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The Spoon

Daily news and analysis about the food tech revolution

Freshly

Nestlé Acquired Freshly

Nestlé announced last Friday that it had acquired prepared meal delivery service Freshly. According to the press announcement, “the deal values Freshly at USD 950 million, with potential earnouts up to USD 550 million contingent to the successful growth of the business.” The deal was signed and closed on October 30th.

Freshly, which provides prepared meals that consumers just need re-heat at home, has raised a total of $107 million in funding. In August of last year, the company was producing 600,000 meals a week. By April of 2020, that number had grown to nearly 1 million meals per week and a Freshly rep told us last week that by August the company was delivering “well over one million” meals each week.

The COVID-19 pandemic, of course, has played a hand in Freshly’s growth, as the pandemic has forced the closure of dine-in options at restaurants and forced more people to eat at home. When we checked in with Freshly in April, the company said that it had basically doubled the number of people over the age of 60 ordering meals, and that the average order size had jumped 20 percent.

Given how the pandemic continues to rage across the U.S. and Europe, people will most likely continue to eat in as much, if not more, considering that the cold winter months are almost upon us and dining outside is not really an option in a lot of places.

In 2017, Nestlé had purchased a 16 percent stake in Freshly. With the outright purchase of Freshly, Nestlé said that it will be able to combine its understanding of what people eat at home and deep research and development with Freshly’s consumer analytics platform and distribution network.

Nestlé’s purchase of Freshly also comes during a bit of a renaissance in direct-to-consumer sales. Brands big and small, among them Pepsico, Impossible Foods, Beyond Meat, and many others, are selling direct to consumers online in addition to traditional retail outlets. Freshly gives Nestlé another such D2C route to sell its brands.

Changes are already afoot at Freshly. In a corporate blog post about the acquisition, Freshly CEO, Michael Wystrach, said that thanks to Nestlé, the company already has plans to increase its menu variety by tripling the number of weekly meals.

Freshly Launches Business Service so Companies Can Ship Meals to Employees Working From Home

One of the perks of going into an office, at least for many in the startup world, was the catered lunches. Sheltering in place and people being forced to work from home has obliterated that particular perk. But prepared meal service Freshly could help bring it back — not just for big startups, but for companies of all sizes.

Freshly announced its new Freshly for Business service today. The idea is pretty straightforward: Companies create an account with Freshly, and their employees can order prepared meals for home delivery, just as they can with the consumer service. Meals arrive cold and only need to be reheated in the microwave and served. (I tried Freshly last year and thought the meals were delicious.)

“We’ve always seen the opportunity with businesses to be massive,” Freshly Founder and CEO, Michael Wystrach, told me by phone today. He said Freshly for Business had been on the product roadmap for a while but there was “so much demand with companies trying to solve the COVID challenge. So we accelerated the plans.”

The service can be scaled both in volume and cost. It’s available to companies of any size, and meals can be fully or partially subsidized by the company to fit with budgets. The service is available now and companies can sign up at the Freshly for Business site. Unfortunately, Freshly only ships to the lower 48, so employees in Hawaii and Alaska will need to find some other perk.

Freshly isn’t the only food business adapting to the current state of the world. Last month, NYC corporate catering service Ox Verte pivoted to home office meal delivery. It too was working with existing corporate clients to subsidize meals for employees. And startups like Pepper and Choco are helping restaurant food suppliers transition into direct sales to consumers.

While I had Wystrach on the phone today, I asked him about any changes that have happened with the company’s consumer business since the pandemic started. “We’ve really seen older generations make aggressive moves to the platform,” he said. People over 60 years old used to make up 25 to 35 percent of Freshly’s customer base; since the COVID-19 outbreak, the over 60 set now accounts for more than 50 percent. This make sense as older people in particular are susceptible to the virus and really need to rely on food delivery and not leave the house.

In March, Freshly shipped 4.2 million meals and is close to hitting 1 million meals a week (back in August, the company was doing 600,000 meals a week). Freshly has also seen an increase in the amount of food people are ordering, with average order sizes jumping 20 percent. This too makes sense, as panicked people are too scared to go into the grocery store, unable to get a grocery delivery time, or not wanting to pay exorbitant restaurant delivery fees, and are probably stocking up on food wherever they can find it.

With dire predictions for what a COVID+flu season in the fall could look like, chances are good that this won’t be the last time we are ordered to stay at home. That means more working from home offices. It’s smart for food companies like Freshly to have the infrastructure in place to accommodate the back-and-forth future we are likely to be living with for some time to come.

I Tried Freshly, Which is Now Producing 600,000 Meals Per Week and Expanding into Snacks

It was the instructions to take the food out of the plastic tray and place it on an actual plate that hooked my wife. I mean, she enjoyed the meal as well, but it was this little touch that made Freshly stand out compared with the other meal services we’ve been trying throughout the summer.

It had been almost a year since we last checked in with Freshly, so when they reached out to see if I wanted to test out their meal delivery service, it seemed like the perfect opportunity to catch up with the company. After enjoying a few of their meals, I got on the phone with Carter Comstock, Co-Founder and Chief Innovation Officer at Freshly this week to learn what the company has been up to.

“We’re finally a national company,” said Comstock, “We launched two more kitchens this year, that gives us national coverage.”

Freshly now has three kitchens across Phoenix, AZ; Linden, NJ; and Savage, MD. This broader geographic dispersion means that the company can now ship meals to all of the 48 contiguous states. When I asked Comstock about the demographic makeup of his customers, he said “We are even across the board from 23 [years old] to 65+.” Geographically speaking, Comstock said that Freshly’s customers map closely to population density across the country, so more in cities than rural areas.

Comstock also said that Freshly’s kitchens are now producing 600,000 meals per week, up from roughly 200,000 a week a year ago. For comparison, ICON Meals puts out 50,000 meals per week.

While Freshly focuses on dinner menus, Comstock said that due to customer demand, the company is expanding into snacks, which just recently launched for customers only. Unlike its meals, however, the snacks are not made by Freshly’s kitchens; instead, they’re a box of prepackaged snacks that the Freshly team curates.

But it wasn’t the snacks that I tried, it was the meals. Freshly sent me (and, subsequently, my wife) four meals to try. Like Trader Joe’s and Whole Foods, Freshly has a list of 85 banned ingredients that it won’t use in its meals. The list doesn’t go as far as to make everything organic and locally sourced, but the meals don’t have artificial ingredients or flavorings, and contain no added sugar.

Meals arrive chilled (not frozen) in an insulated box with ice packs. Like with any meal kit or meal delivery service, the packaging always feels… excessive, even though I know they have to keep their meals cool to prevent spoiling and food waste. The insulation material is 85 percent biodegradable (though you still have to throw it in the trash), and the plastic trays are recyclable. The company also says you can drain the water-soluble gel from the ice packs into the garbage once it thaws, and recycle that plastic as well.

The meals I received were summer chicken and zucchini, super pesto and veggie fusilli, cod cakes and steak peppercorn. To cook each one, you just pop it in the microwave for roughly three minutes and dinner is served.

A dinner which the packaging suggests you put on a plate. It’s a small thing, plating, but I don’t remember the other meal services I’ve tried suggesting that. It actually made a difference and using a plate elevated the experience, like I was eating something homecooked and not off of a cafeteria tray.

Each of the meals I tasted was excellent, and as with other meal delivery services, convenient. Freshly provided me with a meal I wouldn’t ever make for myself that tasted really good, and only took three minutes to make. Having tested Freshly, Kettlebell Kitchen and ICON meals this summer, I’d have to say Freshly is my favorite so far. The Freshly meals tasted, well, fresher than the other options and I would totally eat them again.

The hardest part with any meal delivery service is the price. You can order 4, 6, 9 or 12 Freshly meals per week. Prices are $12.50 per meal on the four plan, $9.99 per meal on the 6 and 9 plans, and $8.99 per meal for the 12 plan. This is sort of a Goldilocks pricing between ICON, which starts down at roughly $8 a meal and the more expensive Kettlebell Kitchen meals, which are roughly $12 a meal.

I mean, fifty bucks a week isn’t bad for four meals, especially if you’re the type of person who goes out to eat four times a week. But I eat at home mostly, and adding another $200 – $240 to my monthly bills seems excessive, and kinda lazy.

But it is tempting to try it in bursts. Rather than a sustained, ongoing habit, I may try it for one week out of the month, just for the convenience and variety. If you’re interested in meal delivery, I’d recommend trying out Freshly, just remember to use a plate.

Podcast: Talking Food Delivery With Freshly’s Michael Wystrach

A few years ago, Michael Wystrach had left a career in finance and was looking to get healthy.

The problem? He hated cooking.

Lucky for him, not only did he own a restaurant, but he also had a good family friend who could design a healthy meal plan for him. He soon had his own chefs preparing nutritional meals for him, and it wasn’t long before he was in the best shape of his life.

Wystrach knew not everyone could have chefs prepare food for them, so he started thinking about how others like him could get healthy food delivered to their home and soon the idea for Freshly was born.

In this episode, I catch up with Michael and talk about those early days, how Freshly differentiates from others in a highly competitive market, and where he sees both the industry and company headed in the future.

You can listen to the episode below, download it here or subscribe in Apple Podcasts or your favorite podcast service.