As HelloFresh’s shares tumble, is the mealkit brand following a recipe for disaster?

HelloFresh shares plunged recently after the company warned that its earnings would underperform expectations. The meal kit maker went as far as to scrap its revenue and profit targets for next year.

So why is the brand struggling? Looking at the grocery sector, we can see that HelloFresh’s media buying efforts may have cut through with the public:  Ad Awareness scores (which track whether consumers have recently seen an ad for a brand) were at 11.8; scores for the sector on average were at 6.4. But these marketing efforts haven’t translated into greater public esteem: Impression scores for HelloFresh, which measure general sentiment, are at 4.3; the sector average is more than double this at 10.7.

Measures tracking HelloFresh’s quality are closer – at 6.9 compared to the sector average of 8.5 – but still underperform the rest of the industry. The most telling gap is perhaps in terms of Value for Money: with scores of -5.4 compared to an industry average of 4, it’s clear that people view the brand as poor bang for buck. Same story with Recommendations, which are at 0.4 for HelloFresh and 7.3 for the industry.

We can’t necessarily ascribe this solely to issues with HelloFresh. It’s a similar story with the brand’s main rival, Gousto: Impression scores are at 3.5, Quality is at 6.0, Recommendations are at 1.8, and Value at -1.6 – all below the average for grocery brands.

HelloFresh CEO Dominik Richter recently acknowledged that the pandemic saw meal kit brands benefit from “free traffic, word of mouth, a fairly relaxed labour market and an outsized percentage of meals consumed at home.” A convenient meal – even one perceived as lower-quality and lower-value for money – might have been an attractive proposition during the COVID-19 crisis; against the backdrop of a cost-of-living crisis, it may seem less of a convenience than a luxury.

This article originally appeared in City A.M.