The meal-kit industry is looking for growth in the next generation of vending machines.
Chef’d, a company backed by Campbell Soup Co. and Smithfield Foods Inc., is putting its meals in hundreds of new-age machines across the Bay Area, including at the offices of Tesla Inc. and Chevron Corp., and on the campus of Stanford University. It’s betting that workers on their way out the door might be in the market for boxes of pre-portioned ingredients that allow them to skip the grocery store on the way home.
While Chef’d is a small player in the meal-kit market, it’s been driving growth through sales at grocery stores, an increasingly popular strategy in an industry mostly built on e-commerce subscriptions. About seven months after the company ramped up its retail push, Chef’d meals are in almost 1,000 U.S. stores. Sales from brick-and-mortar locations now generate more than half of revenue.
The partnership with Byte Foods, which operates more than 500 vending machines packed with ahi tuna poke bowls, kale salads and kombucha, gives Chef’d another outlet to get its meals in front of customers.
“Most people are not looking to be forced into a subscription,” said Kyle Ransford, chief executive officer and founder of Chef’d. “You’re seeing people shift to the model we have in place.”
The Chef’d move into vending machines comes as the meal-kit industry grapples with the online subscription model. It’s expensive to acquire and keep customers that way, leading companies to increasingly look to sell their products in supermarkets. Retail sales of meal kits gained more than 26 per cent last year to surpass US$150 million, according to Nielsen.
GRAB AND COOK
Chef’d meals are in about 100 vending machines, and the company has plans to expand soon to the more than 500 across the Bay Area that are served by Byte.
The meal kits, generally two portions, sell for about US$15 to US$20 and are designed for busy workers who can grab one on the way out of the office. A Byte Foods fridge at the offices of Bolt, a San Francisco venture capital firm, is currently offering “black truffle butter sirloin steaks,” a meal Chef’d says can be prepared in 15 minutes.
Chef’d is also experimenting with branded fridges, made by Byte, that it plans to place at a handful of large residential buildings. The machines use radio frequencies to tally what a customer has purchased, with the door unlocking only after a credit card has been swiped. Byte is talking to large food companies interested in machines that could be placed at hospitals or gyms, according to Lee Mokri, the company’s founder.
“Brands are looking to sell their food at places where people don’t currently buy food,” he said.