Cincinnati, OH and Chicago, IL – Less than a week after announcing its plan to partner with and gain exclusive rights to Ocado, the U.K. robotics-automated online grocery fulfillment service, Kroger is making headlines again.
This time, Kroger has announced its acquisition of Home Chef, one of the country’s largest private meal kit companies, for $200 million, with future payments of up to $500 million over five years if certain performance milestones are met, including significant growth of in-store and online meal kit sales.
Kroger feels the combined company will lead the way in revolutionizing how families shop for, prep, and cook their meals, according to a press release.
“Customers want convenience, simplicity and a personalized 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,” said Yael Cosset, Kroger’s chief digital officer. “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.”
This move will also help Home Chef to expand its already thriving business. The company reported 150% growth in 2017, $250 million in revenue, and two profitable quarters. “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,” said Pat Vihtelic, Home Chef’s founder and CEO. “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.”
Kroger isn’t the only grocer looking to jump on the meal kit bandwagon. As WholeFoods Magazine reported in September, Albertsons acquired the Plated meal kit service, and began selling meal kits in-store, across its digital channels and through a variety of distribution options.
Kroger’s acquisition of Home Chef will help it accelerate its omni-channel capabilities, and may help it race past Amazon in the meal-kit segment, and match, if not exceed, Albertson’s capabilities, says Jay Jacobowitz, president and founder of Retail Insights. This is partially due to Home Chef’s profitability, something that has been elusive in the meal-kit segment so far. “Credit Home Chef’s simpler, less expensive, more easily and consistently sourced comfort-food oriented approach, as opposed to the premium foodie-oriented focus of most other meal-kit companies. Also, Home Chef already has a national footprint, with three distribution centers, east, west, and mid-country,” says Jacobowitz.
Kroger’s two acquisitions also move it ahead of Walmart in meal-kit and last-mile grocery delivery. “Coupled with the company’s consistent growth and profitability within its 2,800-unit bricks-and-mortar store base, we would expect Kroger to vie for one of the top three slots in U.S. food retailing for the foreseeable future,” says Jacobowitz.