Photo: Home Chef
Kroger has been busy making deals. Less than a week after announcing an exclusive deal with Ocado to have the British company develop automated warehouse facilities for its business, Kroger has reached an agreement to acquire Home Chef, the largest privately-owned meal kit company in the U.S.
The deal price involves an initial payment of $200 million with additional payments of up to $500 million over the next five years if Home Chef achieves agreed-upon milestones. Home Chef, which saw its sales grow 150 percent last year to $250 million, has posted two consecutive profitable quarters. The company, which was founded in 2013 and delivers around three million meal kits a month, will become a subsidiary of Kroger following the close of the deal.
Kroger, which has developed its own Prep + Pared meal kit line for sale in more than 525 of its stores, will fold that business into Home Chef, which will now also be sold in many of Kroger’s 2,800 stores in addition to its own website. Home Chef operates three distribution centers in Atlanta, Chicago and San Bernadino, CA, putting product within a two-day delivery window of 98 percent of the country’s population.
"As one of the fastest growing meal kit companies in the country, Home Chef is poised for even more explosive growth," said Yael Cosset, Kroger's chief digital officer, in a statement. "We admire their focus on the customer, culture of collaboration, dynamic experimentation, and demonstrated financial success. Home Chef's combination of culinary expertise and a customer data driven decision-making process is right in line with Kroger's vision to serve America through food inspiration and uplift by providing meal solutions for every lifestyle."
With the merger, Kroger and Home Chef move into a business that has been attracting attention and investments from major retailers (Amazon, Albertsons, Walmart) and consumer packaged goods companies (Campbell Soup, Smithfield Foods, Unilever). The market for meal kits, according to Pentallect, reached $2.2 billion last year, with annual sales expected to grow between 25 percent and 30 percent over the next five years.
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