Deal will bolster retailer's omnichannel capabilities

CINCINNATI — Kroger Co. is buying Home Chef, a Chicago-based meal kit company with $250 million in sales. The companies say the deal will position Kroger to take the lead as consumers change the way they shop for and prepare the meals they cook at home.

Kroger will pay $200 million for the Home Chef, with potential additional payments of up to $500 million over the next five years if Home Chef achieves certain milestones, including significant growth of in-store and online meal kit sales. Kroger noted that Home Chef’s achieved 150% growth in 2017, and had two profitable quarters.

“Customers want convenience, simplicity and a personalized food experience,” Kroger’s chief digital officer, Yael Cosset, said in a statement. “Bringing Home Chef’s innovative and exciting products and services to Kroger’s customers will help make meal planning even easier and mealtime more delicious. This merger will introduce Kroger’s 60 million shoppers to Home Chef, enhance our ship-to-home and subscription capabilities, and contribute to Restock Kroger.”

After the deal closes, Home Chef will operate as a Kroger subsidiary, maintaining its e-commerce business on homechef.com and assuming responsibility for Kroger’s meal solutions portfolio. The company will continue to operate its offices and facilities. At that point Kroger will will make Home Chef meal kits available to its shoppers, both in stores and online.

“We’ve long believed that the future of our industry is omni-channel and bigger than just meal kits sold online,” said Home Chef founder and CEO Pat Vihtelic. “We want to be where our customers are and want to help make cooking at home easier, more accessible and even more enjoyable “We’re thrilled that we will be part of the Kroger family and plan to maintain our relentless focus on innovation that meets customers’ evolving food needs. Kroger’s expansive retail footprint will allow us to serve millions of more customers across the country with simple, convenient and enjoyable meal solutions.”

The deal comes on the heels of Kroger’s announcement that it will partner with online British supermarket Ocado in an effort to accelerate its own e-commerce offering.

Other food retailers have made their own moves in the meal kit space. Last year Albertsons Cos. acquired the Plated meal kit service. And earlier this month Costco Wholesale Corp. began selling Blue Apron meal kits in its warehouse clubs.