Meal kit businesses were buoyed by pandemic-related demand for direct-to-home groceries, but that demand seems to be slowing.
Berlin-based HelloFresh BB #:299518 is reportedly closing its Atlanta-area distribution center, a 200,000-squre-foot facility that opened in 2020.
According to a facility employee, orders had slowed significantly from the company’s peak.
The most recent analysis by Mercatus and Brick Meets Click found that ship-to-home e-commerce has dropped sharply since the early days of the pandemic, from $2.5 billion in March 2020, to $1.4 billion in March 2024.
The makeup of online grocery users has shifted dramatically since March 2020. Nearly 55% of all online grocery users are ordering online for pickup
“Pickup and delivery share has grown at the expense of Ship-to-Home,” the report said. “Pickup, which accounted for less than one-third of eGrocery sales in 2019, quickly moved to the top spot when the pandemic started and it has stayed there ever since, expanding 586 basis point (bps) from March 2020 to 43.2% this year.”
The facility is scheduled to close in July.
A company spokesperson said it is focusing on “diversifying our offerings and optimizing our operations network to best serve our customers and grow profitably,” and that it will “leverage existing sites across the U.S.” to serve its customer base.
