Q4 2022 Blue Apron Holdings Inc Earnings Call
Speaker 1: The K? K.
Speaker 2: Good morning and welcome to the Blue Apron Holdings 4th Quarter and Full Year 2022 Earnings Conference Call and Webcast.
Speaker 2: At this time, all participants are in a listen-only mode. As a reminder, this call is being recorded today, Thursday, March 16, 2023, for replay purposes. A slide presentation has been created to accompany today's remarks and can be accessed on the Blue Apron investor relations website.
Speaker 2: Should you need assistance on this call, please signal a conference specialist by pressing the star key followed by zero.
Speaker 2: On this morning's call we have Linda Findlay, President and Chief Executive Officer of Blue Apron and Mitch Cohen, Interim Chief Financial Officer. Before handing the call over to the company, we will review the Safe Harbor Statement. Various statements that the company makes.
Speaker 2: during today's call about its future expectations, plans, and prospects, constitute forward-looking statements for the purpose of the safe harbor provisions under the Private Securities Litigation Reform Act of 1995. Actual results may differ materially.
Speaker 2: from those indicated by those forward-looking statements as a result of risks and other factors, including those described in the company's earnings release issued this morning and the company's SEC filings. In addition, any forward-looking statements represent the company's views only as of today.
Speaker 2: should not be relied upon as representing its views as of any subsequent date. The company specifically disclaims any obligation to update these statements. During this call the company will be referring to non-GAAP measures which are not prepared in accordance with generally accepted accounting principles.
Speaker 2: You are encouraged to refer to the earnings released and SEC filings where it has defined these measures, and to review the reconciliation of these non-GAAP financial measures to the most directly comparable GAAP measures.
Speaker 2: With that, I would now like to turn the call over to Linda Findlay, Blue Apron CEO . Linda?
Speaker 3: Thank you, Drew. Good morning, everyone, and thank you for joining us for an update on the business.
Speaker 3: On the call with me today is Mitch Cohen, Blue Apron's interim CFO .
Speaker 3: To start, I will give you a brief overview of our fourth quarter and full year performance, and then focus the rest of my remarks on improvements that we were already seeing in 2023. Mitch will then provide a deeper dive into our financials, as well as the recent at-the-market offerings and our cash position.
Speaker 3: As many of you know, 2022 was a challenging year for a business.
Speaker 3: In the fourth quarter and year to date, we've made significant progress in addressing those challenges.
Speaker 3: We're effectively managing our cost structure and working towards stabilizing our balance sheet, all while making progress against key customer metrics.
Speaker 3: Most notably, in Q4 2022, we achieved our highest average order value of $73.15.
Speaker 3: When compared to Q3 2022, this was driven primarily by orders from our strong core customer base who are responding well to our product offering.
Speaker 3: The added variety of our menu continues to deliver great value to our customers.
Speaker 3: In 2022, we shipped over 6.5 million orders.
Speaker 3: Our meals reduce food waste, eliminate meal planning stress, bring variety into people's lives, connect families, and help develop healthy and creative habits.
Speaker 3: We sit at the intersection of the most critical aspects of health, sustainability, and community, and we also have the opportunity to provide jobs across multiple disciplines.
Speaker 3: Our customers rave about the quality of our meals and the unique flavors we bring to their table.
Speaker 3: The value of our product is evident in our average orders per customer, which was up as compared to Q3 2022 at 4.9, an average revenue per customer, which climbed to $358 a new company record.
Speaker 3: Total customers over the 12 months ended December 31st, 2022 was approximately 659,000, a slight decline of 3% from the equivalent period a year ago.
Speaker 3: For the fourth quarter of 2022, total customers were 298,000 down 7.6% sequentially and down 11.2% from the prior year. We believe a portion of the decline can be attributed to the reduction in marketing spend that we began to implement in Q4. We ramped down our brand investment and in preparation for Q1.
Speaker 3: focused our resources on performance marketing.
Speaker 3: We're already seeing improved marketing efficiency thus far in Q1, which I will discuss shortly.
Speaker 3: Seasonal and macroeconomic pressures on consumer spending due to the inflationary environment also had an impact on Q4 performance.
Speaker 3: It is important to consider the fourth quarter within the broader context of our strategy of achieving our goal of long-term profitability.
Speaker 3: This includes our efforts to manage our cash burn. Notably, as of the end of February 2023, we've seen a reduced cash burn of over 50% year over year as a result of ongoing expense reduction actions.
Speaker 3: I will discuss this in greater detail along with how our work in Q4 is shaping 2023.
Speaker 3: We continue to execute against three strategic initiatives outlined during our last call that address the key fundamentals of the business.
Speaker 3: This means 1. Taking a more targeted approach to acquiring and retaining more profitable customers while reducing our marketing spend.
Speaker 3: 2. Driving margin improvements, and 3. Executing disciplined cost management in PT-GNA.
Speaker 3: Our focus on profitability is expected to put pressure on our top-line revenue and customer numbers in 2023. This is not to say that we are deprioritizing revenue and customer growth, but rather focusing our business objectives to support our path to profitability in the near term.
Speaker 3: As part of our efforts, we worked with our lenders to amend our debt agreement to pay down our long-term debt on an accelerated schedule.
Speaker 3: As part of our efforts, we worked with our lenders to amend our debt agreement to pay down our long-term debt on an accelerated schedule. Which we'll discuss in detail.
Speaker 3: What I will share is that this reduces our covenants and we believe it gives us more flexibility as we continue to pursue other opportunities.
Speaker 3: We are considering other options at our disposal to plan for the future success of the company. This includes potentially pursuing, evaluating, and executing financing opportunities, a business combination, or other strategic transactions.
Speaker 3: As I said before, when looking at the industry as a whole, it's highly fragmented and one that we believe is open for more consolidation.
Speaker 3: Diving deeper into our three initiatives, starting with marketing. We made significant strides over the past several months in positioning our marketing efforts towards profitability and scale.
Speaker 3: In the fourth quarter, we reduced marketing spend by 18% year-over-year to $17.1 million, in line with our commitment to a thoughtful and targeted approach to marketing.
Speaker 3: Throughout 2022, our efforts were geared towards building the foundational elements of brand equity and awareness.
Speaker 3: Today we have approximately 81% brand awareness and close to a 99% weekly retention rate for customers who are with us consistently for more than 13 weeks, which is our sweet spot in terms of retention.
Speaker 3: Having established a solid baseline, we're now focused on achieving a balanced marketing mix that is designed to propel efficient and sustainable growth. To do so, we're focused on leveraging the channels we know are efficient and investing in our dollars strategically to ensure we get the highest return.
Speaker 3: Starting in the third quarter of 2022, we began reducing our spend on upper funnel channels with a shift away from TV and out of home.
Speaker 3: We reallocated some of that spend towards performance-based and digital channels with a focus on delivering a strong cost per acquisition.
Speaker 3: We're seeing positive progress in the first quarter of 2023, and as of the end of February , we cut our cost per acquisition by half and increased our conversion rate by more than 25% sequentially. In the first quarter of 2023, we anticipate customer count will be up sequentially in line with seasonality.
Speaker 3: We do expect a decline year over year in part due to our progress as we continue to make marketing more efficient throughout 2023 towards profitability. We continue to leverage partnerships to further unlock efficiencies in our marketing efforts. This week we announced a partnership with Verizon on its new Plus Play hub.
Speaker 3: which allows consumers to manage their subscriptions all in one place.
Speaker 3: As part of the platform, we are launching Blue Apron Plus, a new savings program that unlocks exclusive deals.
Speaker 3: In addition, we continue to work with DoorDash via their DashMart storefront and have expanded the availability of our HeatNeat microwaveable product to 11 markets in the Northeast, including New York City.
Speaker 3: Turning to our second priority, in the fourth quarter our variable margin was 34.9%, a 2.7% improvement sequentially and roughly flat with a prior year.
Speaker 3: The variable margin was driven in part by the receipt of a $1.2 million credit related to a previous ingredient quality issue.
Speaker 3: Another key factor in the margin improvement is our ability to upsell customers on higher value products like premium recipes, customization options, and add-ons.
Speaker 3: For the full year, variable margin was 33.6% as compared to 35.8% in the prior year.
Speaker 3: We were able to keep margin levels relatively stable in 2022 despite the ongoing inflationary environment and approximately 40% increase in customer menu options.
Speaker 3: As mentioned on prior calls, we increase menu options by leveraging our existing ingredient pantry and adding only incremental items that we believe are of value to our customers.
Speaker 3: To drive margin improvements in 2023, we are pairing the efficiency learnings and operations from 2022 with a rollout of a new organizational structure in our facilities.
Speaker 3: This new structure establishes accountability across the entire supply chain to deliver on improved efficiency and quality.
Speaker 3: It also provides a clearer path for our teams.
Speaker 3: The initial results are promising. Productivity metrics quarter to date are hitting levels we have not seen in the past eight quarters even with an approximately a hundred and seventy percent increase in product variety over the same time period.
Speaker 3: We plan to build on this momentum and provide you with updates on our progress in the coming year itself.
Speaker 3: We are also enhancing and expanding our product offerings with an eye towards profitability. Our menu now features 84 options that address different meal moments. Notably, our seasonal boxes continue to be a hit. These boxes are created to help our customers bring to life memorable experiences with family and friends.
Speaker 3: In particular, our holiday boxes performed exceptionally well, with 2022 gross revenue more than double compared to our 2021 offering. This was in part driven by the optionality to purchase holiday themed add-ons. Last week we added our newest seasonal box, a brunch offering, to the menu available through Mother's Day. Our third and final commitment is focused on cost management with an eye towards right-
Speaker 3: in annualized cost savings, resulting in over 50% year-over-year reduction in our cash burn as of the end of February 2023. In all, we continue to manage our operations to set the business on a path to profitability.
Speaker 3: Additionally, earlier this month, we announced that the New York Stock Exchange has accepted our plan to regain compliance within 18 months with a global market capitalization listing standard. We are committed to maintaining our New York Stock Exchange listing and being in compliance across all listing standards.
Speaker 3: Before turning the call over to Mitch, I want to take a moment to thank every Blue Apron employee. From the fulfillment centers to our corporate office, they play a key role in our success and I'm proud to call them my colleagues. Thank you.
Speaker 2: With that, let me turn things over to Mitch to walk through our financials. Mitch? Thank you, Linda, and good morning, everyone. I'll begin with an update on our liquidity position before getting into the fourth quarter and full year results for the year ended December 31, 2022.
Speaker 2: Our cash balance as of December 31, 2022 was $33.5 million. In January 2023, we completed the $30 million aftermarket offering that launched in November 2022, selling approximately 29 million shares at an average sale price of $1 per share. With the completion of this aftermarket offering, our cash balance of January 31, 2023 was $3.5 million.
Speaker 2: and providing us with greater flexibility to pursue, evaluate, or execute on other potential financing or strategic opportunities. Substantially, all of the $70 million remains available. As of the end of February , our cash balance was $46.3 million.
Speaker 2: In addition, on March 15th, we amended our note purchase receivable in a move that we believe can provide us with further financial flexibility. The amendment accelerates the pay down of about $30 million senior secured notes as well as accrued and unpaid interest into four monthly installments of $7.5 million. The first installment was made in connection with the signing of the amendment.
Speaker 2: The amendment also reduces minimum liquidity covenant on a dollar-for-dollar basis corresponding to our payments, up to $10 million, until the full payment of the debt.
Speaker 2: effective use of the cash at this time as it reduces or removes covenants that previously restricted our ability to access the full amount of our cash on our balance sheet.
Speaker 2: Finally, we continue to have discussions with Mr. Sandberg and his affiliates regarding the outstanding $56.5 million private placement, of which we received $1 million in December of 2022, and the $12.7 million gift card fundings owed to us.
Speaker 2: As you recall, in November 22, we entered into a pledge agreement with an affiliate of Mr. Sandberg, which provided us with securities of privately held companies as collateral to secure the equity funding obligation. These efforts reflect our commitment to diversifying our potential sources of liquidity and removing our debt as we work to resolve the Sandberg funding delays.
Speaker 2: Our ultimate goal is to get on a path to a stabilized balance sheet and long-term profitability. Turning to the fourth quarter, net revenue was $106.8 million, down slightly sequentially and roughly flat year-over-year. The sequential decline was driven by a reduction in our customer base.
Speaker 2: and a reduction in total orders partially offset by an improvement in AOV.
Speaker 2: As Linda mentioned, average order value was $73.15 and orders per customer increased to $4.9.
Speaker 2: Price increases introduced in 2022 as well as ongoing efforts to add variety and customization to our menu drove the solid performance in key customer metrics. These efforts have served to improve the stickiness of our product to our customers while also preserving the value of our product relative to other food options.
Speaker 2: Turning to expenses, variable margin was 34.9% in the fourth quarter. This is a 2.7% increase sequentially and a 0.4% decline over the prior year period.
Speaker 2: The sequential improvement was in part a $1.2 million supplier credit.
Speaker 2: In the fourth quarter, PT-GNA costs for $34.3 million, an 8.8% sequential decrease, and a 6.9% decrease year-over-year. For the full year, PT-GNA costs for $155.1 million, a 7% increase from the prior year.
Speaker 2: The fourth quarter decline year-over-year was primarily driven by a reduction in the accrual for corporate bonuses to be paid in the first quarter of 2023.
Speaker 2: The sequential decline was, in part, the result of corporate headcount reductions in 2022. As part of our other management initiatives, we implemented a reduction in corporate overhead and administrative expenses such as consulting and recruiting fees and travel and entertainment expenses.
Speaker 2: We continue to look for further efficiencies and are making a portion of our Linda, New Jersey and Austin, Texas spaces to sublease out unused square footage. Other expenses for the fourth quarter was 1.5 percent representing severance related expenses associated with the corporate workforce reduction announced in December of 2022. Looking at the bottom line, we reported a net loss of 21.8 million for the fourth quarter compared to 20...
Speaker 2: the deeper power loss was 79.3 million, in fact the 39.2 million in the prior year.
Speaker 2: of $79.3 million compared to $39.2 million in the prior year. As Linda mentioned, our Q1 results...
Speaker 2: to date are an early indication that our efforts are showing solid progress. We expect customer count to be up sequentially following seasonal patterns, and efforts to drive efficiency and improve our cost structure have already allowed us to realize a more than 50% annualized reduction in cash burn by the end of February , or through the end of February .
Speaker 2: Our productivity metrics are also hitting their highest levels in the past eight quarters, and we have substantially lowered our cost per acquisition.
Speaker 2: Before I turn it over to Q&A, I'd like to quickly discuss our outlook. In line with our comments last quarter, we are not providing any forward guidance at this time. As a business, we remain focused on achieving EBITDA profitability and stabilizing our overall balance sheet and liquidity position.
Speaker 2: With that, let me turn the call over back to the operator to take your questions. Operator? Quick plugin changing...
Speaker 2: We will now begin the question and answer session. To ask a question, you may press star then 1 on your touch tone phone.
Speaker 2: If you are using a speakerphone, please pick up your handset before pressing the keys.
Speaker 2: To withdraw your question, please press star then 2. At this time, we will pause momentarily to assemble our roster.
Speaker 2: The first question comes from Maria Rips with Canaccord. Please go ahead.
Speaker 4: Good morning and thanks so much for taking my questions. First, understanding that you're not providing forward guidance, can you maybe discuss whether you're expecting to see a typical seasonality in Q1? So you did mention sequential custom additions, but do you expect to see sort of increase in revenue compared to Q4? And could you share any insight on what you've observed?
Speaker 3: focusing that acquisition on Q1, but still with much reduced and more efficient marketing spend. So we will see some seasonality, but again, maybe more muted than in past years as far as the change between Q4 and Q1 as we continue to rationalize marketing spend. What we are particularly proud of and I think is an incredible accomplishment is this fact that we are able to more efficiently acquire customers with that lower marketing spend.
Speaker 3: by about 50% and dramatically increase conversion. So that is playing well for Q1, but yes, we will see some of that seasonality come through while we continue to gain efficiency. I think the other aspect that both Mitch and I mentioned, it's pretty interesting, is we are seeing levels of productivity we haven't seen in two years.
Speaker 3: and productivity was quite high, but with significantly more complexity, with about 170% increase in complexity in our menu during that time. So we're seeing both good seasonality, normal on the top line, and then also some improvements in bottom line as well.
Speaker 4: Thank you Linda. That's very helpful. And then my second question is around your partnerships. So how have your partnerships with Walmart and Amazon have been performing since you launched them last year? And is there any material contribution to revenue? And what are your expectations for these channels in 2023?
Speaker 3: to take a same-day order and deliver it immediately. That's actually something that's quite powerful for us, and we continue to see that opportunity expand for other potential uses in the future. So, they're good channels for us, but not necessarily material.
Speaker 2: I'd like to see not yet material hopefully in the future.
Speaker 4: Got it. And maybe one more if I could. Could maybe provide us with an update on your product portfolio given your focus on liquidity and sort of cost reductions. Are there any sort of recipes or meals that you are maybe de-emphasizing or advocating more to customers given sort of maybe different variable cost structures? Thank you. That's actually a really interesting question and an important aspect.
Speaker 3: We do continue to believe that adding variety is important, both for growth of the company, but also getting to profitability, because obviously with more variety, you tend to get these higher engagement numbers. So all these customer KPIs, including AOV, are very related to the added variety.
Speaker 3: Some of the AOV may, you might see that fluctuate going forward simply because of the promotional aspects and that comes out of AOV, so we might play with that as we think about adding more variety.
Speaker 3: So it's important to note, but that doesn't necessarily mean a negative impact on the overall business because it's the mix that actually matters. So that variety is part of why you see this record average revenue per customer continuing to go up and so it is an important part of our strategy. We've been able to refine a lot of our sourcing as well into Q1 of this year.
Speaker 3: In fact, the seasonal boxes that I was talking about tend to be very good margin for us and good attractiveness for bringing in customers. So the mix is actually quite healthy and we plan on continuing to expand it, but maybe at a slightly slower rate of expanding variety than we have in the past while we focus on profitability. And our customer metrics are up.
Speaker 3: Yeah, all of our customer metrics reflect that with the increased numbers. Sorry. Yeah.
Speaker 4: Thank you, that's very helpful. Thank you very much for the call. Absolutely, thank you Maria.
Speaker 2: The next question comes from Ryan Myers with Lake Street Capital Park Market. Please go ahead.
Speaker 2: Hey, good morning guys. Thanks for taking my question. This is kind of a follow up on the last question, but you obviously saw another strong quarter of AOV growth. Just kind of wondering if you can unpack that a little bit more. How much of that came from price versus how much of that just came from customers spending more on the platform, adding more to the box.
Speaker 3: helpful to kind of understand what's going on there. Sure, it was about a 50-50 mix Ryan. So about half of it came from product expansion and continued growth of people adding more to the box. And then the other half came from the continued impact of our price changes.
Speaker 3: which we did pretty strategically to still stay within a good value within the market and against competitors. So it was about a 50% split. Okay, that's helpful. And then throughout the year, obviously we've seen kind of a continued decline in the number of customers in order count. But I know looking back on Q1 and Q2, there was...
Speaker 2: some pretty significant investments being made into marketing. Are we just not seeing some of that flow through quite yet or we didn't see that flow through in 2022 and now we're starting to kind of see some of that here in Q1. I know you guys gave the commentary about the acquisition cost being down but the flow through being even more positive.
Speaker 3: Or is there anything from like a customer demand perspective that we should be aware of? So we did see some of the impact of inflationary macro trends on Q4, but a lot of it was also just the pullback on marketing spend as we started to focus on more performance channels. And frankly, we pulled back on things that would impact Q4 in order to support Q1.
Speaker 3: So we are seeing much more efficiency in our marketing channels and again we're continuing to play with the mix between promotion and marketing spend because that's actually an interesting lever for us going forward. But yes, the decline that you saw was actually due to both a combination of yes, some macroeconomic trends.
Speaker 3: while our core customer base remained very strong in spending more. And then we also did intentionally move some marketing dollars and reduce some marketing dollars in order to focus on Q1. But a lot of the spend that we made earlier in 2022 really focused on building that upper pool of customers, so that brand awareness of 81% that I was talking about earlier.
Speaker 3: And that will serve us well in 2023 as we apply performance marketing to those on driving the customer base. But our focus right now is making sure that we're getting significant return on investment on our customers, because it's all about getting adjusted EBITDA lower throughout the year, and that's really where we're going to be spending our time. So you will see some, what I would call quieter numbers.
Speaker 3: in customer numbers and that's intentional as we drive towards profitability. Thanks for taking my questions.
Speaker 3: in customer numbers and that's intentional as we drive towards profitability. Got it. Thanks for taking my questions. Thank you.
Speaker 2: Again, if you have a question, please press star then one. The next question comes from Dan Coros with the Benchmark Company. Please go ahead.
Speaker 2: Again, if you have a question, please press star then one. The next question comes from Dan Coros with the Benchmark Company. Please go ahead. Great, thanks. Good morning.
Speaker 5: Linda, I guess this is the topic of the day. I'm going to stick with it just a little bit, maybe a little bit more nuanced, I guess, on sort of the marketing front. Can you talk a little bit about on, first of all, from your existing customer base, where you're starting to see, it seems like incremental traction again, and I know that wasn't.
Speaker 5: sort of a historical strategy and a refocus point here. I mean, this kind of toggle between promo, new offerings, but can you talk a little bit about like how exactly you're marketing to them to drive the upsell? And then on the new customer ad, you can see,
Speaker 5: count, you know, I guess we would expect that obviously to be muted.
Speaker 5: the way that you go to market is it kind of like again with that brand toggle verse with the the contra toggle versus Direct marketing is that sort of like the market is more accepting of a lower upfront price and those people come in and subsequently Convert, you know with incremental add-ons because you're able to sort of offer them Looks like better upfront deal and to have the strong brand awareness
Speaker 3: or just help me kind of think through some of those nuances. Thanks. Sure, so what we've talked about before, we do continue to see in marketing for meal kits in specific, which is people are very price sensitive at the beginning, trying a meal kit. And then once they're in, they are far less price sensitive.
Speaker 3: So a big part of what we think about going forward is how do we actually balance those promotional dollars? Not just any promotional dollars, and I'll tell you a little bit about kind of some of the things that we're doing there where we're focusing a lot more on the conversion side of the funnel. But balancing those promotional dollars with media spend.
Speaker 3: because we have the ability to sort of say, okay, let's target fewer customers with a better promotion, bring them in, and then the lifetime value gets higher as they come in, because they are engaging with those additional products and those additional add-on services, again, including some things like those seasonal boxes.
Speaker 3: So it's just continuing to test, test, test, test, and make sure that we're driving the best balance between those two, because the price sensitivity coming in does not necessarily represent what's potential for long-term health. It's more about demographics and psychographics. So you'll see our media dollars go down.
as we focus on some of those healthier targets. And then you will see us playing with some of those promotional dollars to attract those media targets, but only paying for the conversions of those. In some of the channels that historically have been a little bit more about overall traffic and registrations, like for example, affiliates.
we're getting much more focused on the conversion and the health of the customer getting to that 13 week mark that we were just talking about. Does that answer your question? Yeah, no, that's helpful. And I guess it's obviously too early to ask about sort of.
you know, initial new cohort retention from some of the new plans. I guess I'll call that a feature call.
Yeah, we can save it for future calls, but what I will say is we are very good at marking behavior throughout the entire early stage process, and so we are seeing strong behavior from their early behavior patterns of order rate, etc.
that tell us that this mixed play is gonna be very interesting for us in 2023. Okay, well that's helpful and a better answer than I expected this early on. So, a tip-raffle on this.
that this mixed play is gonna be very interesting for us in 2023. Okay, well that's helpful and a better answer than I expected this early on, so. It's a pretty helpful amendment. Just on the clock, guys.
Well, yeah, I know, that's the whole point, right?
So, the other question, just on the cost savings front, obviously, so the other key components here, super helpful on the CPA metrics and the productivity. Just talk about sort of the phasing in, timing, some of the cost savings efforts, and look, obviously, we saw...
egg prices continue to finally come down. Those are ridiculous. How do we think about sort of the mix of variable versus fixed and incremental opportunities as we work our way through the year? And Linda, just conversely, if you do get better traction with your marketing efforts, is there a point at which you say, hey, listen, this is working super well.
while still reducing costs. And for that, for us, that's a lot about productivity and that continued management of food waste. So again, this is sort of that secret that most people don't understand about meal kits and continues to be really important, not only for the company but for the customer. The reduction of food waste, eliminating that 40% that most, you know, 40% of food in the US is mostly thrown out.
we don't have that because of the fact that we order exactly what we need and we send the customer what they need. So that is the key along with labor productivity, which has improved greatly. As we said, we're seeing numbers we haven't seen since 2020, I guess, in productivity.
And those two things in combination really help manage some of those food inflation costs. I think some of the challenges we had last year was we were struggling a little bit with inflation from all aspects of the supply chain. And this quarter we're already seeing significant improvements in being able to balance out both our food purchasing costs as well as increasing productivity in our fulfillment centers.
So no change in quality, but much, much more agile purchasing processes that will help us with that. On the marketing side, I do completely believe in marginal ROI marketing spend. So as we continue to test some of these different nuances, and as we continue to manage the capital structure of the business.
we will absolutely invest more if we can do it at the right return on investment. I'll be honest with you, for the most part, we'll be looking at shorter return on investment right now, and then as we fix the capitalization of the business, we can look at still very efficient paybacks, but allowing us a little bit more fromaire
all of it.
You did. Thank you. Ladies and gentlemen, this will conclude today's question and answer session. I'd like to turn the conference back over to Linda Findlay for any closing comments.
Thank you everyone for your time today. We look forward to providing an update on all of our efforts soon and in the meantime, if you have any additional questions, please don't hesitate to reach out to us directly.
The conference has now concluded. Thank you for attending today's presentation. You may now disconnect. No one else has left the call.
So Pro.