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Lock-down changed eating habits sending shares in HelloFresh up 150% on strong demand for recipe box kits

Hello Fresh hiked its guidance for 2020 for the third time highlighting soaring demand for meal-kit makers amid the pandemic Read More...

HelloFresh hiked its guidance for 2020 for the third time, highlighting the soaring demand for meal-kit makers during the pandemic as people continue to cook at home and confidence to eat out in restaurants remains lacklustre.

German meal-kit delivery company HelloFresh HFG, -7.07% reported a surge in second-quarter sales and core profit, boosted by demand for food deliveries in the U.S. and other markets. Sales at constant exchange rates rose by 122% in the second quarter, compared with the same period a year ago.

Meal Kit services companies have spiked in popularity during the pandemic as scores of people have turned to home cooking during lockdowns as restaurants closed and customers looked for comfort and convenience, helping revive an industry that was stagnating amid fierce competition.

The average family cooked at home four times a week before the pandemic across all markets. That has now risen to an average of seven meals cooked at home, according to data from HelloFresh and Piper Sandler’s 2H20 outlook report.

Read:Six in 10 still reluctant to eat out, study finds

Shares in Frankfurt-listed HelloFresh are up more than 150% so far this year.

The surge in sales at HelloFresh has allowed the company to sign lease agreements for two new production sites, creating 1400 new jobs. One is based in Nuneaton in the UK, the other is opening in Newnan, Georgia, marking its first operations in the Southeastern U.S. The country already accounts for half of the company’s sales.

Dominik Richter, co-founder and CEO of HelloFresh, said the growth the company had seen in the last few months has been “exceptional,” as both new and existing customers have made it their go-to choice for cooking at home.

“We see clear indicators how customers have started to form new habits and expanded their share of weekly HelloFresh meals as they are spending more time at home,” Richter said.

Read: If the coronavirus spreads in America, food delivery companies could see a surge in demand—are they ready?

Investors will be hoping the update from HelloFresh will help boost shares in Blue Apron APRN, -3.53%, its New York-listed rival, whose stock has been on a roller-coaster ride since it went public in 2017 at $10 a share.

Shares in Blue Apron fell 13% on July 29 even as the company reported 10% net revenue growth during the second quarter, compared with the same period a year earlier, as customers spent and ordered more at levels not seen since 2015.

However, both big food companies and fast food chains are trying to win back some market share in the sector. Bakery chain Panera Bread has added at-home salad and sandwich kits to its menu, while Chick-fil-A has rolled out its Chicken Parmesan Meal Kits, offering pre-measured and precooked ingredients allowing people to whip up a meal in 30 minutes or less.

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