Home Chef enjoys strong double-digit growth, boosts convenience to tackle ‘cooking fatigue’
“We’re seeing continued adoption, so we’re attracting new customers all the time, but our retention is also meaningfully higher than what we saw last year,” chief revenue officer Rich DeNardis told FoodNavigator-USA.
“We’re up meaningfully year on year, so we’re seeing double-digit, near triple-digit growth over last year’s numbers, and we’re hopeful that the retention rates will stay at an elevated level through next year,” said DeNardis, who joined the Chicago-based meal kit company in 2015 and now oversees marketing, business development, retail channel sales and web/mobile products.
‘They still want a good home-cooked experience, but they don’t want to have to put in so much effort to achieve it’
That said, Home Chef's offer has broadened, as many people are beginning to experience “cooking fatigue,” and are looking for more convenient products that still deliver restaurant quality, said DeNardis, who was speaking to us shortly after Nestlé USA acquired fresh prepared meal delivery firm Freshly.
“At the start of the pandemic you saw all these stories about baking yeast being sold out and everyone cooking all the time, but now I think people are maybe a little bit over it, and they’re back to seeking convenience.
“They still want a good home cooked experience, but they don’t want to have to put in so much effort to achieve it,” he added.
“So we’re seeing increased adoption of our fast and fresh meals, which can be cooked in the oven or the microwave, but require no prep time, and our oven ready meals, which require no prep but still need cooking in the oven, and are part of our Fresh & Easy Plan.
“Our typical approach is to add one or two meals to the menu and really listen to customer feedback about what they like or don’t like about the meal before we do a wider roll out, but we’re very excited about the feedback for our fast and fresh meals so far.”
‘A more elevated experience’
Kroger - which acquired Home Chef in 2018 in a $200m deal - is also investing heavily in Home Chef’s instore offering, with stores now offering a mixture of products from traditional boxed meal kits, to oven ready dinners, and ready to heat meals.
The latest innovations under the Home Chef brand available in 2,000+ Kroger stores include fresh heat & eat soups in seven flavors ($4.99) and three varieties of Sicilian-style flatbread pizzas ($5.99+), said DeNardis.
“We’re really trying to push the envelope and deliver a more elevated experience than you’d get with a traditional take and bake pizza.”
He added: “It’s about providing solutions – we know customers aren’t solely interested in doing only meal kits, or only heat and eat.”
A permanent shift in consumer behavior?
Asked whether everything would go back to normal for meal kit or/and prepared meal delivery brands once a coronavirus vaccine becomes widely available, DeNardis argued that the e-commerce adoption curve has dramatically accelerated in 2020, and the genie won’t go back in the bottle.
“I think we’re seeing a permanent shift in consumer behavior not just in food, but in general retail, multiple years of growth in e-commerce penetration that have been pulled forward into this year…
"We’ve had an opportunity to engage folks that have never engaged before… my parents were never click and collect shoppers before the pandemic and now they’re never going back.”
Home Chef is gearing up for a bigger than usual Thanksgiving this year as more Americans stay home and prepare dishes for smaller groupings, said DeNardis.
“In a typical year there’s travel and we see customers drop off in online ordering, but this year, with the changing dynamic we’re not seeing as big of a drop.” Find out more about the holiday offerings HERE.
HelloFresh: Strong growth in revenues and customers; Blue Apron up more modestly, sees decline in customers
Kroger does not separate out Home Chef figures in its financial results, but Kroger CEO Rodney McMullen told analysts on the Q2 earnings call in September that Home Chef had had “an incredible [2nd] quarter both in sales growth and profitability.”
Rival HelloFresh meanwhile, continues to go from strength to strength, posting a 113.5% year-on-year (YoY) surge in US revenues* in the third quarter to €526.3m ($621.6m), despite capacity constraints, with a 68.7% increase in customer US active customers in Q3 to 2.49 million. Group sales were up 120.2% to €970.2m ($1.15bn) and earnings before interest and tax topped €92m ($108.8m).
Blue Apron posted a 13% increase in revenue to $112.3m in Q3, driven by higher average orders and higher numbers of orders per customer, although customer numbers declined from 386,000 in Q3, 2019, to 357,000 in Q3 2020, a 7.5% drop.
Net losses topped $15m in the quarter at Blue Apron, which recently entered into a $35m term loan that matures in March 2023, said CEO Linda Findley Kozlowski: “We are confident that we have the necessary capital resources to continue to execute our growth plan and we believe that Blue Apron is now in a sounder competitive position.”
*124% growth in constant currency
