HelloFresh, the world’s largest meal kit company, has agreed to pay $277 million to acquire Batavia-based Factor75, which specializes in health-focused ready-to-eat meals.
The acquisition will give Germany-based HelloFresh its first office in the Chicago metro area, along with Factor75’s four production and fulfillment facilities in Burr Ridge, Franklin Park and Lyons. A soon-to-be-launched facility in Aurora will give it capacity to deliver more than $500 million worth of Factor75 meals annually, the company said.
Factor75, founded in 2013, will continue to operate as a stand-alone company. It specializes in heat-and-eat prepared meals that comply with keto, paleo, low-carb, vegetarian, plant-based and high-protein diets, at a price of $12.38 per meal for an eight-meal-per-week subscription.
The deal strengthens HelloFresh’s position as the meal kit market leader in the U.S. and reflects the industry’s move toward catering to niche diets and lifestyles as well as prepared meals that require little effort, said Cara Rasch, research analyst at Packaged Facts, a market research firm.
HelloFresh has made several growth moves in the U.S. market to appeal to a variety of appetites and price points. The company, whose U.S. headquarters are in New York, in 2018 launched budget-friendly meal kit service EveryPlate and bought organic meal kit company Green Chef, based in Boulder, Colorado.
Interest in meal kits has surged during the pandemic, as people confined to their homes look for ways to make cooking easier.
Hello Fresh, founded in 2011, more than doubled its global sales in its most recent quarter to $1.13 billion, up 120% compared with the same quarter last year, and counts more than 5 million active customers.
The market had been crowded with some 100 companies and stagnating before COVID-19 gave it a jolt. Numerous meal kit companies headquartered in the Chicago area, including Home Chef, Meez Meals and Tovala, reported jumps in sales ranging from 60% to 300% after stay-at-home orders went into effect in spring.
As the pandemic has worn on and people have tired of cooking, people are gravitating toward more convenient options, especially for weeknight dinners when they don’t want to spend 40 minutes with a meal kit recipe, Rasch said
“Although meal kits are going to continue to see interest during the pandemic, the industry is moving toward higher levels of preparation such as pre-chopped vegetables and meat and prepared sauces,” Rasch said in an email. “Meal kit companies are also moving toward prepared meals that require only minimal work, such as frozen or refrigerated meals that are ready to be cooked in the microwave, oven, or skillet, and meals that are already fully cooked and ready to eat or heat.”
Factor75, whose meals can be reheated in the microwave or oven, expects full-year revenue to reach $100 million this year.
“By joining HelloFresh, the market leader in meal kits in the U.S., Factor will leverage new resources and category expertise to accelerate our growth, enhance our brand positioning and further amplify our mission,” Factor75 CEO Mike Apostal said in a news release.
Up to $100 million of the $277 million purchase price will be based on performance and in the form of management incentives.
