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Kroger Buys Home Chef in $200 Million Deal

By Dan Scalco • Updated Leave A Comment

The latest news in the world of meal delivery services is that the grocery store chain, Kroger, has purchased Home Chef for a cool $200 million. This deal was announced in mid-May, making Kroger the owner of what is the largest private meal delivery service in the United States.

It seems this move in becoming the norm as more brick-and-mortar companies are investing in their online alternatives. And with Kroger’s stock down 11% so far this year, this merger could be just what they need to innovate and go in a new direction.

Kroger now has the ability to introduce their 60 million customers to the service that is Home Chef. For those who are Kroger shoppers, you may already be familiar with the chain’s line of prepared meals, Prep+Pared. When their merger with Home Chef is finalized, you can expect to see some of Home Chef’s meal kits in the stores along with the Prep+Pared range. However, other sources are reporting Home Chef may eventually consolidate this line into their own brand. Either way, it isn’t expected to be long before the Home Chef meals become available in many of Kroger’s 2,800 stores nationwide.

With Kroger and Home Chef joining forces, it appears they’re planning to enhance the ship-to-home and subscription capabilities, as well as contribute to Restock Kroger. This initiative is the company’s move to redefine pricing, create more personalized communications with shoppers, and revamp their product assortments based on research data. Only time will tell what other ideas they have up their sleeves. We could be seeing many more improvements after the merger finalizes.

Yael Cosset, Kroger’s Chief Digital Officer said in a statement, “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.” This merger is sure to bring that to them, as the popularity of meal delivery services continues to skyrocket. And now, they’ll have the ability to bring even more options to their customers.

These two companies joining forces comes not long after Amazon made the move to purchase Whole Foods. It’s possible that other brick-and-mortar and online companies will join forces as well, making competition in the meal delivery and grocery market even more intense.

Home Chef’s founder and CEO, Pat Vihtelic, commented on the merger, saying, “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.” He also stated, “We know our customers would love to see more Home Chef meal kits on grocery store shelves.”

Depending on whether or not Home Chef reaches certain milestones, Kroger could wind up paying an additional $500-700 million to the meal delivery service. Those milestones would include a significant growth of in-store and online sales, so we’ll have to wait and see how that develops. In a statement from Kroger, they said that Home Chef grew a whopping 150% in 2018 with revenue of $250 million. For the saturated and highly competitive industry that is meal delivery, these are great numbers.

Which meal delivery service companies and food retailers will merge next? Leave your predictions in the comments below…

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