Ladies and gentlemen, greetings and welcome to the Goodfood Market Investor Presentation. At this time, all participants are on a listen-only mode. If you have not already done so, please close all other programs on your computer. You may submit a question via the web at any time by using the "Ask a Question" feature located on the left side of your window. If anyone should require operator technical assistance during the program, please push star zero on your telephone keypad. It is now my pleasure to introduce your host, Glenn Axelrod. Thank you. You may begin.
Thanks, Adam, and thank you everybody for joining our webcast today with Goodfood Market. The purpose of today's presentation is to introduce the company and to give a better understanding of the business through a PowerPoint review and discussion with management. The discussion will be led by Co-Founder and CEO, Jonathan Ferrari, who is also joined by company CFO, Philippe Adam. We're going to break for Q&A at the end of the formal presentation, and when we do break, we encourage Q&A to take place. A couple of quick reminders. This is a teaching call and geared towards helping investors better understand the business. Any specific high-level detailed quarterly type questions should be emailed to me, and I'll forward them to management for direct feedback. We're going to like to keep this call at a high level to help us better understand the business in general.
Also, as the company has a financing pending, questions not covered by the filed prospectus will have to be deferred to a later date. We doubt this will be an issue, but just an FYI. Finally, just a reminder, we are only taking questions via the web portal. If you are listening via the telephone, please access the web link sent earlier to ask a question. Just a reminder that you're going to be advancing the slides on your own today using the arrow keys on the top right-hand corner of the presentation. You can also expand the PowerPoint using the expansion feature in the top right of the PowerPoint. If these arrow keys should disappear, simply hover your mouse over the top right portion of the PowerPoint on your screen, and they'll reappear.
If for whatever reason your audio is having an issue, a dial-in phone number is provided. Remember, you can submit a question that you'd like management to address using the question text box within the Webex portal at any time. I'll ask the question on the air for everyone to hear, and management will then answer. I'm not going to reference any names, we'll simply read the question asked. If I can't get to your question online, I'll come back to you via email. If for some reason you're experiencing any issues once we start, please remember you can email me at glenn@grecolearo.com. I will be happy to assist. I'm not going to read the forward-looking statements, but I simply state that they apply and I reference them on page two of this PowerPoint. With that said, once again, thank you for joining us.
Remember, this is fairly informal. We do encourage Q&A to help you better understand the business. I'll turn the call over to Jonathan to start his part of the discussion and presentation.
Thank you very much, Glenn. Jonathan Ferrari here. I'm the Co-Founder and CEO of Goodfood. I'll invite you to turn to page three of the presentation. You'll hear a little bit more about my background. I'm the Co-Founder of Goodfood. I started the business close to five years ago now. I am a Montrealer through and through. I was recognized as one of Canada's top under-40 Canadian business leaders in 2017. I was also recognized as one of EY's Entrepreneur of the Year in 2018. I'll let you introduce yourself.
Hi. Philippe Adam. I'm CFO. I joined the company two years ago. I'm in charge of finance, treasury, accounting, and strategy. Before joining Goodfood, I worked in private equity and investment banking at National Bank, and before that, I started my career at Deloitte in.
Moving over to page four. A few key investment highlights. Goodfood is the number one home meal solution brand in Canada. What does that mean? We have an online website, goodfood.ca, where we provide meal solutions for our members on a subscription basis. Our members sign up for a weekly delivery. We will deliver ready-to-cook meals anywhere across Canada on that weekly subscription basis. We have 126,000 active subscribers. Those are households across Canada that subscribe to our weekly delivery. That represents approximately 1% of the Canadian population. The key investment thesis behind Goodfood is the grocery industry in Canada is about CAD 130 billion. There are some pretty significant changes that are happening in the grocery business and across the entire retail industry and retail sectors.
There's a significant amount of CAD that are shifting from offline stores into online destinations where consumers can purchase products and services that they used to purchase offline. Today, Goodfood has captured CAD 168 million in annualized revenues from meal solutions that consumers used to buy offline and that are now buying online. That gives us the leading position in our industry across Canada. We typically have approximately 40% the Canadian market. We started the business primarily in Eastern Canada. We were servicing Ontario, Quebec, and the Maritime provinces for the first two years of operation. Approximately a year ago, we launched our Western Canadian operations out of a fulfillment center in Calgary, which we'll talk to you a little bit more about later on in this call. That's given us the ability to service Canadians coast to coast.
Throughout that rapid growth, we've been averaging approximately 20% month-over-month growth since 2015. We've been able to achieve positive EBITDA in our early, more mature market. We've also been cash flow from operations positive for two quarters in a row. We've been able to, and we'll talk to you a little bit more about our strategy, but follow a strategy of very rapid growth while being approximately breakeven from a cash flow from ops perspective. The last point on this page that's important to note is the management team, including myself, the founders, and some other key parts of the management team, own more than 30% of the shares in the company. We really have a dedicated, aligned team that's working for the success and continued success of the business. I'll let you move on to slide five.
Yeah. Company overview, page five. As Jon said, we started in Montreal, and still supported there. We have over 1,500 employees across Canada between Montreal and Calgary city, and 126,000 active subscribers as of November 20th, which was one of our Q1. We now have the largest infrastructure in Canada for a meal kit company, with 200,000 sq ft, 155,000 sq ft in Montreal, distributing the expansion of 72,000 sq ft that we announced in the fall, which should be completed next summer, and an additional 15,000 sq ft in Eastern Calgary. We're listed on the TSX. Since June 2017, we've raised CAD 35 million of capital. That's excluding the current dual financing that just closed this Friday for CAD 35 million. In total, CAD 60 million of capital raised to date. Moving on to slide six, business model.
The way it works at Goodfood, when a client places order a meal kit on our website, we receive a payment, let's say on a Wednesday. They want to receive the box on the next Sunday. Then we place the orders with our suppliers. We have direct relationships with more than 40 farms. We deal with distributors as well, mostly in Canada and some in South America and the U.S. Then the box gets delivered to the client, let's say on Sunday, but we only pay our supplier on average 45 days. The range is between 10 and 90 days. It creates a negative working capital structure, which give us fuel to further growth. Like Jon said, the last two quarters we were cash flow positive, even though capital conversion is still positive and the operative did start with negative.
That kind of negative working capital structure that Costco or Amazon as well. Really helpful to finance our growth. We also have a just-in-time inventory, so we only order what we need. We know exactly what the customer is going to order, and that creates minimal food waste, close to 1% mark, which competitors that would be to the grocers who have close to 10% waste. That's the core business model. I'll let Jon continue with slide six.
On page eight, there's a little bit more detail about the facilities that we've built across the country. This is about, we have approximately 200,000 sq ft of purpose-built manufacturing and fulfillment centers across the country. This leads us to have the largest direct-to-consumer perishable goods supply chain in Canada. With this capacity in Montreal and Calgary, we figure we have approximately CAD 500 million of total revenue capacity across the country, with approximately CAD 400 million in Eastern Canada through the Montreal facility and approximately CAD 100 million in Calgary for the Western Canadian facility. On page nine, we go through a little bit more detail in terms of how we think about what business we're in and the total addressable market that we're going after.
Understanding from the slide before, on slide eight, this national direct-to-consumer perishable goods supply chain allows us to deliver ready-to-cook dinners, which is currently the vast majority of our business. It's the first bar on the left-hand side of page nine. That being said, through that same infrastructure, we're able to solve other meal solutions for other day parts, as well as meal solutions that require different levels of engagement, for example, through our prepared meal segment. If you think about the need that we're solving from a consumer perspective, every day, three times a day, every single consumer is asking themselves, "What am I going to have for breakfast? What am I going to have for lunch?
What am I going to have for dinner?" We are uniquely positioned to be able to answer that question for our consumer with meal solutions for each part of the day, for breakfast, lunch, and dinner, as well as meal solutions that require different levels of engagement. A prepared meal, for example, that would be ready to heat and serve on busier days of the week, whereas on other days of the week when the consumer would like to engage in a baked-at-home-from-scratch, ready-to-cook dinner, we would be able to address that need in a way that's mix and match within the same Goodfood delivery. We figure that throughout these different segments, we have approximately CAD 9 billion in addressable market, and that's a very small segment of the CAD 130 billion overall grocery industry in Canada.
We intend to build leadership position with consistently curated, delivered directly to the consumer. On page 11, there's a little bit more detail about some of our direct competitors. Of course, our indirect competitors would be the major grocery stores where a consumer would have previously purchased ingredients to make their meals. From a direct competitor perspective, we looked at website traffic data as a proxy of the competitive landscape or market position. As you can see within the chart on page 11, we've been able to lead the market in Canada on pacing delivery public in 2017. All right, continuing on page 13.
Yeah. On page 13, we talk about subscriber growth. This will be carried on from slide 11. It's data as of November, but in January 2019, we surpassed the 1 million mark in terms of website visits. The momentum is great. If I continue on slide 13, subscriber growth. Last quarter was a record quarter with a net new add of 37,000 new members. As of the end of the quarter, we have 126,000 members across Canada. Really what's great for our business is the loyal customer base keeps growing, meaning, if you stay with Goodfood for several months, it becomes embedded into your lifestyle, and you, instead of ordering about once a month, you keep ordering almost every week, and you end up ordering CAD 4,000 or CAD 5,000 a year with us. The loyal customer base are key to it.
We're seeing growth in our member base, they are ordering more, that's why, depending on the seasonality, we see higher revenue growth than customer growth because the loyal base is growing and it's these guys who are increasing the average annual revenue per member. Moving on to page 14, revenue growth. Last quarter, with our last 12 months, we surpassed the CAD 100 million mark in terms of gross subscription-based sales. Like Jon mentioned, our gross subscription-based sales run rate stands at CAD 168 million as of last November. We are one of the fastest-growing companies under TSX in terms of revenue growth. We're the fastest for a couple of quarters now. We're on the fence, if I'm not mistaken, but over a 5-year growth, the average quarter-over-quarter growth is 39%.
Some of the main drivers are our model, recurring subscriber base, the loyal customers I just mentioned, and also that what Jon mentioned, the introduction and adoption of new product offerings, the launch of Western Canada contributing to the growth as well. This combination of all I've just mentioned, we give back to our members. Moving on to page 15. On the left side of the slide, we have our gross margin. Last quarter, our gross margin was at 37.7%, 27 percentage points in the last 12 months. We're able to achieve actually economies of scale. The more we grow, the better the terms are with our suppliers in terms of structure of packaging, in terms of shipping. We're getting better terms because we're bigger, but also because of the density we get with in-person and code.
With the new carriers who deliver our box, if some carrier was delivering one box out of Coquitlam, a year ago, and now he's delivering 20 boxes, the price is not the same. That gives us a good leverage on the margins. As well as automation. We've been focusing on automation for a while now, several quarters, and we see the results on our margin. For the past 12 months, the biggest driver for the improvement. On the right-hand side, you have our cash position at CAD 25 million, and that was, I think, Q1. Before the bond deal that we've announced and that you showed this Friday.
The cash flow from ops. Like Jon mentioned, we had cash flow from ops positive for the last few quarters. That total approximately CAD 5 million of cash flow from operations generated. Moving on to slide 16. That's Goodfood growth flywheel. I think we've alluded to this already, but our strategy is really to grow subscriber base and our revenues. That's number 1 for us. Then that give us an increase in economies of scale. That translates into a lower cost structure. We also invest in automation, and that gives us, like I just mentioned, gross margin expansion. Instead of taking the savings and the profits, we reinvest them into value proposition to members. For instance, we're bigger, we have economies of scale on food. When we're buying 1,000 lemons, now we're buying probably 10,000 lemons. We're not paying the same price.
We reinvest the savings into the value proposition to probably give more food to the customer, better quality in terms of protein. We're repricing food to improve the value proposition, and therefore translate into grow subscriber, more bigger order values, higher order rates, and more revenue for us. For us, our strategy is really to invest the profit in order to grow the business and the customer base. Moving on to slide 17. At the left-hand side of the slide is our current cost structure. Gross margin was at 38% last quarter. But in there was a drag coming from the Canadian operations because it's a new operation. We only started it in last year. New products drive as well to a margin that is more limited at 40%.
We aim to have an adjusted gross margin of 45% when we get to scale, and we'll be able to achieve the 45% through additional investment in automation. Right now, our processes are about 60% automated, and we aim to be at 75%. If you add economies of scale, we think the 45% gross margin is something that we always hit and can even be surpassed. After our marketing expenses represent approximately 40%. We're going to continue to invest in marketing, the dollar investment will continue to go up, but as a percentage of sales should go down. Therefore, we are aiming at an EBITDA margin of 15% when we're going to be at scale. Moving on to slide 18. That's our automation investment track record.
When we moved into our new e-fulfilment center facility in Montreal in September 2017, we started to invest in automation quite significantly. In terms of labor costs, we are able to reduce them by 40% since September 2017. With additional investment in automation, we are aiming to reduce labor cost by another 30%. Therefore, this will be translating to gross margin points and is why we are aiming to grow the full year to a 45% gross margin. Jon, I will let you continue. We will take questions.
Yes. Thank you, Phil. On page 19, just included here before we turn to the Q&A session. Through the CAD 25 million equity bond deal that we will be closing on Friday, we will be preparing to use this capital to bring Goodfood to its next phase of growth. We will be investing in our ready-to-eat solutions that are healthy, tasty, and ready in less than one minute. We will be scaling our prepared meals and see increasing penetration of the Goodfood subscriber base across Canada, in eastern and Western Canada to continue to grow. We will be investing in automation across our production facilities, which will improve labor efficiencies and improve gross margin. As we continue to grow our market position, we will be delaying short-term profitability in order to maximize longer-term shareholder value.
Building the scale, building our market position in order to gain both cost efficiencies on the food side and on the delivery side to be able to build a really sustainable moat around this new business into the future. With that, we are happy to take questions. Thank you for your attention.
Perfect. Thanks, Jonathan. We have got a bunch of questions in the queue. You may have touched on some of these points, but I will ask the question anyway, so maybe you can expand on the points. What are the reasons for limiting current operations to Canada, and do you have any plans to expand into the U.S. market?
The Canadian market and the U.S. market are quite distinct from a food supply chain logistics perspective, and there's a lot of cross-border issues to be able to deliver either from the U.S. to Canada or from Canada to the U.S. To be present outside of Canada would require facilities and a supply chain outside of Canada. Our focus to date has been on building our market position and building the density within the Canadian landscape. Given that we're at approximately CAD 170 million of annualized sales in a market which we expect to grow, just in Canada, to CAD 9 billion, the investments that we make today are focused on the Canadian market.
Okay. Super. Thank you. What is the average price paid by a consumer, and does the consumer pick all the food items?
We have a number of different plans. If you think of the way that we've segmented our client base, we have three age groups that we've created product offerings for. The first age group would be the 25- to 35-year-old young professionals. Primarily what they're purchasing is our Easy Prep plans, where all of the ingredients are pre-cut and some of the cooking is already done. You can get dinner on the table in approximately 15 minutes. That price point will be approximately CAD 12 per person, per meal. Our next key group is our family segment. The meals are from our Family Plan that are specifically tailored, designed for kids and parents alike. The price point for our Family Plan is approximately CAD 8.75 per adult portion. Depending on the age of the kid, an adult portion could feed approximately two kids at CAD 8.75 per adult portion.
As we move into our empty nester age category, we have primarily our Classic Basket that's targeted towards empty nesters. Classic Basket are recipes that you cook entirely from scratch. The ingredients are not pre-cut or pre-cooked. Those meals start at approximately CAD 10 or CAD 11 per serving. The Classic Basket is around trying to create a totally different culinary experience with some unique flavors and unique ingredients that you might not have thought about including in your weeknight cooking.
Okay. Super. Thank you. Can you comment on the company's strategy related to food allergies and how you deal with that for organic offerings and free-range animals?
Sure. From an allergy perspective, all of our meals are prepared within the same facility. We can't guarantee for any severe allergies that an allergen would not have come into contact with any specific meal or any specific ingredient. However, we do label in the client section of our website which meals contain which allergen, we'll be able to let our customers know which meals contain nuts or dairy or soy or any of the other common allergens. Depending on the severity of their allergy, we do have some clients that will order the meal and leave out the allergen. Of course, we can't confirm that it's completely untouched. The second question was around-
For organic and free-range animals.
We do have some ingredients that we source organically for free-range, but we don't currently have an entirely organic or free-range plan or box today. Something that we could develop in the future, but we've been focusing on trying to target what we consider to be the largest piece of the market first. Over time, we'll be developing options for organic diets, having some higher-end free-range meats, for example, as well, focusing on some other dietary plans, such as diabetes-focused nutrition, focusing, for example, on halal or kosher techniques. These are some that we would see being able to address further down the road.
Okay, super. Thank you. How do you see the acquisition of Chefs Plate by HelloFresh creating a larger competitor in the Canadian market? Do you expect a more competitive environment in the future as a result?
Overall, what we've seen is two things. Following the acquisition of Chefs Plate by HelloFresh, Goodfood continues to be the number one best-selling home meal solution brand in Canada. HelloFresh and Chefs Plate are being maintained as separate brands. While in total this fiscal growth, HelloFresh has consolidated Canada to remain the number one best-selling brand, which will continue in turn from a consumer perspective and also important from a network effect perspective, because a lot of our sign-ups come from referrals from friends and family members that are encouraging people to try the food service. The second point I would say is, generally speaking, we've seen some consolidation within the industry as something that we've expected and something that we think is positive for the industry.
If you compare the Canadian market to the U.S. market, there are many, many programs in the U.S. that are going after the same customer. I believe the latest number is 150 different home meal solution brands in the U.S. Whereas in Canada, the top two companies own approximately 80% of the market in Canada. We view that this consolidation is actually quite positive for the players in the Canadian market and lead to better customer acquisition costs and unit economics than you might see in an industry like the U.S. market.
Thank you. Can you comment on what is the lead time for an order? In other words, put it at ten A.M. on a Wednesday. When can you get it?
There's approximately, depending when you order, there's a 3- to 5-day lead time between when the order is placed and when a customer receives the order. That's something that might seem long for the first time a customer places their order. We remind them that this is a subscription weekly delivery. Whatever that timing of the first delivery might feel a little bit long, the subsequent deliveries will be arriving about a week later. Which is kind of perfect in a product life cycle, because the meals that we deliver on average have approximately a 7-day shelf life. You'll get a week's worth of meals, and they'll be good in your fridge for approximately 7 days. By the time you're coming to the end of your meals, you're receiving your next week's delivery.
We focus on not so much trying to reduce the lead time between an order and delivery. Focus on keeping that lead time intact right now because it enables us to be much more cost effective from a delivery perspective and from a food purchasing perspective. It makes sense for the customer once they get onto our cycle.
Great. Thank you. Do you believe your meal kits will ever be available to be bought in grocery stores?
We've seen some key players in the space get into brick-and-mortar retail. In Canada, MissFresh was acquired by Metro a few years ago. They've been selling MissFresh meal kits in Metro stores. In the U.S., Albertsons purchased Plated, which was the number 3 meal kit in the U.S. at the time. They introduced Plated into their stores. Home Chef was acquired by Kroger last year, I believe. They've also been introducing Home Chef branded meal kits within Kroger stores in the U.S. It's something that we're seeing internationally as becoming a little bit more popular. There are some unique challenges that come with brick-and-mortar retail. It becomes more difficult to manage inventory, manage waste, and also ensure that the quality of the product and the shelf life of the product matches consumers' expectations.
The second challenge is making room in the margin for this to become an attractive product for a retailer. So we're following other companies in other markets closely. Perhaps when we feel confident that those two challenges can be addressed, it's something that we might do in the future.
Great. Super. Thank you. Can you talk about, I'm not sure if you can or if you need this public, what is your average number of consecutive weeks per subscription, and what is your average subscription cost, either on a monthly or yearly basis?
These aren't numbers that we disclose publicly. Philippe, is there any comment that you want to give based on public disclosure?
Yeah. We don't disclose these numbers, in terms of the average revenue per subscriber, if you look at our run rate of CAD 168 million, you divide it.
That subscriber number, you get approximately CAD 1,400-CAD 1,500 per customer per year. That gives you a good average. That's including the guys who are staying with us on only a week or two. It's also including guys who are ordering 50 weeks in a row and spending CAD 5,000, CAD 6,000, CAD 7,000, even CAD 10,000 with us.
Great. Super. Thank you. What's the advantage of having almost double weekly recipe options versus your direct competitors?
As we started expanding across Canada, we realized that there are many different ways in which taste preferences change across the country. Having more recipe options enables us to better tailor menus to different parts of Canada. I would say that translates into better order rates and higher order values when we're able to have menus that are tailored to the taste preferences of consumers across Canada. The second point I would add is, we've been focusing on building out our recipe offering based on the two verticals that I mentioned earlier. The taste preferences that I just talked about, but also different models of engagement. We have, for example, the Easy Prep plan, which actually was launched last year and allows for consumers that do want to cook at home, but want to spend less time doing so.
Another example that I'll give you is, in January of 2019, just a month ago, we launched our Clean15 plan, which is a plan that is lean, clean, and ready in 15 minutes. It's essentially a low-carb offering with a higher serving of protein and vegetables. This came out of the request from our member base to have more diet, more fitness-oriented offerings in our meals. We feel we're putting more choice on our menu and more variety of plans and recipes can help us tailor our meals to different Canadians that eat differently and that engage with their food in different ways.
Okay, thank you. What is your lowest priced meal kit cost right now, and can you see it going lower? Can you also comment on your highest priced point meal and can you see it going higher?
I would say the answer is yes to going higher and lower. Our lowest priced meal is about CAD 8.75 per meal. Our highest priced meal currently would be our Artisan collection of premium recipes. Our Artisan recipes are recipes that will be market priced for premium shortcuts of meats and seafood that won't fit within the price point of any of our other meals. We've had Artisan meals that will have a whole porterhouse steak, and that could be priced at CAD 30 or CAD 40 per portion. On the lower end, as I mentioned, we have our CAD 8.75, which is the lowest price for our Family Plan, adult portion. I would say as we build density across the country and as we tailor our product for different types of consumers, we would see ways in which we can provide more convenience.
For example, organic baskets that might be pushing our average price point up. We can also see ways in which we can simplify recipes in order to hit lower price points with a lower food cost, for example, and go a little bit down market as well.
Thank you. Our next question is, how you define a loyal customer?
I would say, a loyal customer for us will probably be defined in terms of their tenure with Goodfood. Most of the churn or cancellations will happen earlier on in the life cycle of the customer. If you think about the consumer experience within the first few weeks of starting a Goodfood subscription, you'll get a good sense of whether or not the meals are tailored to your lifestyle, your dietary preferences, the way that you want to eat. If within those first few weeks it is a good fit for your lifestyle, we usually see that the retention really stabilizes after that.
If it's not fitting within your lifestyle, for example, it's not the right price point or you don't have a lifestyle that is consistent enough from one week to the next to be able to receive a weekly delivery, you might cancel and churn out. I would say within, call it six months of the lifetime value of the client. The customers that remain beyond that will be really stable at that time.
Okay, perfect. Thank you. This may go into your disclosure issue, but have you ever disclosed the % of revenues, the number of revenues that come from those customers historically?
We have not disclosed that. That's a figure. We're the only publicly traded company in our space in Canada, we follow those numbers closely internally, but we don't disclose numbers of the customer acquisition costs or specific lifetime value costs because we believe that our competitors would benefit from having that competitive edge. We don't have competitive intelligence on our competitors.
Okay, perfect. This might be the same type of answer, but I'll ask it because four or five different people asked it in different ways. Can you comment, of the 126,000 subscribers, what's the average churn rate? How do you think about churn over subscribers on a regular basis?
What we can share is the economics of the business generally have exhibited a positive trend over the past few months. Partly perhaps due to some of the consolidation that we talked about in the space in Canada. We've seen a positive impact on customer acquisition costs and lifetime value and retention numbers. The other thing that I think is important to comment on is, I believe we are the only company in our space globally that has demonstrated the ability to generate a positive cash flow from operations. Of course, while growing at the pace that we're growing at, we're probably the only company in our space globally that has demonstrated multiple quarters of positivity from a cash flow from operations perspective.
An important part of the reason why we were able to not burn significant amounts of cash while growing at this pace is because of the solid nature of our unit economics. The positive retention numbers and customer acquisition numbers and lifetime value numbers are really important to be able to generate that solid financial base.
Okay. Super. Thank you. You may have commented on this, but this is more of a philosophical idea for a strategic perspective on how do you control churn. One of your major competitors has struggled on the public markets, mainly due to the problem of heavy churn limiting their ability to show long-term profit growth. Maybe just some high-level overview on that.
Sure. From our perspective, the most important way to limit churn comes from two things. We keep trying and make sure that we're acquiring the right customer. We're constantly customizing the way in which we target our customers through the various marketing channels that we use in order to use the data and the intelligence that we've had over the past five years to continue to refine the way in which we go after those customers. That's the first part. The second part is it's tremendously important to deliver a customer experience that resonates well with our customer and a customer experience that's way beyond what they were expecting. We're really proud through the flywheel that Jennifer was talking about in our investor presentation. We're really proud that we've been able to use the scale that we've built over time.
We have some scale now, but we intend to develop significantly more scale in the future. We've been able to use that scale in order to reinvest in the product experience and every week deliver more value to a member than we were delivering the week before or the month before or the year before. Customers notice that, and we're able to retain them by showing them that we're continuously improving the experience and that we're reinvesting into the value of the product. We make sure that we're making those same investments in improving our technology, improving the ways in which we develop new recipes to better tailor the product to the needs of our consumers. When you combine all of that together and you also layer on, we like to say that we have a team of 1,500 entrepreneurs.
It's not just myself that's the leading entrepreneur here, but we have 1,500 people who are entrepreneurs and who are thinking about the customer internally, who are thinking about ways to deliver more value, cut costs, improve the experience. When you have so many people that are dedicated to that, it really makes a big difference in the customer experience. I think that's how we've been able to retain more customers over time than some of our international competitors.
Okay. Thank you. How are your delivery logistics managed? Are they internal or outsourced? Do you disclose your shipping cost per meal?
We don't own any trucks. Our delivery drivers are employed by third-party delivery carriers. They can be big national carriers like UPS and FedEx, or smaller couriers in denser areas of major urban centers in Canada. In terms of delivery cost, I think there's two pieces of guidance that we can give on that. The first one is, we've mentioned publicly in our ranking of our top buckets that within our gross margin, food cost is our largest cost, then labor, then delivery cost, that's our third-largest cost in our gross margin, and then packaging cost for the box and all the packaging that's included in the delivery. The delivery cost is the third-largest cost.
The other piece of guidance that we can give is, we're able to benefit from the cost savings that are generated from the density in our delivery without having to necessarily own the trucks or employ the delivery drivers themselves. We're still able to try and generate routes that are more and more dense. As Khalid mentioned during the presentation, if we went from having one delivery on the same street to having four deliveries or five deliveries on the same street, the delivery cost that we can see on those more dense areas can quickly go below CAD 5 per delivery.
If I can add to that, definitely our shipping cost has been trending down with the high density in the square. With our current logistic structure, we are now able to deliver to 95% of the Canadian population.
Okay. Thank you, Paul. Just a reminder to everybody, I tried to get to everybody's question. Some questions were asked, answered at other times. Other questions I couldn't get to because of the prospectus and financing issue. If you feel your question wasn't answered, just email me and I'll try to get it done. I've got six questions remaining for you guys in the queue. The next question is, can you just talk about the key areas of automation?
Sure. Absolutely. We have two major areas of automation that we're investing in right now. The first one is in the portioning of ingredients. Within our warehouses, we receive bulk amounts of ingredients. For example, bulk amounts of vinegar or bulk amounts of rice. We're investing in machines that can, for example, a bottling line that can portion, bottle, cap the bottles, label the bottles. Portioning is one major part of our automation investment. The second type of automation investment is around storing and restating, so moving things around within our warehouses. We estimate approximately 30% of our labor is spent moving things around within the warehouse. We have some current projects right now invested in that type of automation.
Okay, thank you. Sort of a related question, with the pending close of the financing, what are your priorities for this company's plans going forward? Is it automation, new fulfillment center, expansion plans? Would investors see any impact to margins in either calendar 2019 or 2020 with the automation impact?
Yeah. I'll answer that question. In terms of this big equity financing, we've said that CAD 10 million will go towards automation and capacity expansion. We don't provide the specific percent, but it can be a big portion of this CAD 20 million that will go to the company will be invested towards these two buckets. Another CAD 5 million will go towards new meal solutions and extending the product offering as well. In addition to that, we also have bank financing, CAD 12.5 million bank financing composed of CAD 10 million term loan and CAD 2.5 million revolver. Out of that CAD 12.5 million, as of November 30th, it was CAD 10 million drawn, and that CAD 10 million was going to be used for Montreal expansion, but also automation capital expenditures.
If you combine the bank financing and the new equity financing that will come our way, will get me to be investing a significant amount in automation at restaurant speed of release. In terms of margin impact, I mean, it's one of our main focus to increase the margin through automation. In terms of timing, we don't provide any guidance, but the margin should increase over time as the investment automation will decline.
Great. Thank you. Can you speak at all to the gross margin profile of your different segments? Example, Easy Prep versus Family Plan. Do you expect the profile to differ in the meals you plan to launch, i.e., breakfast?
Check the slides. We're not providing that level of detail.
Okay, super. I've got two questions I'm going to combine into one, Jonathan, then I'm going to ask you to give some closing remarks. A ton of questions. Blue Apron have significantly larger customer bases, but struggle to achieve profitability. How does Goodfood's structure differ from peers? Under the current model, what number of subscribers do you believe you need to reach in order to reach profitability? I guess, in a nutshell, what this question is asking is sort of your competitive advantage versus your competitors.
Sure. Goodfood is able to be profitable from one quarter to the next without achieving a larger subscriber number. Profitability for Goodfood is not about a certain number of subscribers, but rather it's just about how quickly we want to be growing the business. The reason why I say that is because the negative EBITDA is generated by the investments that we're making in our people, in technology, in marketing, in product development to grow the business. If we were to back off on those, we would be able to generate shorter term profitability. We've discussed publicly that in our more mature markets where we've started the business, it's already achieving EBITDA profitability that we're using to reinvest in some of the growth opportunities that we mentioned.
Our strategy is really the way in which we believe we maximize longer term shareholder value by delaying that profitability and taking advantage of the window of opportunity that we have in front of us to build our market position and to grow a very big business quickly. That will build a moat around the business in terms of having the densest deliveries across the country, having much more scale on food and packaging, investing into automation that will allow us to be by far the lowest cost producer in our space in Canada and hopefully globally. That's the way we think about our strategy and what differentiates us from some of the other companies that you mentioned. I think we've always been the type of company that has been very lean.
We try to move quickly, but one of our core values within the business is doing more with less. We have created a drastically different cost structure. We've disclosed that more than half of our SG&A is marketing. Growth marketing investments that we're investing to acquire new subscribers. What that means is our actual G&A is very tight, and we're able to run the business on a lean cost structure. I think overall, being more capital efficient and having great competitive dynamics in the industry in Canada have helped us to grow the business without burning a significant amount of cash.
Okay, perfect. I have no more questions in the queue. If you want to give any closing remarks, and then we'll end the call.
Absolutely. Well, thank you very much, everyone, for joining in. We are really excited about the future of the home meal solution business in Canada. I'm very proud of what our team has accomplished in the first five years of Goodfood. The opportunity in front of us has probably never been larger. There's CAD 9 billion of online home meal solutions to go and get. We feel like we're uniquely positioned to capture a significant piece of that market. We have a solid balance sheet to pulling the capital raise that we're closing on Friday to be able to invest in the automation and the future meal solutions that we've been talking about today. Over the next few years, we believe that we have a really bright future for the business.
Please follow up with Glenn or with Vidya if you have any other sort of questions that you'd like to dig into. We're always happy to chat with interested parties about the Goodfood story. Thank you very much, and thank you, Glenn, and to your team for organizing the session today.
Perfect. Thanks, Jonathan. Thanks, Philippe. Thanks to our investors. This concludes our call.