Is Home Chef in Chicago a buyout candidate? – Consumer News

on Jun30

30 June 2017 | 3:33 pm

Fast-growing meal-kit delivery company Home Chef is “regularly receiving” investment and partnership offers, the Chicago company confirmed today, a day after competitor Blue Apron made its debut on the New York Stock Exchange.

Home Chef CEO Pat Vihtelic told Crain’s that outside interest in the four-year-old company is high, though he isn’t “necessarily entertaining” all the offers that have come his way.

Unlike larger Blue Apron, which posted a net loss of $54.9 million last year, Home Chef is profitable and has positive cash flow, the company says. It’s on track to generate more than $300 million in revenue in 2017. Blue Apron posted 2016 revenue of $795.4 million.

Outside interest in Home Chef was first reported last week by Reuters, which said the company was weighing a sale and could fetch more than $600 million, citing unnamed sources. Vihtelic would not confirm the Reuters report, though he said it’s not “completely accurate.”

Home Chef delivers nearly 3 million meal kits a month to customers’ homes across the country. The company portions, packages and ships directly to consumers, who prepare recipes developed by Home Chef’s culinary team.

Investor interest in the space continues to build, particularly among traditional consumer packaged goods companies and grocers, which “see the potential in these businesses as a viable distribution platform,” said Morningstar analyst R.J. Hottovy. “CPG companies are not experts in getting products to consumers’ doorsteps, but they see the retail space evolving.”

Several consumer packaged goods companies already have dipped their toes in the meal kit business, including Chicago’s Conagra, which released via the delivery service Peapod meal kits featuring recipes from Rick Bayless’ Frontera brand. Tyson Foods, which has a major presence in Chicago, also last year unveiled its own line of kits called “Tastemakers” in conjunction with Amazon Fresh.

Aside from Blue Apron, which priced its IPO at $10, less than Wall Street analysts expected, Home Chef’s competition includes HelloFresh, Plated and Chef’d.

There’s also interest on the grocery side, which Hottovy expects to heighten in the wake of the announcement this month that Amazon is taking over Whole Foods Markets. “That will prove that online grocery is here to stay,” he said. “Grocers have to be ready for that and this is one of the ways they could participate in that growth more directly.”

Home Chef has raised a total of $52 million in outside financing, including $40 million last fall from an investment led by private equity firm L Catterton and $10 million in 2016 from a group that includes Hong Kong-based Shining Capital.

Vihtelic started the company in summer 2013, quitting his job as an investment banker to focus on building the business. Each week, the company offers its customers a choice of 10 dinners, as well as options such as a smoothie, fruit basket and breakfast. Meals cost $9.95 per serving.

Since its founding, the company has posted exponential growth. Home Chef has more than 800 employees and distribution centers near Midway International Airport, in suburban Los Angeles and near Atlanta. Home Chef recently moved its corporate headquarters to the Wrigley Building on North Michigan Avenue.



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