Commentary

Meal-kit Company Chef'd Gets Burned As Financing Falls Through

Chef’d, which had backing from Campbell Soup, Smithfield Foods and venture capitalists, has abruptly ceased operations after experiencing “some unexpected circumstances with the funding for the business,” as CEO Kyle Ransford put it in a pink-slip email to his more than 350 employees in Los Angeles County and Brooklyn, N.Y., Monday. 

“The news comes as a surprise, as it comes after a series of major announcements from Chef’d,” writes Business Insider’s Kate Taylor, who broke the story about “the biggest meal-kit service that didn't rely on a subscription model, like HelloFresh and Blue Apron.” 

“Last month, Chef’d announced it would sell its meal kits in 30 Duane Reade and Walgreens locations in New York. In May, Chef’d announced it would be partnering with Byte Foods to stock meal kits in the company's smart fridges. Last year, the company raised $35 million from Campbell's and pork producer Smithfield Foods,” Taylor reports.

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“In May, it said that it would start selling it meal kits at more than a dozen retailers nationwide including Costco, Harris Teeter, Tops, Hy-vee and Gelson’s Markets,” adds Annlee Ellingson for L.A. Biz.

“Launched in 2015, Chef’d allows consumers to choose and order from hundreds of meals, without subscription or membership fees. The company partners with chefs, culinary personalities and brands in food, fitness, and health and wellness to offer dishes spanning breakfast, lunch, dinner and dessert,” Ellingson writes.

“Chef’d was one of the earliest companies to simultaneously sell its boxes in stores and online,” writes Heather Haddon for the Wall Street Journal. “The company developed sophisticated operations that could assemble kits from a thousand different recipes, as opposed to a handful of weekly menus offered by most others. That flexibility helped Chef’d strike deals with major food companies and diet plans — including the Coca-Cola Co., Hershey’s Co., and Weight Watchers — to feature their products in boxes. Campbell Soup Co. and Smithfield Foods Inc., legacy manufacturers looking to pivot into fresh food, took $35 million stakes in the company to try to boost their brands. Wolfgang Puck and dozens of other chefs put their names behind meal-kits sold on Chef’d.” 

“‘Seven days a week, we offer thousands of choices anywhere in the country. It’s a logistics company in the end,’ said  Kyle Ransford, Chef’d chief executive, in a recent interview,” Haddon reports.

In December 2016, PepsiCo’s Quaker began offering three Quaker-branded “Overnight Oats” meals on the Chef’d online meal-kit marketplace, as Marketing Daily’s Karlene Lukovitz reported.

“Chef’d is among an estimated 150 meal-kit ventures jockeying for a piece of what Piper Jaffrey has estimated is currently only about a $2 billion market in the U.S. Further, the market is heavily dominated by just three companies, according to a report from 1010data: Blue Apron, with an estimated 71% share, followed by Hello Fresh, and Plated, with 23% and 6%, respectively,” Lukovitz wrote at the time.

Indeed, it has not been easy going for most players even as more and more companies get involved and the market pushes deeper into retail space. Berlin, Germany-based HelloFresh, which now is the market-share leader, began selling its meal kits in the 581 Giant Food and Stop & Shop supermarkets owned in the U.S. by the Dutch operator Koninklijke Ahold N.V. last month.

“Supermarkets have gobbled up the meal-kit idea and made it their own,” The Economist pointed out in an assessment of the field in April. “Instead of enrolling customers in a weekly menu of meals, these companies offer in-store kits on a day-by-day basis. Albertsons, an American supermarket firm that bought a subscription-based meal-kit company called Plated in September, announced last week that Plated’s products will be available in hundreds of its stores this year. Walmart will soon do the same with its own kits in 2,000 of its stores. Amazon and Weight Watchers, a weight-loss brand, have a slice of the $2 billion market, too.”

The last Facebook post from Chef’d — “Fresh, dense and hearty describes Ziggy Marley’s Frittata recipe. Perfect for breakfast, brunch or dinner, this dish is guaranteed a winner! — was posted at 3:17 p.m. Monday.

“Most employees were alerted to the news prior to [Ransford’s] email, during a 4 p.m. PST company-wide conference call, former warehouse workers told Business Insider. Miguel Gonzalez, who worked as a sanitation supervisor at Chef’d's Pico Rivera, California, location said that all employees were sent home immediately following the call, with the knowledge they no longer had jobs at the meal-kit startup,” BI’s Taylor reports.

“There were some tears,” Gonzalez said, she adds.

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