Hungryroot Sees Record Growth | PYMNTS.com

Hungryroot’s revenue surges as eGrocers realize they may need to do more for their consumers.

The online grocer, which personalizes meal plans for consumers, announced in a Thursday (March 30) earnings release that in 2022, its revenue grew by nearly half (47%) year over year.

“[The year] 2022 brought a lot of challenges to the entire grocery delivery industry, with many services faltering or shutting down completely,” CEO Ben McKean said in the release. “Despite a highly challenging macro environment, 2022 was a breakout year for Hungryroot.”

He added that the company chalks its strong performance up to its artificial intelligence (AI) investments, its health focus, and its convenience, personalizing its recommendations to speed up consumers’ food planning and purchasing routines.

Certainly, last year was difficult for many online grocers, as rising prices and worsening economic conditions put new pressure on the model, which even at the best of times has notoriously thin margins. For instance, many ultrafast grocers shut down or dramatically scaled back.

Additionally, at the end of the year, shortly after meal delivery company Freshly was offloaded by former owner Nestlé, the firm shared that it was shutting down its direct-to-consumer deliveries altogether. Meal kit services Blue Apron and HelloFresh also experienced difficulties late last year, announcing major layoffs.

Yet, online grocery overall continued to grow. Research from the latest edition of PYMNTS’ ConnectedEconomy™ series, “ConnectedEconomy™ Monthly Report: The Evolving Digital Daily Edition,” which drew from a February survey of more than 4,000 U.S. consumers, found that digital engagement with grocers has increased 27% in the last year.

Additionally, the share of digital-only grocery shoppers as grown 36-fold since before the pandemic, marking an increase from 0.2% to 7.2%, according to data from PYMNTS’ study “Changes in Grocery Shopping Habits and Perception,” based on a December survey of more than 2,400 U.S. consumers.

McKean attributed the disparity between the success of some eGrocers and the challenges faced by others to many merchants’ failure to simplify the shopping process for consumers.

“One of the reasons why a lot of grocery delivery companies have been struggling is they are building their services around narrow product offerings,” he said in the release. “These services aren’t providing customers enough convenience or product breadth to support them through their entire week, and instead they’re left spending countless hours on meal planning, shopping and cooking.”

Indeed, Hungryroot is not the only online grocer looking to drive engagement by offering AI-informed recipe and product recommendations. In an interview with PYMNTS, Kevin Yu, CEO of connected recipes company SideChef, explained that the company has been offering personalized meal plans, which have tripled conversion rates relative to single-recipe shoppable content.

“You can drag and drop these recipes that you find on the internet into a meal planner, and from there you can plan out the whole entire week and one-click shop all of those,” Yu said, noting that the tool automatically adjusts serving sizes according to the ingredients consumers are purchasing.

Moreover, grocery giant Albertsons has been offering personalized meal plans since December 2021.

It seems that, for eGrocers to benefit most from the rise in consumers’ digital adoption, they must not only simplify the purchasing process but also the planning process, leveraging customer data to make it as simple as possible for shoppers to plan out their meals and get the foods they need according to their preferences.