FoodNavigator-USA (FNU): What’s the rationale behind the tie up with Hannaford and is it more cost effective for you than home delivery?
Rich DeNardis (RD): We are excited about this partnership because it lets us reach customers who are looking for an easy solution to tonight’s dinner. Hannaford customers can now order and pick up a Home Chef meal kit at their local grocer on the same day, without the need to plan ahead. The meals combine Home Chef’s easy recipes and pre-portioned ingredients with fresh steak, chicken or seafood from Hannaford.
FNU: Through this deal you’re targeting consumers who buy into the meal kit concept but may not want to commit to a subscription. Is this is a significant untapped group?
RD: While many of our customers value the convenience of weekly meal kit deliveries that allow them to plan meals in advance, we’ve heard from some customers that they would also enjoy the flexibility of being able to pick up a meal kit in store on their way home from work on while they’re out doing errands.
FNU: Do you also see potential in selling branded pre-packed meal kits in retail outlets?
RD: Our goal is to have solutions for customers wherever and whenever they’re looking for solutions that make it easier for them to feed their families. We see on-shelf options as a potential for the future.
FNU: Will meal kit brands have to enter more partnerships with retailers, CPG brands or others to reduce customer acquisition costs and reach a broader audience?
RD: The meal kit industry is certainly evolving rapidly as brands differentiate themselves in this new, high growth market. While this rapid evolution makes predicting trends difficult, we believe in the omni-channel model, and think there are a number of examples of digitally native brands who have successfully grown by expanding offline.
FNU: How ‘sticky’ is the Home Chef subscription model?
RD: Home Chef is not a subscription in the typical sense. It is easy to skip a delivery, edit orders, or cancel the service directly online but our retention is pretty high vs our competition.
FNU: How does Home Chef compare to rivals on key metrics such as lifetime customer value, customer acquisition costs, and average orders?
RD: This is propriety information that we don't usually share.
FNU: What’s the Home Chef point of difference in the meal kit market?
RD: We differentiate ourselves from other meal kit brands by offering more variety and customization. For instance, we heard that our customers wanted to reduce meal prep time, so we introduced a line of 5-Minute No Cook options. Recently, we expanded to 17 rotating menu options – which means Home Chef now offers more options than top competitors. We also recently introduced flexible servings, a feature that allows customers to choose the number of servings they receive on each meal.
FNU: Can you share any growth figures? What about profitability?
RD: In 2017, Home Chef grew revenue by 150% and with two profitable quarters in 2017 on record, we are targeting full year of profitability in 2018.
FNU: What’s the operational set-up at Home Chef?
RD: We recently opened a new, state-of-the-art production facility to support our continued growth . Our Bedford Park facility is one of three distribution centers and provides the infrastructure to fuel our continued growth in 2018 and beyond. We also have distribution centers in San Bernardino, CA and Lithonia, GA from which we can serve customers coast to coast.
FNU: How much money have you raised to date?
RD: Our funding to date is included below:
- Guild Capital - $500,000, July 2104
- Series A Funding - $10m, March 2016
- Series B Funding - $40m, September 2016