Meal kit delivery services are going mainstream.
Albertsons Companies, which owns over 2,200 grocery stores in 35 states, has acquired prepared meal startup Plated (which we gave high marks in a ranking of such services). This represents the first acquisition of a meal delivery startup by a national grocery chain.
Financial terms of the deal were not disclosed. Credit Suisse brokered the acquisition, which is slated to close at the end of this month.
Plated will operate as a subsidiary of Albertsons, the nation’s second largest grocery store operator. Customers at Albertsons-owned supermarkets like Safeway and Shaw’s will be able to buy a rotating selection of Plated meals priced at $10 to $12 a serving, which can be picked up in-store or delivered to customers’ homes. Plated’s normal delivery service will continue, and the company will remain headquartered in New York.
“With Plated, we’ve found a partner who shares our commitment to delicious, affordable food; superior technology and innovation; and world class customer service,” Albertsons chairman and CEO Bob Miller said in a statement. “Plated knows its customers better than anyone, and together we will accelerate our ability to serve them.”
“As meal kits continue to gain traction in the marketplace, we believe this winning formula combines choice, flexibility, culinary expertise, and the ability for customers to buy across channels,” Plated co-founder and CEO Josh Hix added.
Plated, which launched in 2012 and was featured on Shark Tank, distributes its food nationally and is considered one of America’s five largest meal kit providers. Company officials haven’t disclosed the exact number of customers, though Albertsons will now have access to all of this data as it builds its meal kit infrastructure.
The deal represents a crucial lifeline for the supermarket chain, which has postponed its IPO multiple times and saw sales dip two percent in the most recent quarter.
The amount of meal kits has grown exponentially in recent years—there are now roughly 100 delivery services in the $2.2 billion industry. While this is small potatoes compared to the $1.5 trillion U.S. food industry, the sector is slated to grow by at least 25 percent annually in the next five years.
These services are increasingly popular among millennials. According to market research, 24 percent of young professionals subscribe to meal kit services, as do 16 percent of adults.
Plated’s partnership with Albertsons gives it an advantage over competitors like Blue Apron, which saw its highly anticipated IPO go down in flames.
Both traditional grocery stores and meal kit startups are grappling with the growing threat of Amazon, which recently acquired Whole Foods and slashed prices at the chain. The company is exploring technology to produce and deliver its own meal kits through its AmazonFresh service.