The Business Of

Fast Food | Huel | What Do They Do?

Morning All!

Hope you had a great weekend! Last week, in the first part of The Business Of Fast Food series, we analysed the kings of fast food - McDonald’s. And looked at how the US giant has become a licensing champion.

This week we’re moving away from traditional fast food. And shifting our focus to the new age of fast food. And I couldn’t think of a better company to dive into than one of my favourite companies - Huel!

Now, I’m uncertain how many readers will have actually heard of Huel. I first heard of the company back in 2018 when my friend mentioned the meal replacement drink he was using. And I tentatively ordered my first Huel bag, uncertain of the benefits. However, would you believe it - fast forward 5 years and I’m still a daily user of Huel!

The UK startup has grown tremendously over the last 5 years. Now boasting over £100 million in annual sales. And this week will be a nice change up from the mega-companies we usually cover. In fact, Huel will be the first company we look at that isn’t a public company! And because the company is still relatively small, we’ll be able to explore the business model this week. And analyse whether the UK startup will be a huge success in the future… or not! Which is pretty much what a venture capital firm does! So, without further ado, let’s jump into what the company does!

Fuelling The Diary Of A CEO

Okay, so what actually is Huel? And who uses it? Well, Huel is basically a way for people to eat/drink healthy food in a quick and affordable way. Whilst the food comes in various forms, it always contains the 26 essential vitamins and minerals our bodies need. Now, I assume most of you won’t be familiar with the company’s product range. So let’s quickly run through them now to help set up our understanding of the company. There are products you can drink…

1. The Original - the original Huel meal, and best-seller. This comes in a powder form. A couple of scoops of powder + water + milk = lunch!

2. Black Edition - like the original, but more protein and less carbs!

3. Ready To Drink - a meal in a bottle. No need to mix anything. As the name suggests, this product doesn’t require any prep before drinking!

And products you can’t drink…

4. Hot and Savoury - spaghetti carbonara anyone?! So, a couple of years ago, Huel actually diversified their product range and moved into hot food. Couple of scoops + water = spaghetti carbonara!

5. Bars - snacks to get you through the day. These are beautiful. A tad expensive though.

6. Complete Protein - not a meal, just protein powder! The latest addition to the product range. After being mistake for protein powder for years, Huel then went and actually released their own protein powder last year.

(By the way, it might sound like it - but I can assure you that I am not sponsored by Huel!) Just a big fan. However, one chap that is sponsored by Huel is Steve Bartlett. Most of you will know him from the Diary of a CEO podcast. And his promotion of the drink has acted as a great marketing tool for the company. But what you may not know is that Steve isn’t just a fan who promotes Huel…

… he’s actually a director of the company! Which means he sits on the board of directors. Which means he helps with decisions on the company’s strategy. But does Mr Bartlett do all of this from the softness of his heart? Oh come on, you know that’s not the case by now! In Huel’s latest annual report, it showed that Steve Bartlett was paid £380k for his role as director! Not bad!

90% Of Companies Fail… So Yes, This Week Is Important!

Now, I’m sure some of you will be thinking - what’s the point of learning about Huel. ‘I’m not a Huel-user’. ‘I’m perfectly happy with eating normal food’! ‘This company’s tiny, I want to know about bigger companies’.

Welllll, yes, Huel is much smaller than the previous companies we’ve covered. But learning the journey of a startup is so important. It’s been super helpful for my overall understanding of businesses. And I really think it’ll be beneficial for all of you too! Why? Well, what were McDonald’s, TSMC and Netflix at one point…? Startups! Like Huel!

No one knew of them. They required loads of funding just to stay alive. And they went through crazy journeys to get to their positions now. The number of times Netflix were almost out of money is astonishing! Also, it’s important to recognise that most businesses fail. We hear about the McDonald’s, the Apples, the Amazons, etc. But the reality is that 90% of startup businesses end up going bust!

And on Friday, we’ll actually talk about one high-profile failure, Blue Apron. The US meal-kit company was once the hottest startup around. Valued at $3bn at the time of its IPO in 2017. But since then, the company has crashed and burned. And lost 99% of its value! Will Huel follow the path of McDonald’s or Blue Apron? Well, by the end of this week - you’ll have the inside track!

5th Jun 2023

Nigel Jacob CFA