The initial transaction price is $200 million with future earnout payments of up to $500 million over five years. That mark is contingent on achieving milestones, including the growth of instore and online meal kit sales.
“We’re excited to welcome Home Chef to The Kroger family of companies,” said Rodney McMullen, Kroger’s chairman and CEO. “The merging of our two innovative, data-driven, and customer-focused cultures will allow us to accelerate our reach across America, serving food inspiration and uplift.”
Founded in 2013, Home Chef delivers more than 3 million meals to US consumers each month. The company employs approximately 1,000 and operates three distribution centers in Chicago, Atlanta and San Bernardino, California. Home Chef said it experienced 150 percent growth and produced $250 million in revenue in 2017.
“We couldn’t be more excited to join the Kroger family and for what this will mean for millions of customers,” said Pat Vihtelic, Home Chef’s founder and CEO. “We look forward to bringing Home Chef’s simple, convenient and enjoyable meal solutions to Kroger locations.”
Home Chef will operate as a subsidiary of The Kroger Co. and assume responsibility for Kroger’s meal solutions portfolio. Home Chef also will maintain its e-commerce business and continue to operate its offices and facilities. Kroger said it expects the acquisition will have no effect on 2018 earnings and will be slightly accretive in 2019.
Kroger’s acquisition of Home Chef continues the trend of retailers providing meal kit services.
In September 2017, Albertsons Companies Inc. acquired Plated, a New York-based meal kit company. In November 2017, Supervalu Inc. launched a new line of Quick & Easy meal kits.
In March, Walmart debuted its own meal kit offerings. Blue Apron Holdings Inc. also announced plans in March to begin selling prepared meal kits at retail locations.