One of the world’s biggest players in the fast-growing meal-kit delivery market has bought a main rival in the Canadian market, a Toronto startup called Chefs Plate that had hoped to go public as early as this year.
Germany’s HelloFresh SE announced Wednesday it has agreed to buy Chefs Plate Inc. for an undisclosed amount believed to be between $50-million and $100-million. Chefs Plate was founded in 2014 by Patrick Meyer and Jamie Shea and quickly scaled up, generating more than $50-million in annualized revenues as of last year.
Privately held Chefs Plate, which once claimed to be the Canadian market leader, now lags market leader GoodFood Market Corp., a Montreal-based company that went public on the TSX via a reverse takeover in June, 2017 and had 89,000 active subscribers as of Aug. 31, as well as HelloFresh, which entered the Canadian market in 2016, according to research reports by Desjardins Securities and National Bank of Canada
The acquisition “will amount to a middle double digit million Canadian dollar amount,” HelloFresh said in a release on its German investor relations website, first reported by tech website BetaKit. “The majority of the consideration will be paid in cash and the remainder will be paid by issuing new shares of the Company out of its existing authorized capital to the shareholders of Chef’s Plate Inc.”
Hannes Blum, a director with Chefs Plate whose Acton Capital was one of the earliest institutional investors in the Canadian firm, said HelloFresh has made an aggressive push to become the leading player in all English-speaking countries, and “Canada was one of the markets where they weren’t the market leader. ... I think this is a very smart acquisition by HelloFresh to make a real leap forward in the Canadian market.”
HelloFresh, which went public on the Frankfurt Stock Exchange last fall, said in a release its combined business with Chefs Plate in Canada would have revenues of $200-million and create the “clear market leader in Canada” with the largest customer base. A spokesperson declined to say how many customers HelloFresh has in Canada, adding the company serves 1.84 million households worldwide. It delivers “cook from scratch” meals through a subscription. Meal prices vary between $10.31 to $13.33 per serving.
“We started out four years ago a the pioneer in the Canadian meal kit market and have led it ever since,” Mr. Shea, co-founder and CEO of Chefs Plate, and a former brand manager with Cara Operations Ltd., said in an e-mail Wednesday. “As we continue to think through being a leader in the space we decided that the best approach was to join forces with the global market leader that had the same vision in mind.”
Mr. Blum said while the sale represented “a very good exit … I think there would have been an opportunity to develop [Chefs Plate] even further" as an independent company. "This is an attractive market and I think there’s a great opportunity in Canada.”
Chefs Plate financiers include BrandProject, Acton Capital, Emil Capital and InvestEco Capital as well as Comerica Bank.
The fast-growing meal-kit delivery industry faces heavy competition from players including New York-based Blue Apron, whose stock has struggled as companies such as Amazon.com Inc. have launched their own meal-kit services.
A HelloFresh spokesperson declined a request for interviews.
Editor’s note: An earlier version of this story incorrectly identified Chefs Plate as the market leader in the Canadian meal-kit delivery market. Research reports published by two investment analysts who cover the sector a day later said Chefs Plate is now the third largest player in Canada behind market leader Montreal-based GoodFood Market Corp. of Montreal and HelloFresh SE. The story has been corrected to reflect this information.