Kroger has acquired US meal kit company Home Chef for an initial price of $200 million as it aims to “significantly accelerate availability of meal kits”.
The cost of the firm could rise to $700 million over the next five years if certain milestones are met, including “significant” growth of in-store and online meal kit sales.
The merger comes on the heels of Home Chef’s 150% growth in 2017, as it recorded $250 million in revenue.
Kroger has continued its expansion after last week’s signing of an exclusive partnership with delivery service Ocado, giving it access to the UK company’s Smart Platform technology and boosting its home delivery capabilities.
Kroger has drawn attention to the variety of products that Home Chef offers, including its five-minute lunches and easy-to-prepare meals that require minimal preparation.
Home Chef employs around 1,000 people, is headquartered in downtown Chicago, and operates three distribution centres in Chicago, Atlanta and San Bernardino. Its distribution centres reach “98% of all continental US households within a two-day delivery window”.
Kroger rival Albertsons announced a similar deal last year to acquire meal kit start-up Plated to boost its sales in stores. This year, Sun Basket secured $57.8 million in funding and HelloFresh bought organic meal kit company Green Chef.
Kroger chief digital officer Yael Cosset said: “Customers want convenience, simplicity and a personalised food experience. 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.”
He added: “As one of the fastest growing meal kit companies in the country, Home Chef is poised for even more explosive growth. 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 founder and CEO Pat Vihtelic added: “We’ve long believed that the future of our industry is omni-channel and bigger than just meal kits sold online. 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.”
After the deal closes, Home Chef will operate as a subsidiary of Kroger, maintain its e-commerce business on its website, and assume responsibility for Kroger’s meal solutions portfolio. The company will continue to operate its own offices and facilities.
Following closing, Kroger will make Home Chef meal kits available to Kroger shoppers, both in stores and online.
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