When you have delivered more than 60 million ready meals in nine years, variety really does become the spice of maintaining and growing your customer base. Kim Berry takes a look at ready meal company Youfoodz. This article first appeared in the July 2021 issue of Food and Drink Business.
Youfoodz releases a host of new offerings every season. Winter 2021 was no exception with more than 20 new menu items, including soups making an appearance for the first time. Shoyu Beef Ramen Bowl and Chicken & Sweetcorn Noodle Soup headlined, albeit reserved only for the home delivery clientele.
And it works. In its Autumn quarter, more than 30 new items were added. The company recorded website visits up by 6.3 per cent, app downloads up by 39.3 per cent, and app-based transactions up by 120.9 per cent – all compared to the prior comparative period (pcp).
In fact, Q3FY21 represented the highest quarterly result in new direct-to-customer (D2C) customer acquisitions (56,294 people), representing 20 per cent growth vs pcp.
Youfoodz launched in 2012. In December 2020, the company commenced trade on the ASX after a successful IPO, raising $70 million at $1.50 per share.
The company has scalable proprietary technology for production and distribution, with three manufacturing facilities (in Sydney and Brisbane) producing more than 400,000 ready meals, 80,000 snacks and 25,000 drinks per week.
A new 13,200 square metre facility is earmarked for completion in Q1FY23, which will bring all three manufacturing facilities and two offices under one roof and increase its capacity to around 1.1 million meals per week.
The company uses an omnichannel sales model for more than 850,000 home delivery customers via D2C and business-to-business (B2B) offerings. Its B2B market includes major and independent supermarkets, petrol and convenience stores, corporate and government customers.
The company says supporting local growers is core to its business and is delivered daily to its Brisbane headquarters. Meals are prepared and then sealed through a combined process of vacuum sealing and Modified Atmosphere Packaging (MAP). MAP is when the air inside the package is substituted with a safe and protective gas made up of nitrogen and carbon dioxide. It keeps oxygen to a minimum, which helps keep meals fresh for as long as possible.
Youfoodz says its meals have a shelf life of up to 18 days from the day they’re made. They can also be frozen for up to three months if they are in the freezer before their use-by date.
In the company’s Q3FY21 guidance update, it said it expects net revenue for FY21 to be in the range of $146.0-148.9 million and EBITDA in the range of $1.0-2.0 million. This is down from the $2.9 million it forecast, with the company saying the lower figure reflected the underperformance in B2B due to the ongoing impact of COVID-19 in the retail channel and its own strategic focus on B2C growth.
Its net revenue for Q3 was $35.3 million, up 18.2 per cent vs pcp, but B2B gross revenues were down 3.8 per cent relative to pcp to $15.6 million, reflecting ongoing COVID-19 restrictions on wholesale customers in certain channels (in particular petrol and convenience, gyms and corporate). A mid-sized B2B customer also paused stocking Youfoodz to trial non-branded ready meals. It has resigned from Q1FY22, the company says.
Youfoodz CEO Lance Giles says its impressive B2C performance drove its top-line growth. “Our B2B business, which has experienced challenging trading conditions recently, is an important component of Youfoodz’ omnichannel model.” Initiatives implemented in Q3 would see B2B well positioned to return to growth in FY22, Giles says.
Stop the press
As we went to press, HelloFresh announced plans to acquire 100 per cent of Youfoodz for $125 million in its bid to become a leading global D2C food business. The initial offer proposes $0.93 cents per share.
