dollar in savings that it can get. It was once synonymous with the meal kit delivery business, delivering boxes of fresh ingredients and menus to amateur gourmands.
But shares of Blue Apron (APRN) have tanked since the IPO because of concerns about increased competition. The stock is down 70% this year and is trading barely above $1.
There are plenty of other meal kit companies, including Germany-based HelloFresh, Plated, Sun Basket and Home Chef, which was bought earlier this year by supermarket giant Kroger (KR).
Too many cooks in the meal kit kitchen
The competitive landscape has gotten so tough that Blue Apron was recently the punchline in a tweet about podcast clichés that went viral. One of the squares on a podcast bingo board was "All Blue Apron ads have been replaced by HelloFresh ads." Ouch.
Blue Apron CEO Brad Dickerson acknowledged the company's problems in a release about the layoffs Tuesday.
"The ways in which consumers access meals for various occasions has evolved rapidly with expanded choice and the continued convergence of online platforms and brick and mortar stores," he said.
The company said it would focus even more on its "best customers" -- those that tend to spend more and stick with the service for longer.
Blue Apron also hopes to forge more partnerships with larger retailers in order to lessen its reliance on its own direct-to-consumer offerings.
Along those lines, Blue Apron recently announced a deal with Walmart (WMT) owned Jet.com to offer more same-day and next-day delivery of meal kits to Jet customers in the New York City area.
These partnerships need to pay off quickly though. Blue Apron has made the conscious decision to spend less on marketing -- its ad expenses were down more than 30% in the quarter -- to eke out a profit.
But cost cutting won't be enough to get Blue Apron back on track. The company either needs to attract a lot more foodies or get existing ones to spend a lot more.
Total sales fell 28% from a year ago. Blue Apron reported a nearly 25% drop in total customers during the quarter -- and both the number of orders and average value of those orders fell too.
That's not a recipe for success.
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