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Gousto announces maiden full year profit, driven by market share gains from UK supermarkets

BGF News 27.04.2021.
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Gousto, the UK’s leading recipe box provider, announces record sales for 2020 of £189m, up 129%. Delivering underlying EBITDA of £18.2m, (2019: loss -£9.1m), Gousto achieved its first full year of profitability since launch.

Strong growth has continued into 2021, with over 25 million meals sold in Q1 alone – three meals a second. This performance was driven by Gousto’s market leading position in mealtime choice, enabling it to capitalise on the three consumer trends driving the UK grocery market: convenience, health and sustainability.

Winning market share from the supermarkets through technology and data

Traditional supply chains are being revolutionised by technology. This has already happened in many other industries1; books (Amazon); music (Spotify); TV and Film (Netflix). Grocery is next in line. Gousto’s investment in technology and data means it can significantly scale choice and personalise its offering to individual customers. This positions Gousto at the confluence of the three consumer mega trends in grocery:

Convenience: Customers want frictionless shopping and choice that is relevant to them. The customer data collected means Gousto’s tech team can personalise the 50 weekly recipe choices to a customer’s unique preferences, using their recommendation engine – think ‘Spotify Discover Weekly’ but for food. Today, 52% of all Gousto orders are made as a result of an AI recommendation. Customers use Gousto’s mobile app to plan and order their week’s meals in just 60 seconds, and get it all delivered to their door seamlessly.

Health: The future of healthcare and wellbeing will see a continuing shift from reactive medicine to preventive medicine, especially nutrition. Gousto’s data-driven menus set baseline standards for recipes, to establish a threshold of nutrient content as well as calorie ceilings. Customers get precisely-measured ingredients which helps with portion control, plus the ability to customise elements of each meal to healthier options, resulting in 370,000 potential box combinations per week during 2020. In future, through personalisation and the unparalleled choice inherent in a growing menu, recipes can be grouped into targeted ranges to address specific health issues like obesity, diabetes or hypertension.

Sustainability: Gousto uses forecasting algorithms to reliably predict supply needs at its manufacturing sites. This means that just 2% of food is wasted in their facilities, as opposed to around 20% in supermarkets supply chains. Exact portion sizes also mean next to zero waste in the home. Every Gousto order saves 2kg of food waste and 7kg of CO2 emissions compared to a similar supermarket shop. The saving is equivalent to driving 18 miles. Gousto reduced plastic in its boxes by 50% in 2020, by 2022 all Gousto own-brand packaging will be either recyclable, reusable or compostable.

Investing in capacity and technology to meet accelerating demand

Gousto will reinvest the cash it generates for the long-term; to improve the customer experience and increase its share of the grocery market.
Gousto doubled its capacity in 2020, investing in its existing fulfilment centre in Lincolnshire and adding a second automated factory in December. Gousto plans to double capacity again by the end of 2022, adding two further fulfilment centres in Essex and Cheshire to meet accelerating demand. This was accompanied by significant investment into people, particularly tech resource, with total headcount rising from 500 to 1,000 in 2020, and plans to reach 2,000 by 2022.

As the leader in automation technology within the recipe-box sector, Gousto’s proprietary algorithms ensure it is able to maximise speed and accuracy of pick within its automated factories, meet daily volumes, whilst minimising food waste. This technology is a key driver behind EBITDA margins of 10% in 2020 and has allowed Gousto to have 30% lower overheads since the introduction of such algorithms. This in turn has allowed Gousto to deliver value to its customers with industry leading prices of £2.98 per meal with free delivery.
This investment enables Gousto to offer the largest choice of any recipe box provider, with over 50 recipes every week, from 10-minute meal prep, to calorie controlled and an expanded Joe Wicks Lean in 15 range. This has led to an increase in Gousto’s Net Promoter Score, a universal measure of customer satisfaction, to 70.

Timo Boldt, Founder & CEO of Gousto, said: “2020 was a transformational year, but we’re only scratching the surface of the huge opportunity ahead. 500 million evening meals8 are eaten each week in the UK and 76% of people cook from scratch. Gousto is working to unbundle the evening meal from the traditional grocery supply chain. We use software to upgrade both the supply chain and the customer experience of cooking from scratch, while riding the permanent structural shift from offline to online. This is just the beginning and I’m incredibly excited about the journey our amazing team is embarking on, which will see our customers benefit as we fulfil our vision to become the most loved way to eat at home.”