Freshly Says It’s Time for Lunch | Matt Hagel, CFO, Freshly

As the pandemic last spring bore down on different U.S. geographies, Freshly was enjoying a profitable quarter—a trend that the online prepared meals company was determined to repeat.

“I’m proud to say that for 2020, we have year-to-date profitability, and we expect that trend to continue,” explains Freshly CFO Matt Hagel, who entered 2020 keen to sharpen his team’s focus on costs after years of marshaling resources and new plant capacity to accommodate growth.

Meanwhile, shopping experiences like Freshly, which promise safety as well as convenience, are attracting new customers—but not necessarily for dinner.

We recently asked Hagel about Freshly’s business mind-set and how the company is adapting to the current business environment.

Hagel: Actually, our constraint is capacity. We almost operate where every meal we make is sold. When we were in March and early April, we didn’t have the opportunity to actually see any uptick in revenue because we couldn’t produce more. But what happened was that we saw the order rates increase for our current customers. There was a period of a few weeks when we had no new customers because there was so much demand by people who were already using our service.

Freshly CFO Matt Hagel

What was very interesting as we followed our data in detail and sliced and diced cohorts in every which way was that we noticed slightly higher reorder rates out of San Francisco and Seattle. And then eventually it became New York. If you follow the spread of COVID, you do see that trend kind of overlaid with our order rates. In addition to these order rates, we saw people upgrade from four-meal plans to six-meal plans, or six meals to 12 meals. I don’t know about you, but I’m sitting here in Brooklyn and I couldn’t even get on Instacart or Peapod. It was really difficult to get food. I think that people were just trying to stockpile what they could get. And once people were an active Freshly subscriber, they just needed more meals.

Still, in the past we were more of a dinner solution, whereas I think that now we’re seeing a transition to be more of a lunch solution. Freshly is a very good option for all of us working from home.

Seeing how the trends of our cohort retention were performing, we then applied some of this learning to ask, “Hey, where should we further be acquiring customers? Which DMAs make the most sense?” We can see now that with COVID cases going up in California, Florida, and even Phoenix and Arizona, we have slightly higher demand in these regions. jb

As we followed our data … we noticed higher order rates..