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The Wall Street Journal this morning reports that meal kit provider Chef’d has suspended operations after burning through “tens of millions of dollars in cash from venture capitalists and big food companies such as Campbell Soup Co. and Smithfield Foods.”

The Journal says that the company emailed suppliers saying, “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. Consequently, please cease all work associated with Chef’d.”

The story notes that Chef’d had a business plan that included a standalone e-commerce business as well as selling its meal kits through retailers. “That flexibility,” the story says, “helped Chef’d strike deals with major food companies and diet plans - including the Coca-Cola Co. , Hershey’s Co.  and Weight Watchers- to feature their products in boxes. Campbell Soup Co. and Smithfield Foods Inc., legacy manufacturers looking to pivot into fresh food, took $35 million stakes in the company to try to boost their brands. Wolfgang Puck and dozens of other chefs put their names behind meal-kits sold on Chef’d … But running both operations has proven tricky, with the online service proving particularly difficult to generate profits given high shipping costs and managing so many recipes at once, the people familiar with the matter said. Some meal options went unsold or spoiled.”

Plus, “The company lost a number of executives, along with several junior employees in product development and sales, as finances grew shakier in the past several months, the people said. Executives scrambled to secure new financing from major banks and private investors, but talks didn’t progress.”
KC's View:
It seems to me that the meal kit business is likely to be most successful when the kits are sold by existing retailers, whether bricks-and-mortar or online, simply because they have the ability to know more about their customers and to eliminate waste through efficiency. That seems to be what Blue Apron has discovered, and I think we’re going to see this more and more.

That said, the meal kit business … lower case … is one that I think will have legs, just because it makes a lot of sense conceptually. It’ll endure some shaking out and some missteps, and there will be casualties, but I think there will be entities that will make it, and retailers that will make a go of it.