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The great meal-kit shakeout continues as Kroger plans to buy Home Chef for at least $200 million

Who’s next?

A grocery store produce section with meal kits on the shelves Scott Olson / Getty
Jason Del Rey has been a business journalist for 15 years and has covered Amazon, Walmart, and the e-commerce industry for the last decade. He was a senior correspondent at Vox.

A year ago, no meal-kit startups of consequence had gone public or sold to a competitor. As of today, at least five of the startups in the space have, or intend to.

The latest: On Wednesday, Kroger announced its intent to purchase Chicago-based Home Chef for $200 million up front. The value of the deal could balloon to $700 million over five years if Home Chef hits certain “significant growth” milestones.

Home Chef, the third-largest meal-kit company, grew 150 percent in 2017 to $250 million in revenue, Kroger said. The company has historically been unprofitable, but recently posted two quarters in the black.

Home Chef, like others in the space, ships pre-measured ingredients to customers’ homes so they can make recipes that are included in the order.

The string of transactions in this space started last June with the IPO of then-market leader Blue Apron, which went public at a value of around $2 billion. The company has struggled since then, though, with operational and growth issues that led to the exit of its first CEO, Matt Salzberg.

Blue Apron is now valued at just $570 million, as reduced marketing spending has led to shrinking revenue. It’s worth wondering at what price Blue Apron might become attractive to another grocer like, say, Walmart — the largest in the U.S.

Blue Apron’s struggles, in addition to Amazon’s acquisition of Whole Foods, appear to have dissuaded several other smaller players in the space from continuing on a path as an independent business, where distribution typically comes with high customer acquisition costs. Big grocery companies can give these startups a way to reach mass audiences by selling their meals a la carte in brick-and-mortar stores.

Plated sold last year to another giant grocer, Albertsons, while Green Chef sold to larger meal-kit company HelloFresh.

HelloFresh, for its part, went public on Germany’s Frankfurt Stock Exchange in the fall and is currently worth about $2.2 billion — trying, along the way, to dispel the notion that these business models are better off existing underneath a giant grocery company.

And earlier this year, healthy meal-kit startup Sun Basket raised a new $58 million in capital to continue to go it alone.

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