Last week, popular meal kit company Chef’d announced that it was suspending operations effective immediately. Customers were advised that they could no longer order Chef’d meal kits via the company’s website.
This was a surprise move for the company who last month announced that it would sell its kits in Duane Reade and Walgreen’s stores in New York City. But according to a report in The Wall Street Journal, the company laid off about 350 workers and sent an email to vendors announcing it would be halting operations. Most of the employees operated out of the company’s warehouses in Brooklyn, New York and California.
“Due to some unexpected circumstances with the funding and business, I regret to inform that Chef’d has ceased all operations until our investors and lenders decide the final fate of the company,” the company’s chief technology officer wrote in an email to a supplier Tuesday. “Consequently, please cease all work associated with Chef’d.”
WSJ also reported that the company had been burning through millions in cash, including investments from Campbell Soup Company and others. Chef’d offered a wider range of meal kits and was the first in the industry to sell its boxes in big chain stores like Smithfield, Gelson’s and Costco.
This announcement surprised investors and analysts who have been watching the industry closely. Most meal kit companies are looking to distribute via big grocery chains, which Chef’d pioneered. Overall, in-store meal kits saw a 26.5 percent rise in sales over the past year, reaching $154.6 million. While Blue Apron and Hello Fresh remain the top competitors, the majority of their sales are still through online subscriptions.
Chef’d found creative methods of distribution, including partnering with vending machine company Byte to place meal kits in their refrigerated vending stations at workplaces.
The wide range of choices (as opposed to the handful of weekly menus that other meal kit services offered) gave Chef’d a competitive advantage in the market. The company was able to make deals with companies like Coca-Cola Co., Hershey’s Co., and Weight Watchers to include their food and products in Chef’d kits. Chef’d also partnered with Wolfgang Puck and other celebrity chefs to offer name-brand recipes to its customers.
Despite these efforts, sales dropped sharply in 2018. The meal kit industry in general has been struggling, with major players like Blue Apron opening pop-up stores and partnering with celebrities to create enticing new meal kits, hoping to attract new customers.
All meal kit companies have looked for ways to expand distribution in order to compete with Amazon, who purchased Whole Foods last year and has offered its own meal kits for order online.