Introduction
HelloFresh’s Q1 report was published at the end of April. In combination with current U.S. policy shifts on tariffs and immigration enforcement, HitHawk believes it is the right time to revisit its short report on the company.
At the core of HitHawk’s report is the view that HelloFresh’s business model is fundamentally unsustainable – and this still holds true. As is often the case with “Dead Man Walking” short theses, public awareness takes longer than expected to catch up. The numerous governance and conduct issues we originally uncovered have unfortunately been largely ignored by retail investors, many of whom continue to show a dogmatic and cheerleading attitude toward HelloFresh.
Q1 Numbers
The latest Q1 results strongly confirm what HitHawk predicted more than six months ago. In particular, the U.S.-based ready-to-cook meal business has seen an accelerating decline. In North America, orders and meals are down 17.8% and 19.0%, respectively – following a 10% and 11.8% drop in the previous quarter.
Part of this decline was again cushioned by price increases. However, we believe that demand elasticity is overstretched, if not already exhausted. Following price hikes, an uptick in cancellations typically occurs with delay – and may not have fully materialized yet.
Other business segments show similar downward trends. In total, revenue is down 7%, and the company posted a Q1 2025 operating loss (EBIT) of €127m, compared to a €72m loss in the previous quarter.
Mainly due to weakening demand, HelloFresh has been restructuring its logistics network since December 2024. It closed 3 of its 11 U.S. facilities, laying off more than 1,500 workers.
Politics
Given that HelloFresh’s U.S. segment is its largest, recent political developments warrant closer examination.
Overall, the impact of policy changes appears limited for now. The U.S. operation – mainly based on the 2020 acquisition of Factor75 – is a fully owned subsidiary headquartered in the United States. Since the supply chain is domestic, tariffs should have minimal effect, while Trump’s tax policy could even prove advantageous in the short term.
However, the consequences of uncovered child labor in at least one HelloFresh facility (as of December 2024) remain unresolved. The U.S. Department of Labor is investigating in Illinois. This raises further concerns that illegal immigrants may have been employed – which could expose HelloFresh to ICE enforcements.
Also, it is likely that these incidents triggered the termination of HelloFresh’s relationship with staffing agency Manpower in March 2025.
Conclusion
HelloFresh continues to face multiple structural problems that can no longer be covered up. The company’s customer base is shrinking rapidly, and repeated price increases have reached a point where they no longer support margins – they accelerate cancellations.
On top of this, the situation is worsened by serious compliance failures, including an active federal investigation into child labor and the potential employment of illegal immigrants – which could further escalate into ICE enforcement action.
Losses are deepening, and in HitHawk’s view, investor confidence now appears driven more by belief than by fact. We however expect that the mounting problems will soon become impossible for both institutional and retail investors to ignore.
HitHawk maintains its short position and continues to view HelloFresh as a company in long-term decline.