CINCINNATI — The Kroger Co. has agreed to acquire Home Chef, a Chicago-based meal kit delivery company. The initial transaction price is $200 million, and future earnout payments of up to $500 million over five years are contingent on achieving milestones, including growth of in-store and online meal kit sales, Kroger said. As part of the deal, Kroger will make Home Chef meal kits available both on its web site and in its stores.
“Customers want convenience, simplicity and a personalized food experience,” said Yael Cosset, chief digital officer for Kroger. “Bringing Home Chef’s innovative and exciting products and services to Kroger’s customers will help make meal planning even easier and mealtime more delicious. This merger will introduce Kroger’s 60 million shoppers to Home Chef, enhance our ship-to-home and subscription capabilities and contribute to Restock Kroger.”
Founded in 2013, Home Chef delivers more than 3 million meals to U.S. consumers each month. The company employs approximately 1,000 and operates three distribution centers in Chicago, Atlanta and San Bernardino, Calif. Home Chef experienced 150% growth and raked in $250 million in revenue in 2017, the company said.
“As one of the fastest growing meal kit companies in the country, Home Chef is poised for even more explosive growth,” Mr. Cosset said. “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.”
Home Chef offers a range of meal kits featuring recipe cards and pre-portioned ingredients, including 5 Minute Lunches, Flexible Serving options and meals that require minimal preparation. Home Chef’s offerings complement Kroger’s Prep+Pared meal kit offerings, Kroger said, which are available in more than 525 stores.
“We’ve long believed that the future of our industry is omni-channel and bigger than just meal kits sold online,” said Pat Vihtelic, founder and chief executive officer of Home Chef. “We want to be where our customers are and want to help make cooking at home easier, more accessible and even more enjoyable. We’re thrilled that we will be part of the Kroger family and plan to maintain our relentless focus on innovation that meets customers’ evolving food needs. Kroger’s expansive retail footprint will allow us to serve millions of more customers across the country with simple, convenient and enjoyable meal solutions.”
One the transaction is complete, Home Chef will operate as a subsidiary of The Kroger Co. and assume responsibility for Kroger’s meal solutions portfolio. Home Chef also will maintain its e-commerce business and continue to operate its offices and facilities. Kroger said it expects the acquisition will have no effect on 2018 earnings and will be slightly accretive in 2019.
Kroger’s acquisition of Home Chef follows a recent rush of retailers moving into the meal kit market. In September 2017, Albertsons Companies, Inc. acquired Plated, a New York-based meal kit service. In November 2017, Supervalu Inc. launched a new line of Quick & Easy meal kits, and Walmart followed suit in March by debuting its own meal kit offerings. Also in March, Blue Apron Holdings, Inc. announced plans to begin selling prepared meal kits at retail. then earlier this month, meal kit company Chef’d partnered with Smithfield Foods, Inc. to bring its meal kits to grocery stores nationwide, including Costco, Hy-Vee, Harris Teeter, Tops, Weis and Gelson’s Markets.