Gousto posts first profit as demand soars during pandemic

Recipe box player Gousto posted a full-year profit for the first time last year after sales soared to record levels during the pandemic.

Gousto grew total sales by 129% in 2020 to £189m, having doubled its capacity during the year.

Along with surging sales growth, the firm, which achieved ‘unicorn status’ of a $1bn valuation after raising £25m of new equity in November, posted underlying EBITDA of £18.2m compared to a loss of £9.1m in 2019.

Founder and CEO Timo Boldt said the shift to profitability occurred before the pandemic hit, having posted a profit in the fourth quarter of 2019.

He added that posting a profit did not reflect any focus on tightening costs during the pandemic, as the brand continued to invest “aggressively” during the year.

During the period it added two further fulfilment centres in Essex and Cheshire and grew total headcount, rising from 500 to 1,000 in 2020.

It plans to redouble that headcount again in 2021 to reach 2,000 employees by the end of the year.

“Profitability is a nice side effect, but not the goal,” he said. “We are focused on revolutionising the grocery market and capitalising on the market shifts that have accelerated during the pandemic. For us, it is about building the foundations, investing and playing the long game.”

The firm’s technology is a key driver behind the improvement in EBITDA margins of 10% in 2020 and allowed Gousto to have 30% lower overheads since the introduction of such algorithms.

Strong growth has continued in 2021, with over 25 million meals sold in the first quarter as it continues to win share from supermarkets.

Boldt commented: “Even with lockdown measures now easing, we are not seeing any sign of drop-off in growth.

“The primary effect of Covid was to accelerate the pre-existing shifts in the market relating to convenience, sustainability and health, which are areas Gousto is amazingly aligned with.”

He noted that despite doubling its sales in each of the past three years, the company is “only scratching the surface of the huge opportunity” in the UK, with 500 million evening meals eaten each week and Gousto catering for just 0.2% of those.

“Restaurants are reopening, but meals out tend to be a high-end experience and are not replacing eating meals at home,” he said.

Subscription delivery services have boomed during the coronavirus period, with fmcg giant Nestlé acquiring a majority stake in rival recipe kit business Mindful Chef in November.

Goutso has raised more than £150m in funding from investors including Perwyn, BGF, MMC Ventures and health and fitness guru Joe Wicks.

However, Boldt said he was not focused on the potential for further investment.

“Of course we always look at all options, but at this point I’m not talking to bankers all day long, I’m just focusing on the customer and making sure we provide them with better value.

“We’re really proud of the fact we’re the only unicorn globally in this space – and we’re one of the few unicorns that is profitable and purpose-driven in the world. So to us we’re hugely excited about our growth, proud of what we have achieved and there is so much more opportunity ahead to revolutionise the grocery market.”