Chef’d, the gourmet-focused meal-kit service known for its partnership with brick-and-mortar grocers, appears to be getting a new lease on life since it suddenly closed last week due to "unexpected circumstances with the funding of the business."
Newport Beach, Calif.-based True Family Enterprises, along with its subsidiary True Food Innovations, has acquired Chef’d’s assets, including its plant, property, equipment, brand and intangible assets, for an undisclosed amount. The current plan is to consolidate all of Chef’d’s assets into True Food Innovations’ existing business and bring the brand back for physical retailing.
True Food Innovations currently markets the True Chef line of meal kits, which are known for their longer shelf life than many rivals' offerings. The kits are available for online ordering and through physical partnerships with Costco and Bashas'.
"We seized the opportunity to acquire the assets and brand of Chef'd, as the transaction will be accretive to our business from day one," said True Food Innovations President Robert Jones, who was previously SVP of business development at Chef’d. "We believe the retail channel will continue to grow, and we will concentrate our efforts on that portion of the Chef'd business."
True Food Innovations provides manufacturing services, turnkey product development, HPP (high-pressure processing) packaging solutions, and customer partnerships that introduce first-to-market, private label meal kits and retail-ready HPP products both domestically and internationally. Through its sister company True Fresh HPP, True Food Innovations develops and manufactures food products that use HPP technology, an all-natural USDA- and FDA- approved process that eliminates the use of preservatives or heat to produce fresh, clean-label, all-natural refrigerated products with a safe and extended life – up to 10 times the normal range.
A Physical Problem
Throughout its lifetime, Chef'd's long-term existence has been questioned by a number of experts who doubted any pure-play direct-to-consumer service's profitability. Following the El Segundo, Calif.-based meal-kit service’s closure last week, David Bishop, partner with Barrington, Ill.-based retail consultancy Brick Meets Click, said the event only served to reinforce that grocers eventually will own the meal-kit segment.
"The two assets that pure-play providers want – and grocers who operate in the physical market possess – are proximity and connection," Bishop told Progressive Grocer. "These two assets, respectively, being closer to the consumer and having an established relationship, help reduce the distribution and marketing expenses that pure-plays like meal kits struggle to overcome."
While Chef’d deserves some credit for moving more quickly than its rivals in partnering with grocers and integrating new products online and in-store, Bishop noted that unfortunately, the move wasn't enough to offset the "extraordinarily high cost" related to the direct-to-consumer sales model.
"Pure-play meal kits have always been a challenging and expensive proposition relative to other online grocery shopping options, whether that’s from a consumer or operator perspective," he observed. "As consumer interest has grown, so has the level of competition, and with it expectation and perceptions related to the various value propositions."
Added Bishop: "Chef’d isn’t alone, as others continue to wrestle with similar challenges as grocers refine their own meals offering. While these realities hurt Chef’d, they also should help grocers in developing more sustainable strategies in this area."