WATCH: Factor_ meal delivery service makes healthy eating simple
"We hit on the holy trinity of food - from a taste component, from a nutrition component, and from a convenience component," co-founder and CEO Michael Apostal told FoodNavigator-USA.
Factor_ is a fully-prepared meal delivery service with a weekly rotating menu of breakfast, lunch, and dinner options that are put together by gourmet chefs and nutritionally optimized by dietitians. Every meal is free of refined sugars, gluten, soy, hormones, antibiotics, and GMO ingredients, according to the company.
Apostal took over the business in 2015 after working for a number of years helping to grow and scale early-stage consumer brands as a junior partner at VC firm 2x Partners. His real passion, Apostal said, was helping early-stage startups and entrepreneurs develop their business, products, and market positioning.
Through a business school connection, Apostal was introduced to Nick Wernimont, the CEO and founder of Factor_75 who had launched the business in late 2012.
"When I came on, we didn’t have a lot of runway from a capital perspective and we were losing money," said Apostal. The company had supply chain challenges and inefficient processes in place to deliver to subscribers.
"At the end of the day, the most important thing is the product and the customer experience. We were lacking on a variety of fronts," said Apostal.
However. Apostal saw the market need for a product and service like Factor_.
Cutting down on time-to-mouth
"I thought that the product market fit was ideal. Consumers are time constrained today, cooking is time intensive, it’s challenging eating the right way. Here’s a business that allows you to hit on certain dietary lifestyles and uses the highest quality ingredients," he said.
"From a time to mouth standpoint, I thought it was really interesting. All of our meals are two and a half minutes in the microwave, five minutes in the oven. If you look at the broader meal delivery category, the companies that are performing optimally today, are those with the shortest time to mouth."
Over the course of four years, Apostal invested in the business, led the marketing efforts to rebrand Factor75 as 'Factor_', brought on new people to the team including culinary chefs to create its meals, and opened a 25,000-square-foot facility just outside of Chicago. Factor_ has grown from shipping nearly 1,000 fresh meals weekly to their current rate of over 75,000 meals a week from its new facility.
The company delivers fresh, fully prepared meals consumers can eat for dinner or lunch that are ready in less than three minutes in the microwave or five minutes in the oven, as well as a variety of breakfast and snack options to choose from.
"Because we're a weekly subscription, we're constantly looking at lifetime value (a prediction of the net profit attributed to the entire future relationship with a customer). And lifetime value to me, has always been a function of product and customer experience, they're directly correlated," Apostal noted.
"We're constantly trying to drive up the overall blended average of those meal ratings on a week to week basis, and over time we've driven up over 1 point on a 1- to 5-point scale."
Improving the user experience
Apostal and his team managed to improve the ratings on its meals -- and as a result, lifetime value -- by creating an easier to navigate user interface on its website and mobile app, as well as improving the quality of its meals by recruiting classically-trained chefs and registered dieticians to create its revolving weekly food menus.
The average price of a meal can range from $11-15 depending on the type of subscription. As a result, Factor_ has gained the most traction with consumers between the ages of 30 and 55 who are college-educated and make $65,000+ in annual income, according to Apostal.
The company is continuing to do more pyschographic research, which includes Apostal making 10-15 calls to customers per day, to determine what motivated someone to subscribe to Factor_.
