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Daily news and analysis about the food tech revolution

Home Chef

Kroger Begins Roll Out of Home Chef Meal Kits

Kroger announced yesterday that it has started the nationwide roll out of Home Chef meal kits on its grocery shelves.

Kroger purchased Home Chef in May of this year for $200 million, and as we wrote at the time of the acquisition:

By acquiring Home Chef, Kroger can meaningfully jump into the meal kit space and scale up quickly. Home Chef brings with it national prep and distribution systems already in place, and lots of data from existing paying customers to maximize how meal kits are rolled out in stores.

Home Chef also brought with it valuable data about what meals its customers order. Together, Kroger and Home Chef can figure out where to target particular meals for different regions and demographics.

The Home Chef meal kits will first be offered at select Kroger locations across the Midwest, with further rollout happening in 2019. Each location will have four menu options that will rotate weekly. Meal kits in store serve two people and start at $17.

As part of the announcement, Kroger also said that it is testing a new Home Chef Express product. Express is a quick-cook meal kit that promises to take only 15 minutes to make.

We’ve been talking about meal kits moving to retail for a good chunk of this year, and soon we’ll start seeing concrete data as to how well they are faring. Last year Albertsons bought Plated and this past April started the nationwide rollout of its meal kits in stores. Blue Apron started selling its meal kits at Costco. Amazon/Whole Foods has its own meal kit option. And HelloFresh signed a deal with Giant Food and Stop & Shop.

Will in-store convenience convert people en masse to meal kits? And if adoption rates increase, how will meal kits evolve? Will something like the new “Express” version of Home Chef’s meal kits, with their 15 minute make time, prove more popular than the full version?

The convenience question is actually worth examining further with Kroger, as the company recently expanded its Easy For You! line of almost-customizeable meal kits. Easy For You! is sort of like a frozen food buffet line. Customers bundle together different proteins and sides and pay by the pound to simply reheat at home. Will this level of convenience cannibalize Kroger’s other, more traditional meal kits?

It’s worth it for Kroger to experiment to see what consumers gravitate towards. The concept of in-store meal kits is relatively new, now, where shoppers take them remains to be seen.

HelloFresh Jumps on Bandwagon to Sell Meal Kits in Grocery Stores

HelloFresh will start selling its meal kits at 600 Giant Food and Stop & Shop locations starting this week, The Wall Street Journal reports, as the meal kit sector’s migration from mail order to brick and mortar continues at a furious pace.

The first half of this year has seen a flurry of activity from meal kit companies going into grocery stores. Chef’d and Blue Apron started selling in Costcos. Plated is rolling out nationwide at Albertsons. And just a couple of weeks ago, Kroger bought Home Chef for $200 million to put that company’s product on store shelves. And that doesn’t even count the meal kits WalMart and Amazon have available in their own stores.

It’s not hard to see why. According to Nielsen, last year in-store meal kits generated $154.6 million in sales, and grew more than 26% year-over-year. It’s a hot sector, and in-store meal kits are something customers want.

Last month, Pat Brown, Albertsons Vice President of strategic business initiatives told CNBC: “Our internal research told us that 80 percent of our customers would love to see a meal kit option in the store. And what was more surprising was that 85 percent of customers that were already subscribing to meal kits wanted to see meal kits in the store.”

Customer churn has been a big issue for meal kits in the past as the cost and inconvenience of waiting for your meals to arrive by mail have been stumbling blocks for maintained meal kit subscriptions. Having meal kits in stores offers customers more convenience and more choice closer to when they actually make meals.

HelloFresh CEO Dominik Richter told The Journal that online subscription will continue to drive sales, and that going into grocery aisles was a way for the company to find new customers. He also said that HelloFresh is in talks with other retail outlets.

HelloFresh recently surpassed Blue Apron as the top meal kit company by market share in the U.S.. The Berlin-based company went public in the fall of last year, and in April the company acquired organic meal kit provider Green Chef.

This is a big and fast retail move for HelloFresh, which will start selling meal kits on store shelves starting this Wednesday. For comparison, Chef’d has done deals with numerous regional chains as well as Costco, Blue Apron is in 17 Costcos, and Plated will be in “hundreds” of Albertsons by the end of the year. Kroger, which had already rolled out meal kits to some of its regional chains such as QFC in Seattle, is planning to put meal kits in most of its 2,800 stores nationwide.

Clearly HelloFresh needs to act fast as the window of opportunity for meal kit companies in grocery stores appears to be closing rapidly. While it may be rolling out judiciously, Albertsons still owns Plated, so that will be its preferred meal kit provider. Same with Kroger and Home Chef. Amazon, of course, has Whole Foods, and WalMart has… itself. To stay alive in retail, and by extension alive as a business, HelloFresh will need to get into a lot more grocery stores.

Kroger Buys Home Chef for $200M as Meal Kits Continue March into Grocery Stores

Kroger announced today that it’s acquiring meal kit company Home Chef for $200 million in a move that illustrates the continued transition of meal kits from a mail-order business to a must-have in-store grocery item.

Home Chef will operate as subsidiary of Kroger, maintaining its e-commerce business at homechef.com while it takes over responsibility for Kroger’s “meal solutions portfolio.” Kroger will start offering Home Chef’s meal kits online once the deal closes, and, according to The Chicago Tribune, the two companies will crunch consumer data numbers to figure out where to stock meal kits among Kroger’s 2,800 nationwide stores.

Home Chef, which is the third largest meal kit company in the U.S., has 1,000 employees, has raised $57 million in venture funding and had sales of $250 million last year. Kroger’s final purchase price could hit $500 million over the next five years if certain milestones are hit, including, according to the press announcement, “significant growth of in-store and online meal kit sales.”

Depending on expectation, those milestones could be tough to hit; almost every grocer is getting into the meal kit game. Albertsons acquired Plated and is going national with their meal kits this year. Blue Apron and Chef’d are selling meal kits in Costco. Weight Watchers has put their meal kits on supermarket shelves. Then, of course, there are the meal kits Walmart is rolling out to 2,000 of its stores, not to mention the offerings from Amazon/Whole Foods.

And you can see why everyone’s diving in. As we’ve covered before: According to Nielsen research, “in the year ended 2017, in-store meal kits generated $154.6 million in sales, posting growth of more than 26% year-over-year. For context, total brick-and-mortar sales for center store edibles (grocery, dairy, frozen foods) dipped 0.1% last year to $374 billion.”

By acquiring Home Chef, Kroger can meaningfully jump into the meal kit space and scale up quickly. Home Chef brings with it national prep and distribution systems already in place, and lots of data from existing paying customers to maximize how meal kits are rolled out in stores.

But the acquisition also shows that Kroger is hitting the gas to stay technologically relevant. The Home Chef acquisition comes just days after Kroger invested more money in UK-based online grocer, Ocado. As part of that deal, Kroger will be building out 20 robot-driven smart warehouses and take advantage of Ocado’s fast delivery logistics.

Now it looks like meal kits will definitely be among those fast deliveries.

Want to learn about the future of meal kits and food delivery from the leaders of companies like Chef’d and DoorDash? Come to the Smart Kitchen Summit in Seattle on Oct 8-9th.