Interview: Gousto founder’s ingredients for grocery success

In the bar of the Soho Hotel, Timo Boldt sips gingerly at a steaming mug of peppermint tea and leans back on the sofa.

Dressed in chinos and a blue button-down shirt, the German-born entrepreneur wouldn’t strike a passer-by as being the chief executive of the UK’s largest recipe box delivery business. He certainly looks a million miles away from his past life working in the City.

In 2012, at the age of just 26, Boldt decided to swap his life as the vice president of a hedge fund to found Gousto with a partner after finding himself frustrated that, after working long hours, he struggled to find the ingredients to cook healthily at home. So Gousto was born, supplying subscribers with recipe boxes with ready-measured ingredients.

“People are always going to need to eat. I think we’re in a relatively good position”

Timo Boldt, Gousto

Initially, Boldt worked out of his home and delivered the first boxes around London himself by hand. Now Boldt’s business employs over 500 people. He hopes to grow this to 1,200 within two or three years.

While the growth has been impressive, the recipe box model has run into some issues overseas. In the US, meal kit business Blue Apron has become a financial cautionary tale, struggling for profitability and haemorrhaging cash. 

When asked about Gousto’s profitability, Boldt becomes somewhat defensive. “What I would say is, without disclosing profitability, we could be profitable today but it’s all about the big vision. The key point to make here is – what really matters to us is you as a customer.” 

As so often seems to happen at this moment, the conversation quickly turns to Brexit. For Boldt, much of the success that Gousto has enjoyed since 2012 is down to its use of artificial intelligence and automation. Will a no-deal Brexit affect his business’s ability to hire the best data scientists?

“I think the incredible brand the UK has built itself over the last 40 years on talent density and innovation is at risk in some degree,” he muses. “However, we’re not seeing challenges in hiring for data science roles. We’re doing pretty well.”

However, like many of his fellow bosses in the food sector, Boldt is somewhat concerned by the affect Brexit will have on his ability to get access to fresh fruit and vegetables.

“We source all of our meat from the UK, so we’re protected on that front. But yes [it’s a concern]. However, given we don’t use anywhere near as many ingredients [as a big supermarket], it’s much easier. We only show recipes we have in stock. So, if we don’t have courgette, you won’t see anything with courgette in it.”

Boldt has planned for all possibilities and points out that even during recessions, discretionary food spend actually tends to go up, as opposed to down.

“People are always going to need to eat.” He pauses, before reiterating: “I think we’re in a relatively good position”.

Focus on technology

A year after founding the business, Boldt made an appearance on the BBC show Dragons’ Den but left without winning backing from any of the dragons.

The business’ fortunes have improved since then, and Gousto has received more than £100m in funding from a diverse group of investors, including FMCG giant Unilever. 

When asked what the core vision is for Gousto, Boldt says: “We’re working on this vision to be the most-loved way to eat dinner.”

“There are one billion meals eaten every week in the UK; 60 million people: breakfast, lunch and dinner, seven days a week,” his eyes gleam. “It’s a great statistic.”

To make this vision a reality, Boldt and his team have increasingly ploughed the majority of the money they’ve raised from investors over the years into technology – hiring hundreds of data scientists to build algorithms that power an automated warehouse.

While understandably cagey about giving too much away about Gousto’s technology, Boldt believes it allows for the business to be steps ahead of the competition, such as HelloFresh, Mindful Chef and SimplyCook, in a number of key areas.

“It’s all about how you use technology. We use it in the supply chain – so if you go into our factory, you will see all the automation that’s driven by algorithms that my team have built. The algorithms and AI allow us to trade on close to 0% food waste, which is a huge advantage for our business model,” he says.

When asked whether he has a mind to sell the Gousto technology model to other retailers, à la Ocado Solutions, Boldt grins conspiratorially

Although the online business stocks a few hundred ingredients, Boldt is keen to emphasise the level of choice it offers its customers. The founder claims that Gousto offers customers the most meal options of all the food recipe boxes, with 40 different recipes, as well as the “most delivery days, and the most delivery slots” of any in the sector.

Boldt is equally focused on ensuring that Gousto remains the most affordable recipe box service. The cheapest recipe available on the Gousto platform starts at £2.98, including free delivery.

“That’s truly mass market,” he says, proudly. “By far the most economical one in the market and people are very price-sensitive when it comes to the food market”.

When asked whether he has a mind to sell the Gousto technology model to other retailers, à la Ocado Solutions, Boldt grins conspiratorially.

“In the far future, maybe. The stuff we’re building, we could use it for different purposes. But, for the moment, we’re just focused on and being true to our vision. We’re not thinking about any of the rest of it at all.”

A food revolution

Given Gousto’s humble beginnings, the entrepreneur now believes his business stands on the cusp of something of a new food revolution: the move to personalisation.

“The biggest trends we’re seeing in food at the moment is towards personalisation, and we’re in a great position to take huge advantage of this. To us, it’s really about building a platform, capabilities, algorithms that give you as a customer what you really love.”

By contrast, Boldt believes that the supermarket giants such as Tesco and Sainsbury’s have effectively ceded this new frontier to digitally native, more agile tech start-ups like Gousto. When asked about whether he was concerned about the likes of Waitrose and Morrisons trialling their own food recipe boxes, Boldt laughs.

“I wish the supermarkets could produce amazing recipe boxes, because if nothing else that’d help us with category awareness”

Timo Boldt, Gousto

“Our technology is going to keep us ahead of them,” he says.

“Without sounding cocky, their mission is only to be profitable, and they’ve lost the licence to innovate. There’s legacy, there’s inertia, but there’s no licence for risks – no funding, no appetite for it.

“I wish the supermarkets could produce amazing recipe boxes, because if nothing else that’d help us with category awareness and, ultimately, brand awareness. But I don’t have hope. It’s too complicated for them to scale properly.”

In other words, the market share is out there to be taken, and Boldt is becoming increasingly confident that the big supermarkets are vulnerable.

Some of the data though would point to Boldt being a bit optimistic in that assumption. While the ecommerce revolution is starting to hit the food market, it’s not being affected anywhere near as much, or as quickly, as the fashion sector is.

While IGD figures show that in 2018 online grocery penetration in the UK was the second-highest in the world, it was worth just 6% of the total market, at £11.8bn. For context, last year some 15% of all fashion purchases were made online. 

However, IDG has forecast that ecommerce spending on food is expected to increase by 43.8% by 2024 to be worth in excess of £16.7bn a year. 

“Ecommerce in the grocery sector is growing rapidly, there’s been a seismic shift. If you look at fashion, you saw very slow growth and then a sudden, rapid acceleration,” Boldt says.

He is convinced that, as fewer people travel to stores to complete weekly shops, supermarkets will be further squeezed and, by extension, close more stores, which will squeeze margins even further.

“I think we’re getting closer to the inflection point where you will see this, and I’m a big believer that online penetration in grocery will jump up at some point. It’s already a pretty massive market and it’s growing nicely.”

Is the overall plan then to drive the likes of Tesco, Sainsbury’s and Morrisons completely out of business?

“No, not at all,” he laughs. “I just want to make it as easy for you to eat as possible. That’s our mission in life.”

Sustainability and the future

One thing Gousto does share with the wider grocery sector though is a burgeoning focus on sustainability and plastics.

The recipe box business announced at the beginning of the year that it was aiming to take 50% of plastic packaging out of its boxes this year alone.

However, Boldt won’t be drawn when asked whether he believes the issue to the plastics problem lies in eliminating the product entirely or making it more recyclable, believing instead that both tactics can make an impact.

“I think you can attack it from both ends. One, we’ve got to reduce plastic radically. If you think about supermarket pledges of removing x per cent of plastic by 2030. It’s pointless. Secondly, it is about recyclability. We still need plastic today, but it should all be recyclable.”

Boldt says Gousto has also been focused on cutting food waste, which the business has reduced by 40% and now operates at zero waste. 

While Boldt believes his business is in a good space, he says the future is even brighter. Currently, only one out of every five UK adults has even heard of the brand, which he says ”represents a real opportunity for growth”. 

On top of that, he says Gousto has been growing at approximately 70% per annum since the beginning. “If we can maintain anything like that growth rate, we’ll build massively,” he says. “We’ve still got a long way to go.” 

So it would seem. If Boldt and Gousto get their way, even if a recipe box isn’t currently your favourite way to eat dinner, it may well be soon.