A rapidly expanding Toronto meal-delivery company that is emerging as a disruptor in the giant Canadian grocery business has secured a key venture-financing deal to fund its national growth.
Chef's Plate is set to announce Tuesday it has raised $6-million in a funding round led by Germany's Acton Capital Partners, which backed one of the original startups in the e-commerce-based meal-delivery business, Swedish firm Linas Matkasse. Prior venture investors Emil Capital and BrandProject also participated in the financing.
"For us it's a really big opportunity," said Chef's Plate co-founder Jamie Shea. "We're on a mission to build the leading online food company in Canada. … We're well-positioned to be a $100-million business in that market."
Chef's Plate prepares meal kits – a collection of ingredients sourced fresh directly from local farms and packaged by the company with instructions – which are delivered by FedEx and others to customers in refrigerated boxes on a subscription basis. Meals cost $9.75 to $10.95 each and customers spend about 30 minutes to prepare the food once it arrives. The company offers multiple recipes, changing its offerings on a weekly basis.
The company, which made its first deliveries from its Ontario base in February, 2015, delivered 100,000 meal kits in June, the month it expanded to Western Canada by opening a Vancouver-based distribution centre. Deliveries east of Ontario will begin later this year. Chef's Plate is growing sales by 10 per cent or more from week to week as the "vast majority" of business comes from repeat customers, Mr. Shea said. Industry sources say its volumes are approaching 200,000 meal kits per month, meaning annualized revenues are on track to exceed $20-million.
"I'm thrilled with the performance," said Andrew Black, founder of Toronto-based BrandProject, one of the company's earliest investors. "It's been a thrill to see the acceptance of Canadian consumers for such an innovative solution. Some customers have bought [meal kits from Chef's Plate] for 40 weeks in a row. These people have changed the way they shop for food and cook and eat at home. It's transformational. There's no doubt with the momentum we have, the brand will be synonymous with home meal delivery in Canada."
Chef's Plate, founded by Mr. Shea and his friend and roommate Patrick Meyer, both 27, two years ago, is tapping into an emerging trend as new consumer and packaged-goods firms borrow tactics from the high-growth tech sector to bring disruption to their industry, including online subscriptions and a focus on customer service. Already, early investors are seeing returns similar to bonanzas seen in the software space: this summer, Unilever bought shaving startup Dollar Shave Club for $1-billion U.S., and the consumer packaged goods giant was recently reported to be in talks to buy Jessica Alba's green household products firm The Honest Co. for a similar amount (though on Monday it bought Honest competitor Seventh Generation instead).
Meanwhile, several packaged-goods giants, including Coca-Cola, Campbell Soup and Nordstrom are actively funding startups and eyeing takeovers of new competitors as customer tastes shift from long-established brands. Giants in the space "can't afford not to [look at funding or buying high-growth rivals] any more," said Mr. Black, who has financed other upstart brands including Awake Chocolate and Rumble power drinks. "There's so much innovation going on they can't keep up with it. Consumer packaged goods and consumer-products companies are being so disrupted it's incredible."
"The new consumer packaged-goods companies that succeed are laser-focused on customer experience" by leveraging technology, said Hannes Blum, Acton's Victoria, B.C.-based venture partner leading the investment in Chef's Plate. "It all comes down to that."