HelloFresh Invests $70 Million in AI-Powered Meal Planning to Enhance Customer Experience

HelloFresh is investing $70 million to have AI help plan dinner

(Bloomberg) -- Meal kit company HelloFresh is employing artificial intelligence to get more customers cooking. The Berlin-based company announced on Monday a $70 million investment in its menu subscriptions. The funds will more than double the number of meals on offer and increase the range of star proteins such as beef and seafood. The money will also bolster the use of AI technology to streamline decision making during ordering, even as the choices for recipes increase. The refresh is taking place for customers in the U.S., Hello Fresh's biggest market; the company says it will enhance product offerings in other countries at a later date. (In 2024, the group delivered over 511 million meals in North America, which also includes Canada. It's more than half the worldwide number of meals, which was over 965 million.) The investment is intended to enhance brand loyalty and bring in customers in the face of inflationary food pressures, said Assaf Ronen, HelloFresh group president, in an exclusive interview with Bloomberg. While "$70 million is a very large check," he says, "the more we invest in customers, the more they stay with us." HelloFresh sees opportunity as Americans cut back on dining out amid rising food prices. The company is valued at around €1.5 billion ($1.73 billion); at its peak in 2021, it hit €16.7 billion as a result of the pandemic. According to a series of recent company polls, including one among 5,000 customers, nine out of 10 respondents said they're planning to eat more at home in the upcoming year. And 58% of respondents said they're bored with what they eat every night. To that end, a major portion of that $70 million will be used for a broad expansion of weekly meal offerings, from 45 to more than 100. Customers will now be able to start cooking dishes like seared salmon with couscous, spiced vegetables and lemon yogurt, and eggplant caponata pitas with mozzarella. There are more premium meat cuts, including grass-fed rib-eyes and whole chicken thighs, and triple the amount of seafood will be available with no upcharge. Depending on location, subscription prices might range from about $60 for two 2-serving recipes per week, including delivery, to about $370 for six recipes for six people weekly. (The cost-per-serving runs from about $10 to $11.50.) The company is also including the option of more seasonal produce and more specialty products, like nutritional yeast and kimchi. Upcharges will be in place for options like multicourse meals and platters. Portion sizes will also generally increase, says Ronen (look no further than Reddit's HelloFresh thread if you want to discuss): Some sides will increase by 50% while some proteins will be 20% bigger. There will also be increased customizable options for swapping out ingredients, like chicken for pork. Ronen, who was vice president of the Alexa division at Amazon.com a decade ago, says AI technology will help customers navigate the expanded menus and prioritize selections: "What's at the top of your list will be more relevant for you." The more each customer orders, the more the system will Netflix-style prompt meals that reflect your preferences: for instance, recipes that take 5 minutes versus 50 minutes in the kitchen. Ronen won't confirm how much meal prices will go up in response to these improvements, but he says when they take effect in September, they won't be relatively higher than price increases in the broader economy. "Pricing is something we're always looking at. In some places, there is a price increase, but it's lower than the rise in inflationary food prices," he says. Upgrades in HelloFresh's 30-plus distribution centers worldwide will also be implemented with the investment. The company will install robots in warehouses to speed up the meal kit packing. In the future, Ronen said, HelloFresh will increase its use of robotics: "We look at this refresh as our big first step but not as a last step." He said there's no plan to cut the company's workforce. But "the more we do, the more we need robots to meet demand. It's about not needing to grow employees three times" in the future. Or, he said, "it's just going to take people longer to get their meals." More stories like this are available on bloomberg.com

HelloFresh Makes $70 Million Bet on Al-Powered Meal Planning | PYMNTS.com

This funding will more than double the number of meals offered by the company, and enhance its use of artificial intelligence (AI) to make deciding on recipes easier, Bloomberg News reported Monday (Aug. 4). The goal is to bolster brand loyalty and attract customers as inflation drives up food prices, Assaf Ronen, HelloFresh group president, told Bloomberg. Although "$70 million is a very large check," he said, "the more we invest in customers, the more they stay with us." The report notes that the company's in-house surveys have found that most of its customers are planning to eat at home more, while nearly 60% said they are bored with their nightly meals. That's why a large portion of the $70 million will be used to expand weekly meal offerings, from 45 to more than 100, with plans to increase portion sizes as well. Meanwhile, research by PYMNTS Intelligence shows that as consumers switch from remote work to hybrid/office-based jobs, they're finding out how much the evening commute impacts their dinner prep time. Of the workers surveyed for the report "Back-to-Office Mandates Drive Demand for Fast Food, Weekend Shopping and Subscriptions," 75% with food subscriptions from services like HelloFresh and Blue Apron signed up within the last six months. By contrast, just 51% of remote workers with food subscriptions had joined within the same period. "The rise in food delivery subscriptions calls for subscription management platforms that can handle recurring payments, offer easy cancellation or modification options, and provide clear billing information to consumers," PYMNTS wrote earlier this year. As for the AI initiative, Ronen said the technology will help diners navigate the updated menu and prioritize their options. The more a user orders, the more the system will offer meal prompts based on their preferences. "What's at the top of your list will be more relevant for you," he said. The company's use of AI is happening as the technology plays an increasing role in the dining industry, as covered here last month. The smart restaurant robot industry is expected to surpass $10 billion by the end of the decade, fueled by deployment in applications like delivery, order-taking and table service, according to Archive Market Research. Restaurants are also turning to AI to handle administrative needs, with additional PYMNTS Intelligence research finding that nearly three-quarters of eateries say AI is "very or extremely effective" in accomplishing business tasks.