
Kroger acquires Home Chef for $200M - chotachetan
https://thespoon.tech/kroger-buys-home-chef-for-200m-as-meal-kits-continue-march-into-grocery-stores/
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evanriley
I'm always surprised there aren't more kits like what you would find in Blue
Apron/Plated/Home Chef/etc in grocery stores.

I would buy A LOT more, and probably even overpay because of convenience if I
could walk into my local Harris Teeter/Krogers/Food Lion and just pick up a 3
meal/2 person box with most of what I need.

~~~
koolba
Free business idea: A store _dedicated_ to exactly this.

Imagine instead of many different, individually packaged, products, you have
one (or maybe a handful) of pre-packaged meals for one or two people. The
retail space and checkout would be insanely efficient as you'd just grab and
go.

You'd have the green angle too as there wouldn't be any excess packaging to
keep the food fresh nor carbon emissions from all the individual deliveries.
Just standard refrigerators and pictures of happy patrons walking home with
their meal kits.

The recurring subscription model, i.e. the holy grail of high valuations,
could be added as well. Either through the usual $X/period gets you Y meals or
maybe just a discount ($Z/month to get Q% off).

Or taking it to the next level, imagine a meal kit vending machine. The owner
would stock it each day (say around 3pm) and customers could grab their own
meals with a quick swipe of their card. Same idea as the store but reducing
the retail space from a mini store to a couple square feet.

~~~
dboreham
I think you described Mark's and Spencer food stores.

~~~
Willwhatley
Are their only sites in Hong Kong and Macau? This is the site linked from the
only location I could find in Google Maps.

[http://global.marksandspencer.com/hk/store-
locator/](http://global.marksandspencer.com/hk/store-locator/)

~~~
ghaff
They're all over the UK at least.

~~~
Willwhatley
Ok, thanks. I do not get over the pond much.

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tedmiston
This makes me happy.

I've tried a half dozen of the meal kit providers and Home Chef is hands down
the highest quality in terms of ingredients and also providing recipes that
are fancy enough that you don't say "I could have just made this myself" like
everyone says about Blue Apron. I order irregularly but my experience with
Home Chef has been incredible.

I'm probably one of the few on HN who's tried Kroger's existing meal kits that
have been piloted in a few stores around Cincinnati. They definitely target a
different audience than the online meal kits, but being able to pick one up at
the grocery store on a whim vs committing to buy + cook 3 kits in 1 week has
been a game changer for me. I hope that they bring the Home Chef kits in
store. Plus it's got to save a ton not having to ship the kits and not
requiring the ice packs.

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Itaxpica
Home Chef is by far my favorite of the meal kits I’ve tried (and I’ve tried a
lot) in terms of both variety and quality. Fingers crossed this is one of
those “keep doing what you’re doing but now with the funds for greater scale
and distribution” acquisitions and not one of those “steady degradation of
service while the new owner plunders you for parts” acquisitions.

------
subpixel
It was reported when it happened, but most New Yorkers are unaware that Kroger
bought Murray's Cheese last year. They already have 400 or so standalone
Murray's shops _inside_ Krogers around the country, selling the best cheese
and 'specialty food' items (charcuterie, crackers, dips, etc.) you can get in
the US. And every person behind the counter is trained by Murray's to know
their stuff and be able to make expert recommendations.

Murray's bake-at-home mac and cheese, only available at Kroger, sounds quite
nice.

~~~
stefantheard
I didn't know this, thank you for mentioning it. I shop at Kroger pretty often
and have never considered buying cheese or charcuterie there since it seemed
like it might be bad, guess I was quite a ways off the mark.

~~~
professorgerm
It varies by location, though. If you have a Kroger with a Murray's, the
cheese selection will be much better than the average grocer. They're easy to
recognize given all the Murray's branding they put up. Kroger with their
standard cheese counter is pretty much what you'd expect.

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imroot
I'm really not surprised by this at all. I know that Kroger was exploring a
service like this last year, based on conversations that I had with someone
from their legal team; they've had this in the Cincinnati area stores that
I've been in recently (when I've been in that area) -- including their
"flagship" Oakley store -- for at least the last six to eight months.

~~~
chipperyman573
Why are you talking with their legal team, and what would they say that would
lead you to believe they were exploring this service? Honestly wondering, I'm
not doubting you.

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awat
Kroger seems to have some vision on technology implementation. I’ve been
impressed with thier clicklist (online grocery pickup) here in Salt Lake City.
Looking forward to having this available.

~~~
imroot
I'm going to have to disagree -- and this is based on first hand knowledge
(albeit from a few years ago), and from second-hand knowledge from friends
that I trust who are working in/around Kroger now.

Kroger is in a difficult position -- Grocery is a low-margin space: it is the
true "race to the bottom," and now, with Amazon's acquisition of Whole Foods,
and Target's acquisition of shipt (Kroger has looked at other delivery
services, but, can't find one for the same price point), they're struggling to
find the same portfolio matrix to keep them competitive to other startups.

They _want_ to use GCE, but, they're truly struggling to use it. They refuse
to use AWS for competitive reasons. They don't want to pay for talent (they
were offering an Enterprise Architect $25/hour on a contract in the Cincinnati
area , they don't want to pay for commercial tooling). Admittedly, in order
for them to make money, they have to run truly Lean IT...but, they also make
really foolish decisions. They were considering building their own cloud until
it was pointed out just the sheer amount of capex needed for that
project....and then the VMWare Licensing costs. They spend a crazy amount of
money on SurePOS, but, then don't pay for any of the Verifone
branding/customization/contactless enablement for their terminals.
Technologies like LaneHawk help their cashiers catch shrink, but, their
cashiers comment that it's ineffective and do not work 95% of the time.

If it was my job to move Kroger's technology forward, I'd probably do the
following:

* Look at ways to help the cashiers do their job better and more effectively. Finding ways to shave transaction time will add up, enabling more customers per hour to flow through the transaction lines.

* Microservices in the store level for things that need to have store level availability, but, push things to cloud services where it's feasible. Yes -- let's buy bigger pipes to the cloud, but, keep a smaller server at the store in case things fail. We can manage that farm in the cloud more efficiently at scale, and then deploy out to the stores nightly or weekly versus continuous delivery in the cloud.

* Vendor Selection: Use the right vendors for the right things. Look at how you're spending your money with your vendors, and do a double check to make sure you're not being foolish with your spending (ala, vendors like Pomeory -- 99.99% of the time, you can do it better in house)

~~~
nickpsecurity
I can tell you worked with them, too. I think you were only scratching the
surface, though. Most of the stores I see run on some mainframe apps or
something that people use terminals for on buggy handhelds. The checklanes got
upgraded recently to what looks like a Fujitsu Linux running Java-based
clients. Slow and limited in UI control compared to the concurrent DOS thing
from IBM that only slowed down on updates. They had no interest in stuff like
QNX when I proposed it for U-Scan to keep robots running despite software
failures which they have a lot of. Employees complain the browsers in that
company can take several minutes to ten minutes to load on whatever thin
client and virtualization solutions they're using. They didn't know. The
inventory and Clicklist computers often have different inventory in them or
other preventable problems. The digital coupon system constantly screws up to
the point that a recent sale required printed barcodes for cashiers at
registers in case it screwed up again. They apparently have a social network
that few workers use for knowledge sharing since they don't even have time to
stock stuff.

The list goes on and on. I keep following the situation out of both concern
and morbid curiosity. Easily one of the worst I've seen at managing both
operations and IT. Their media and legal departments are among the better I've
seen, though. I mean, nobody reports this stuff. Can't be an accident with the
amount of attention on them.

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kolbe
>And you can see why everyone’s diving in. As we’ve covered before: According
to Nielsen research, “in the year ended 2017, in-store meal kits generated
$154.6 million in sales, posting growth of more than 26% year-over-year. For
context, total brick-and-mortar sales for center store edibles (grocery,
dairy, frozen foods) dipped 0.1% last year to $374 billion.”

So, "everyone's diving in" because meal kits are a rounding error to the other
category?

~~~
brogrammernot
No, they’re diving in because they want the early growth and infrastructure
without the need to build it themselves.

That “rounding error” can be seen in a different light, it’s an area of the
market that is making significant progress YoY.

This isn’t a play for the next year, it’s seeing the YoY growth of this
vertical within their market and wanting to capitalize on that.

The world is and has been moving towards “easier” and services that provide
immediate gratification. In-store meal kits are right in that category.

People don’t want to buy homes, cars or big ticket items anymore, there’s a
culture of “leasing” because of the inconvenience that goes along with the
maintenance/upkeep of those items. In a similar vein, lots of people view
cooking “healthy” meals to be difficult (it’s not) but are willing to spend a
little more to get a simple meal to cook that is either healthy or gives the
illusion of being so.

$200M is dirt cheap to acquire the talent, and all of the existing processes
of the company.

Add in the scale of someone like Kroger, and the price per unit they can
acquire is going to be vastly cheaper then someone like Blue Apron or the
various other meal kit startups.

You end up placing these in their stores on endcaps and other areas where it’s
only a bit more per person to buy a meal kit that’s marketed as “healthy” and
they’re going to fly off the shelf.

This is one acquisition that makes a ton of sense to me, and Kroger likely
sees In-Store meal kits as continuing to grow tremendously YoY.

~~~
ghaff
>People don’t want to buy homes, cars or big ticket items anymore

That's the perspective of a very specific demographic. And even in SV, there
seems to be no shortage of people wanting to buy houses and any shortage of
cars on the road.

That said, there is a trend towards convenience which is one reason you see so
much food that's been pre-prepped to various degrees (for a premium) in
supermarkets. Adding full meal kits seems a very logical extension to that
trend.

------
batbomb
Kroger is also potentially gearing up for an Alibaba partnership as well that
was reported earlier this year. I know rumors are still floating down to the
store level on this (my father is a store manager)

------
mkirklions
I did a study on Kroger, Costco, Walmart, Sams, Aldi, and Kroger was a scam.

Constant "10/10$" or "ALWAYS LOW PRICE $2.49" on items that are cheaper at
Costco, Walmart, and Aldi.

As a note, Walmart won or was on par with Aldi. Aldi had a very limited
selection despite having decent prices. Costco isnt worth shopping at for food
item with few exceptions(canned food, which isnt very optimal in general).

Anyway, my point is, I dont really trust Kroger. They overcharge for items and
claim its cheap. They even have an 'organic' section of the store, which makes
me think is all marketing.

If anyone wants the link to the study, lmk, I avoid posting my link unless its
relevant and wanted.

~~~
RandallBrown
Are you saying that because Kroger isn't cheaper than discount grocery stores,
it's a scam?

~~~
nickpsecurity
What they did was increase the "regular" price of retail goods above what
competition would charge, apply a "discount" if you have a Kroger card, and
then you get this "cheaper" price. They even put how much you would have
"saved" on your receipt if you didn't have a card but that's vs inflated
prices others don't charge. At one point, their "regular" price for milk was
at convenience store levels with sale price just over Walmart. These fake
discounts should be considered straight-up fraud. That's not to say they don't
have plenty of real ones but you'd have to look carefully to know. There's
yellow tags everywhere. So, about all of it is cheaper than Walmart or a
similar competitor at that moment, right? Nope.

The other thing they did with Kroger card was price discrimination. The
regulations apparently were about the _price_ of items rather than what people
_paid for them_. These are technically two different things. The way that
works is they learn that certain people will keep buying specific things. They
use this data from their card profile to deny them coupons or other discounts
while they give them to other people. They've got a lot of profiling tricks
for adding or denying discounts. I'd say more consumers take a hit than
benefit since there were previously coupons for all of them in the papers or
what they mailed out. They're also mailing out fewer coupons with lower
amounts, too, now that they've rolled out digital coupons tied to profile data
from card.

So, many of the sales are fake. The line about what people would've saved
versus Walmart is fake. Most of the coupons are for brand-name items that
already overcharge you anyway. The good generics are cheaper much of the time.
The gas discount and recall notices are about the best benefits of the Kroger
card. The best coupons they gave me discount per order, department, etc
letting me spend on whatever I wanted. Those could probably be delivered based
on survey data without tracking.

Summary: the Kroger card is mostly a fraud designed to trick people into
thinking they're getting discounts, give them coupons for more expensive
stuff, give them less coupons that would make things cheaper, and otherwise
make profit on surveillance of them. There's benefit but most selling points
are layers of lies. This is why I prefer either no loyalty cards or them
limited to stuff having nothing to do with pricing. Preferably by law to
increase competitiveness and reduce risk to consumers.

~~~
mkirklions
This was insanely interesting to read. You should totally write about this.

~~~
nickpsecurity
Thanks! It was originally CASPIAN that I learned it from. I confirmed it with
my own data. They're pretty fringe in what they publish, though. Might limit
their impact on wide audience.

So, a project from a reputable organization re-running the price studies and
explaining the scam might be worthwhile. Consumer Reports may have already
done something on it. They could be good outlet for next version with new
data.

