Dive Brief:

• Meal-kit company Blue Apron lost its top human resources executive, started a temporary hiring freeze of salaried employees and fired part of its recruiting team, according to Bloomberg.
• “We recently completed an internal reorganization which involved several changes to our organizational structure, including the creation of our new consumer products team and the launch of a new fulfillment center team in Linden, [New Jersey],” Blue Apron's CEO Matt Salzberg said in a statement to Bloomberg. “As part of these changes, we temporarily paused hiring for certain positions, while keeping others open, for the duration of our 2018 resource allocation process."
• The news service also reported that Blue Apron has struggled to keep enough workers on the production lines. Despite pay that is higher than minimum wage, the work is stressful, requiring employees to stand for a long time in low-light conditions and repeatedly do the same task.

Dive Insight:

The departure of Kate Muzzatti as Blue Apron's top human resources person, the hiring freeze, and the firing of some recruiters continues what has been a challenging time for the meal-kit pioneer since it went public. In late July, Blue Apron co-founder and former chief operating officer Matt Wadiak stepped down, although he remains with the company in a senior adviser capacity. The company also has been hit with multiple class action lawsuits, most notably one this week claiming it offered “misleading” and “untrue statements” in SEC filings prior to its IPO.

All this comes as the company's stock has plunged nearly nearly 50% since its June 29 IPO — an offering that raised far less cash than the company initially hoped. In its first earnings report as a public company, Blue Apron topped revenue expectations from Wall Street but posted a 9% drop in its customer base from the prior quarter as it trimmed marketing expenses.

Blue Apron's high marketing costs, coupled with the expenses required to get a new facility in New Jersey up and running, are depleting its already low money supply, which has cash and cash equivalents of $61.6 million remaining as of June 30. Some Wall Street analysts expect the company may have to look to selling more shares or getting more credit, since its costs to attract and keep new customers show no sign of abating anytime soon.

Even if the company is temporarily halting adding new salaried employees as part of other changes taking place within the business, the fact that it doesn't have an HR head and let go some of its hiring staff is disconcerting — especially for a company that, according to Bloomberg, is rapidly churning through employees, many of whom are working under challenging conditions.

Blue Apron still has time to turn things around, but if it struggles to do so quickly it could find outside help. Jana Partners, the same activist investor that pushed for the sale of Whole Foods, owned 600,000 shares — or 2% — of Blue Apron as of June 30.

While it's uncertain whether the hedge fund still owns those shares or has made changes to its ownership stake since then, it's possible that further difficulties at Blue Apron could push Jana — or another investor — to agitate for changes — including a sale of the company. In addition, Blue Apron's rough debut on Wall Street could discourage other meal kit companies such as Sun Basket from going public — finding they can operate better without the intense scrutiny they would face in the public marketplace.