Dive Brief:
- Chef’d CEO Kyle Ransford said his company's unique partnership model, wider selection, and no subscription fees translates into customer acquisition costs about a tenth of its rivals, according to Food Navigator.
- Ransford told the publication Chef’d has been growing quickly, and has been "first order profitable" during six out of the last seven months on a gross margin basis.
- "We have significant gross margin in our sales, but the other thing is that we don't have the marketing expenses of competitors,'" Ransford told Food Navigator. "We're not giving it away. It's all about customer acquisition costs versus lifetime value."
Dive Insight:
A recent Harris Poll revealed 25% of adults purchased a meal kit in 2016 and 70% of meal kit purchasers have continued to buy them.
Today’s consumers want convenience more than ever, which is why meal kit services such as Chef'd have become so popular. The problem is with increased competition among companies entering the space, there’s not enough demand yet for all of them. The result is many businesses are floundering. Recently, meal delivery firm Sprig became the latest company to close down its operations, and many more are expected to follow.
Chef’d seems to be following the same strategy of big players such as Blue Apron and Hello Fresh who have prospered in the category. Chef’d relies on a unique partnership model, wider selection, and no subscription fees that so far appears to be working.
Retailers are partnering with Chef’d because it offers hundreds of meals crafted by renowned chefs and top brands, and it’s a name that millennials are following. Searches on Yelp and Instagram both show younger people are talking a lot about it. Even Campbell Soup has been attracted to the company. The owner of Swanson, Pepperidge Farms, V8 and Prego brands recently invested $10 million in Chef'd with the hopes that it will help grow Campbell’s e-commerce capabilities.
“E-commerce will transform the food industry in similar ways to how it transformed entertainment and apparel. It is a game changer for consumers, food makers and retailers alike,” Denise Morrison, president and chief executive officer at Campbell Soup, said in a statement. “The movement is irrevocable and irreversible. Chef’d will help Campbell connect with our consumers where they are today and, more importantly, where they’re headed.”