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The Spoon

Daily news and analysis about the food tech revolution

prepared meals

Territory Foods Raises $22M for its Chef-Created Prepared Meal Subscription Service

Territory Foods, a marketplace where local restaurants can sell their meals for delivery via subscription, announced yesterday that it has raised a $22 million Series B round of funding. The round was led by U.S. Venture Partners, with participation from Upfront Ventures, Lewis & Clark Ventures, DF Enterprises, S2G Ventures, Gaingles, Middleland Capital, Finistere Ventures and Rethink Food Capital. This brings the total amount of funding raised by the company to $44 million.

Territory is a different from other fresh meal delivery services in that it partners with and sells meals from local chefs and restaurants as a weekly subscription. So instead of going to a restaurant once or twice a week, a customer can choose to order a number of meals in advance. The meals arrived prepared and packaged up, so they only need to be re-heated, adding to the convenience factor.

The company’s subscription service really became important during the pandemic last year, as restaurants were forced to close their dine-in operations. Territory offered those restaurants and chefs an added revenue stream by creating and assisting with this D2C shipping channel. The chefs and restaurants make the meals and Territory takes care of all the logistics like ordering, packaging and delivery. Not only could Territory provide more orders, but those orders were also frontloaded and batched. This smoothed out revenue volatility from night to night and gave chefs more time to prepare.

In addition to creating another sales channel for chefs and restaurants, Territory can also extend their geographic reach. A San Francisco restaurant may only deliver hot meals to certain neighborhoods, but Territory can delivered the packaged versions meals more widely throughout the Bay Area.

As we come out of the pandemic, one has to wonder what will happen to prepared meal delivery services like Territory Foods and Freshly (which was acquired by Nestlé). With the ability to once again eat out at restaurants — and with other people — will consumers still want to order a week’s worth of prepared meals? Or have they gotten so hooked on prepared meal delivery that they won’t let their subscription go? We’re about to find out.

Territory already serves 20 markets across the U.S. including Miami, Los Angeles and Washington D.C. The company told Crunchbase News that it will use its new funding to expand into new cities as well as invest in technology and food as medicine initiatives.

HelloFresh Buys Prepared Meal Delivery Service Factor75 for $277M

Meal kit company HelloFresh announced today that it is acquiring prepared meal delivery service Factor75. The deal is being done through Berlin-based HelloFresh’s U.S. subsidiaries and has the company paying up to $277 million in cash (up to $100 million is in the form of an earn-out and management incentives) for Factor75.

Factor75’s revenue is projected to reach $100 million for the full year 2020. HelloFresh is using the acquisition to expand its presence and market reach here in the U.S. Through the Factor75 purchase, HelloFresh will gain a Chicago office along with four production and fulfillment facilities. There is also a forthcoming facility that, according to the press announcement, will provide enough capacity to deliver more than $500 million worth of prepared meals annually.

This the second big acquisition of a prepared meal delivery service is as many months. At the end of October, Nestlé acquired Freshly in a deal that valued Freshly at $950 million (actual purchase price and deal structure details were not disclosed).

Both these acquisitions come against the backdrop of the COVID-19 pandemic, which has more people eating at home. Prepared meal kit companies like Factor75 and Freshly offer a convenient way to mix up home dining because meals are already cooked and just need to be re-heated. There’s no extensive preparation or lengthy cooking times like there is with traditional meal kits that just send ingredients.

Given that there are now three promising COVID vaccines on the horizon, one has to wonder if Factor75 is exiting at the right time. Obviously there is still a mountain of regulatory and logistical work that needs to be done before any vaccine becomes widely available. But if vaccines start to roll out over the next six to 12 months and consumers feel more free to venture out to restaurants and grocery stores whenever they want, will consumers still have an appetite for meal kits and prepared meal services?

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.

Kettlebell Kitchen Shuts Down Its Prepared Meal Delivery Service

Kettlebell Kitchen said today that it is no longer serving prepared meals. In an email sent out to customers this morning, the company wrote:

Kettlebell friends and family,

We’re sad to say we’re closing our kitchens today and will no longer be serving meals.

We’re grateful for the past 7 years and the opportunity to fuel you along the way, thank you for giving us the chance to do so! As we close our doors, we want to introduce you to Territory. Like us, they believe in the power of delicious, clean food, and have been serving healthy eaters like yourself since 2011.

While Territory doesn’t yet serve your area, they’re quickly expanding. Sign up for updates, and they’ll send you a note once they’re live in your neighborhood.

At this point, we don’t know if Kettlebell is just closing down its kitchens to pivot to something else or shutting the company down entirely, or why it is recommending Territory (which Kettlebell says it has no affiliation with). We reached out to Kettlebell and will update this post as we learn more.

Based in New York, Kettlebell Kitchen had raised more than $30 million in funding. The company specialized in delivering prepared meals tailored to specific fitness and nutrition goals like weight loss or burning fat as well as dietary lifestyles like keto.

I actually tried Kettlebell’s meals earlier this summer and liked them quite a bit. While they were delicious and convenient, they were more expensive than other prepared meal services such as Icon, and ultimately the cost was too high for me to continue using the service.

The prepared meal delivery business is tough to scale, given all the supply chain, safety requirements and logistics. Now we have to see if Kettlebell Kitchen is a canary in the prepared meal delivery coalmine.

The email from Kettlebell Kitchen announcing kitchen closures.