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What’s for dinner!?

Calculating the costs of regularly eating out, or using delivery services like GrubHub or DoorDash can quickly reveal an out of control family food budget. A couple will easily spend between $500 and $1000 a month on food prepared outside of their home.

Don’t believe it?

$10/lunch x 2 people x 20 workdays a month is $400 of that total all by itself. If they grab a quick breakfast at McDonalds on the way to work a couple of days a week, that’s another $5/meal. If that couple comes home from work and are too tired to cook; they go out to dinner. Eating on the cheap will still run about $12-15 per meal without including alcohol, times 2 people, – let’s say twice a week, and that’s another $200-$300 to the monthly drain. It adds up quickly.

Still, couples are spending between $350 to $690 per month on groceries, according to One Main Financial.

With the lockdown slashing the household budget, it doesn’t delete the craving for variety above available time and skill in the kitchen. And this creates investment opportunities in the startup space.

We’re obsessed with food! With over 175 cooking shows in the reality competitions, entertainment and educational aspects around preparing food that looks and tastes good, people spend a lot of time thinking about what they’re going to eat; and looking at how to create more economical fine dining.

Meal kits and other deliverables have been appealing to the public for several years now.

In the early days of ready-to-cook or ready to eat meals, the weight loss industry had created meal kits as one way of controlling portions and varieties of food flavors and textures that meet nutritional needs. Jenny Craig, NutriSystems, and Optavia, just to name a few provided heat-and-eat menu items that needed to be supplemented with fresh ingredients like fruits and vegetables.

Then a wider variety of meal kit startups came on the scene.

The Food and Beverage Marketplace

The market is massive and growing. Before the pandemic, this category – also referred to as the premium food and beverage category has been jumping in sales volume, with $136 billion expected in retail sales by 2022 – that’s $13% of the $1 trillion total US food and beverage category. [source: Josh Meah and Company]

Challenges that could disrupt the industry could include food supply disruptions like we’ve seen in other industries during the pandemic. Food prices have been jumping lately, but like the lumber industry should also correct eventually, so consider that into your investment decisions.

In 2012, I started hearing “Blue Apron” advertisements on the radio during my commute, with radio personalities talking about receiving their kit for the week, describing how much their family enjoyed the food, how easy it was to prepare, as well as promoting the value for the cost of meals.  Cost per person per meal typically ranges between $5 and $10, though Nutrisystem toutes $1.62 per meal average, but that’s based on a 6 meal a day lifestyle. [source: Buyer’s Guide – Meal Delivery]

The full meal kit followed a trend of direct-to-consumer food production companies that bypassed the grocery store process like Omaha Steaks.

The meal-kit service promised several positive outcomes, including:

  • Perfect portions (great for weight control)
  • Fresh ingredients – no shopping needed and no spoiling in the fridge
  • Organic ingredients – some plans even offer organic produce and meats
  • Less wasted food. While you might lament not having leftovers for the next day’s lunch, you’re not throwing out leftovers you forgot about. And you don’t have unused vegetables that you didn’t need for the meal, going to waste or  spices cluttering up your cupboard that you don’t remember you had!
  • Healthy options – many kits offer specialty diet recipes and options.
  • Less hassle – you don’t have to plan, shop or prep so meal prep time is brief and enjoyable.
  • Cost savings – while meal kits aren’t exactly cheap, they’re definitely a savings over the equivalent choice served by a restaurant. And in that initial lock-down, restaurants weren’t even a choice.
  • Novelty – if your palate has been stuck in a rut with what you know how to make or microwave, meal kits offer new recipes every week.

[source: FoodBox HQ]

Realizing the potential of losing market share, grocery stores have begun to offer a form of meal kits. Most people notice prepared and ready-to-cook fresh stir fry or fajita vegetables, portioned and seasoned chicken nearby and recipes. When Amazon announced in June of 2017 that they were entering the grocery space with the acquisition of Whole Foods, Blue Apron (NYSE: APRN), which had just gone public that same month, saw its stock value drop 11% following the announcement.

Blue Apron (NYSE: APRN)

Blue Apron’s history gives a cautionary tale about the probable successful and stable growth of meal-kit companies, however. The company’s stock has shown difficulty in holding it’s valuation. In it’s opening month it reached a high of $165 and before the end of the first year had lost over 80% of its initial stock value, and now trades around $7 and change.

[Image Source: ThinkorSwim]

That hasn’t stopped other companies from entering the marketplace. Here are just a few in the startup space to take a look at.

Home Chef

Home Chef was the major challenge to Blue Apron’s early dominance in the meal kit business. In the beginning (2013), founder Pat Vihtelic partnered with a chef to create easy-to-follow recipes, and grew to over 700 employees currently involved in production, marketing, technology, product design and customer service, providing over 10 million meals last year. [source: Home Chef]

Home Chef started out with seed funding on July 23rd, 2014, with their last round (Series B) in September of 2016 bringing their total pre-acquisition funding to $57 million. In 2018, Kroger announced their acquisition of Home Chef, after Home Chef’s 2017 numbers showing $250 million in revenue and two profitable quarters. The initial translation price was $200 million with future earnout payments of up to $500 million over five years, contingent upon achieving growth of in-store and online meal kit sales milestones. [source: Kroger]

Home Bistro

Boardroom covered Home Bistro in detail last year.  To bring you up to speed quickly, Home Bistro brought in the idea of partnering with celebrity chefs behind the recipes and the kit plans. Imagine Iron Chef – Cat Cora, Ayesha Curry, Roble Ali, Claudia Sandoval and Diana Falk at your side, already measuring out spices, and giving you easy to follow step by step prep instructions to have a restaurant-ready meal at the table in minutes; it makes going out to eat superfluous.

Iron Chef, Cat Cora [source: Equifund]

Home Bistro is in the process of offering it’s Regulation A+ investing to angels; with minimum buy-in at $501. Home Bistro offers extra perks to angel investors as well. Investing $1000 or more nets a 50% discount on the first meal order up to $200; $2000 or more nets a 75% discount on the first meal order up to $200 and $5000 investment nets a free $350 home bistro gift card.

So far, $5,373,952 has been committed with 2168 investors so far.  [source: Equifund]

Home Bistro has an unusual simultaneous offering with a  Pink OTC listing (HBIS) which currently is priced at $1.46 per share, but trading volume is less than 4000 shares traded per day, so refer to your investing rules for angel investing as well as the stock market.


Tovala provides a bit more hand-holding in the kitchen; their kit doesn’t just include already portioned and prepped meats, vegetables and other meal components. Tovala has a specialty programmable “smart oven” that lets you scan the barcode and cooks the food perfectly after you pop it in that oven.

Popular cooking/talk show host Rachael Ray tested out and reviewed the oven and meal kits and called it her press-a-button Jetsons’ fantasy fulfilled. Her expectations were low – probably a “glorified TV dinner microwave thing.”  You can read more about her experience here.

Buying the oven outright will set you back anywhere between $300 and $600 depending on your source. However, when purchased with a meal-plan, customers can opt for a $99 price. Meals run $11.99 and up per meal. [source: Tovala]

Launched in 2016 with an early Kickstarter campaign, Tovala approached the what-to-cook dilemma by selling fresh, scan-to-cook meals that took out the prep-time typically involved. Their most recent round of funding was Series C in February of 2021 with a goal of raising $30 million, bringing their total funding to $68.6 million. OurCrowd and Joseph Mansueto are the most recent investors. [source: Crunchbase]


Hungryroot’s approach to the meal-kits market is “The one-click grocery trip”. Their focus is ‘healthy groceries with simple recipes’. If a grocery store is a budget and healthy-choice nightmare for you, their approach may solve a number of problems. They have a detailed quiz to actually suggest groceries and recipes for you.

Earth-friendly. Hungryroot focuses on sustainability by encouraging people to eat more plants more often as a way of having a positive impact on climate change. They also encourage people to recycle their shipping materials, and even incorporate “Enviro-Ice” – a non-toxic, drain-safe gel that can actually be diluted to feed houseplants; then recycle the plastic bag it comes in.

Earth-friendly also includes attention to reduction in food waste. “We only source what we’re able to sell”. When the company runs into an excess food stock over sales demand, they donate 100% of that excess to local food banks. [source:]

Hungryroot has raised $75.4 million in 5 rounds of funding. It’s most recent round was announced June 4, 2021 (Series C). Top investors include L Catterton and Crosslink Capital, and Lightspeed Venture Partners led funding for Series A and B. [source: Crunchbase]

Bottom Line

Using a meal kit service is a great way to enjoy a variety of healthy foods in the fine-dining category, and rein in the usually out of control out-of-the-home food consumption spend. It’s a $136 billion market and rising. While that means great optimism for investment opportunities, Blue Apron’s story and financial performance should warn investors to thoroughly conduct their due-diligence carefully before investing.