Meat Kit Company Chef’d Shuts Down Due to Lack of Funding

UPDATE (July 25, 2018): True Food Innovations, a fresh food technology and CPG manufacturing company, has acquired the assets of Chef’d. The deal was finalized between True Food Innovations and Chef’d’s lender on July 25, 2018. The company now owns all Chef’d assets including plant, property, equipment, brand and intangible assets. True Food Innovations plans on merging these assets into their existing businesses such as their own line of meal kits under the brand of True Chef.

Originally published on July 19, 2018:

The meal kit trend seems to be on a downward slope as major meal kit companies struggle to keep their subscribers. Chef’d is one of the companies that has been affected by this declining trend as the meal kit company has been forced to shut down.

According to the Wall Street Journal , Chef’d has suspended their operations due to lack of funding. The company’s Chief Technology Officer wrote to WSJ and said that Chef’d had “ceased all operations until our investors and lenders decide the final fate of the company.” The company’s 350 workers were also laid off.

This turn of events is surprising considering all the initiatives that Chef’d invested in to stay afloat. The maker of pre-portioned meal kits was one of the first to break out into the brick-and-mortar space last year. However, the launch of their meal kits in-store did not save the company from losing significant profits. Around the same time, the company received 35 million in funding from Smithfield and Campbell Soup, yet surprisingly the company has spent all its cash without securing additional funding. As of Tuesday, customers can no longer order meal kits from their site.

On Monday evening, the CEO of Chef’d, Kyle Ransford, sent out an email to all employees.

“We have had some unexpected circumstances with the funding for the business. Due to setbacks with financing, unfortunately, we are ceasing operations for all employees, effective today, July 16, 2018. If we had been successful with these funding efforts, this difficult decision would have been avoided,” wrote Ransford.

According to the email, all employees will receive their wages through their last day of work along with any applicable vacation pay. Additionally, certain eligible employees can utilize their benefits until the end of the month.

However, most employees were already made aware of the company shutting down due to a company-wide conference call.

While meal kits, in general, are growing in popularity among consumers because of their convenience, the market for these products has become oversaturated, which is why meal kit companies are losing revenue. According to market research firm, Packaged Facts, the meal kit industry has over 150 companies that are competing with each other nationally, regionally and locally.

Although meal kit companies are trying to expand their reach through partnerships with major grocery stores, there is evidence that the competitive landscape in the meal kit industry is set to create some serious damage. Second Measure finds that meal kit delivery trends are slowly declining which is why such companies are breaking into the brick-and-mortar grocery space.

“Meal kits are reminiscent of the late 90’s dot-com boom for everything, and how the market became very saturated. We will see meal kit services and retailers tightening their relationship,” said Darren Seifer, a food and beverage analyst at NPD group, to CNBC.

Strengthening relationships might be exactly what the meal kit industry needs. In June, Hello Fresh announced that they would sell their meal kits in nearly 600 Ahold Delhaize stores, even though the company was the last of several meat kit producers to partner with grocery stores. However, that slow entry into the grocery space hasn’t stopped Hello Fresh from topping Blue Apron in sales and becoming the leading provider of meal kits in America. Blue Apron is close behind in second place with their partnership with Costco, who recently announced that they will be selling Blue Apron meal kits for 30 percent off.

Considering the massive amount of competition there is in the food space for meal kit companies, it’s not likely that Chef’d will be the last meal kit company to shut down.

“I want to personally thank each of you. It was an amazing run and while we didn’t get to where we wanted to go, I hope you each take something away from this experience that will help you in the future. I will miss you and I will miss Chef’d,” wrote Ransford in his email.