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Surge In Meal Kit Demand Boosts Hiring At Blue Apron East Bay Fulfillment Center

RICHMOND (CBS SF/CNN) -- Meal kit pioneer Blue Apron might be for sale but the company's future looks more promising now that it's been rediscovered by consumers stuck at home.

Shares of Blue Apron are up nearly 25% this year, a rally fueled in large part by the company saying in February that it was evaluating "strategic options." That's seen as the equivalent of slapping a "For Sale" sign on your lawn.

But February seems like eons ago. That was before many Americans were forced to shelter in place because of the Covid-19 pandemic. So instead of going out to eat or ordering takeout, more people are dusting off their kitchen supplies and cooking for themselves.

That's led to a surge in demand for Blue Apron's meal kits -- and a need for more workers. CEO Linda Kozlowski told CNN Business in an interview Wednesday that while tens of millions have been laid off in the United States since mid-March, Blue Apron has gone on a mini hiring binge in the same period.

To meet demand, Blue Apron has hired more than 300 people at its fulfillment centers which include a facility on Regatta Blvd. in Richmond, Calif. The company is ready to add more jobs if sales continue to pick up, Kozlowski said.

Surge in demand for home cooked meals

"Coronavirus changed the situation at the company. It drove growth a lot earlier than expected," Kozlowski said. "We've simplified orders to make and ship more boxes as quickly as possible."

Kozlowski, who took over as CEO about a year ago, said many of the new jobs are for supervisory and fulfillment roles in its New Jersey and California distribution centers.

Many of the interviews are being conducted remotely, and employees working in Blue Apron facilities are social distancing to minimize the risk of infection -- a problem that has plagued food workers at Tyson and other big produce companies.

Despite the ramped-up hiring, Blue Apron is in the process of shuttering a third warehouse in Texas this quarter. The move will not only cut costs but make operations more efficient, Kozlowski said, as many of its fresh ingredients come from farms in California and the East Coast near its other two warehouses anyway.

"We expect an increase in quality, too, since the produce is getting to us faster," she said.

Losing money in an insanely competitive business

Still, Wall Street remains skeptical about Blue Apron's long-term viability as an independent company. Only three analysts follow Blue Apron and they all currently rate the stock a "hold" -- often considered the nicer way of saying "sell." They're also forecasting more net losses for Blue Apron this year and in 2021.

Even though the stock is still up sharply this year, shares are down more than 70% from the peak that Blue Apron hit in mid-March when investors first flocked to it as a potential Covid-19 beneficiary.

Blue Apron Meal Kit
Emily Griffin reads a recipe for a Blue Apron meal at her Lisbon Falls home Dec. 6, 2016. (Derek Davis via Getty Images)

The meal kit industry is also highly competitive. Blue Apron has to contend with companies including HelloFresh, Sun Basket and two others backed by grocery giants: Albertsons-owned Plated and Kroger's Home Chef.

Competition could be coming to the broader food delivery business as well. Uber has reportedly offered to buy rival GrubHub in order to combine it with Uber Eats.

Kozlowski had no further comment about Blue Apron's February statement regarding a possible sale of the company or acquisition of a competitor.

Blue Apron is trying to stand out with newer offerings, like a plan centered on preparing multiple meals for the week in one day, and a premium plan with fancier ingredients.

Kozlowski said the premium plan should be popular with more experienced chefs who may want a restaurant-quality meal -- a night out that few are able to enjoy at this time.

"A lot of people think about meal kits as being for novices," Kozlowski said, adding that she considers herself a passionate home cook. "But one of my favorite recipes that got me hooked on Blue Apron was for pan seared cod topped with pickled grapes. We want to be known for food discovery -- a new ingredient or different technique."

But while the company works to attract more customers from newbies to skilled home chefs, investors would love to see Blue Apron either post consistent profits or throw in the kitchen towel and sell to a larger competitor.

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