Dive Brief:

• Home Chef has opened a new production facility in the Atlanta area, giving the Kroger-owned meal kit supplier and prepared foods brand additional fulfillment capacity in the Southeast, according to a press release on Tuesday.
• The 181,000-square-foot center in Douglasville, Georgia, is the first Home Chef location with a full-service kitchen designed specifically to cook and batch ingredients for use in meals the company makes.
• Kroger is investing in its meal kit unit as the grocery chain expands its prepared food operations in an effort to strengthen ties with shoppers in stores and online.

Dive Insight:

The inauguration of Home Chef’s new facility follows Kroger’s announcement late last year that the meal solutions company had passed the $1 billion annual sales mark, putting it in the company of other Kroger-owned brands that have also reached that milestone. Home Chef's sales in 2021 were up from $250 million in 2017, the year before Kroger bought the company.

In a reflection of Home Chef’s growth, the new production center, at 2120 Skyview Drive, is the company’s first single-tenant facility. The center, which includes 6,000 square feet of space dedicated to cooking vegetables, starches and grains and managing in-house sauce preparation, is intended to “better serve the company's growing customer base,” according to the announcement.

Kroger acquired Home Chef in mid-2018 for $200 million, agreeing to pay as much as $500 million more for the company if it reached other performance objectives. The grocer noted in its annual report for last year that it had increased the amount of money earmarked for that purpose in 2021 and 2020, suggesting it has seen success at Home Chef.

In the years since the acquisition, Kroger has stocked Home Chef branded meal kits as well as prepared foods in its stores. This includes selections like heat-and-eat soups, meals and side dishes.

Home Chef is also locked in competition with Germany-based HelloFresh, which dominates the U.S. meal kit market. HelloFresh’s U.S. operations brought in the equivalent of more than $1 billion in revenue during the first quarter of 2022, and the company’s annual revenue in the U.S. rose 65% in 2021 on a year-over-year basis.

By contrast, meal kit supplier Blue Apron generated $118 million in net revenue during the first quarter of 2022 and recorded net revenue of $470.4 million for all of 2021.

Home Chef is looking to fill almost 700 new jobs to staff its new production center. The company is working with a local public-private economic development partnership that recruits employers to Douglas County, Georgia, where Douglasville is located, to attract applicants for the positions.