The Kroger Co. has completed its $200 million purchase of meal-kit service Home Chef, furthering the Cincinnati-based grocer’s four-pillar Restock Kroger strategy, particularly its plan to “partner for customer value.” The deal was first unveiled a month ago.
Intended to significantly accelerate the availability of meal kits, the acquisition will help Kroger further lead the way in “revolutionizing how companies shop for, prep and cook their meals.” Kroger has plans to make Home Chef’s meal kits available to customers online and in stores.
Kroger payed $200 million for the initial transaction, and has agreed to future earn-out payments of up to $500 million over five years, contingent on such milestones as significant growth of in-store and online meal kit sales. The grocer has good reason to believe in Home Chef’s future success, given the company’s 150 percent growth in 2017, $250 million in revenue, and two recent profitable quarters.
"We're excited to welcome Home Chef to The Kroger Family of Companies," says 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."
Home Chef will assume responsibility for Kroger’s meal solutions portfolio and also become a subsidiary of the retailer while also maintaining its ecommerce business through its website. It also will maintain its distribution centers in Chicago, Atlanta and San Bernardinio, Calif., which together reach 98 percent of all continental U.S. households within a two-day delivery window.
Last week, Kroger announced quarter-one results of its fiscal 2018, showing that the Restock Kroger strategy is paying off. The grocer revealed a lift in comparable-store sales and high expectations for the full year.
Kroger operates 2,800 retail food stores under various banner names, employing nearly half a million associates. The retailer landed the No. 2 spot of PG's 2018 Super 50 list of top grocers, logging $79.2 billion in sales during its most recent completed fiscal year.