Today, we’re breaking down HelloFresh. HelloFresh delivers weekly meal kits to people’s homes. With eight million active customers, the Berlin-based business is the most popular company of its kind in the world.   To break down HelloFresh, I’m joined by its CEO and co-founder, Dominik Richter. We discuss the challenges of scaling an operationally intensive business, why HelloFresh is more like CPG companies than grocery stores, and what he’s learned about brand building.   Meal-kits are a notoriously difficult business model to get right and this is a great example of process power; a competitive advantage you don’t come across often. Please enjoy this great breakdown of HelloFresh.   For the full show notes, transcript, and links to the best content to learn more, check out the episode page here.   -----   This episode is brought to you by Tegus. We created Business Breakdowns to uncover the lessons and frameworks behind every business, and that's what makes Tegus our perfect launch partner. Much of the foundational prep for these episodes starts with research on the Tegus platform.   With Tegus, you can learn everything you’d want to know about a company in an on-demand digital platform. Investors share their expert calls, allowing others to instantly access more than 20,000 calls on Coinbase, Hinge Health, Farfetch, or almost any company of interest. All you have to do is log in. If you're ready to go deeper on any company and you appreciate the value of primary research, head to tegus.co/breakdowns for a free trial.   -----   This episode is brought to you by MIT Investment Management Company (MITIMCo), the endowment office of MIT. MITIMCo seeks to find people who are focused on achieving exceptional long-term investment returns, partner with these firms early, and stick around for the very long term. Visit mitimco.org and their new emerging managers page to learn more.   -----   Business Breakdowns is a property of Colossus, LLC. For more episodes of Business Breakdowns, visit joincolossus.com/episodes.   Stay up to date on all our podcasts by signing up to Colossus Weekly, our quick dive every Sunday highlighting the top business and investing concepts from our podcasts and the best of what we read that week. Sign up here.   Follow us on Twitter: @JoinColossus | @patrick_oshag | @jspujji | @zbfuss   Show Notes [00:04:07] - [First question] - What HelloFresh does for its customers [00:05:53] - How many meals are delivered a year and the scale of the business today [00:07:08] - The full customer experience of ordering a meal kit for the week [00:08:03] - What the original service was and the original version of their product [00:10:26] - Overview of the business from a P&L standpoint [00:14:09] - Their centralized and widespread manufacturing plants  [00:16:35] - Attributes of a good recipe that benefits both the customers and the business [00:18:32] - Thoughts on the cost of ingredients and how they impact everything [00:20:43] - How the HelloFresh supply chain differs from traditional ones [00:23:58] - The magnitude of waste and its impact on gross margins [00:27:38] - Identifying customers, acquiring them, and retaining them [00:30:52] - Why other meal kit companies have seemingly done poorly [00:35:53] - Differences in the customer experience of HelloFresh subscribers that allowed them to thrive [00:38:38] - Managing a business that’s dependent on process power and balancing which levers to pull and when [00:41:24] - An example of a decision made to improve tiny percentages of performance [00:44:17] - How a world returning to normal might impact their pandemic propelled growth [00:47:22] - Thoughts on potentially expanding to private supply and distribution [00:50:23] - Lessons learned about successful advertising, branding, and marketing [00:52:41] - Key variables in HelloFresh’s growth for the coming years [00:57:10] - What drives the decision to acquire and build a portfolio of brands [01:00:01] - The biggest risks