Here’s why the Albertson’s + Plated Pairing Makes Sense

By Adam Salomone, CEO of The Food Loft

Albertson’s announcement on Wednesday that they had completed the acquisition of Plated marks the next stage of evolution of the meal-kit space. Coming on the heels of the Blue Apron IPO, rumors that Green Chef was open to an acquisition and news that grocers themselves are starting their own meal-kit lines, we have officially reached “peak meal-kit.” Even a year ago, new entrants were flooding the market with all manner of niche, segmented consumer offerings, and at that time (and indeed well before that), there was plenty of hand-wringing about how all this would end.

It seems we’ve firmly entered the consolidation and acquisition phase. Which is a good thing, both for competing meal-kit companies and the foodtech ecosystem at large. And, while grocery stores seem like natural distribution points for meal-kits, eliminating a lot of the delivery cost and packaging material, it was unclear exactly how such a deal might take shape.

We now have our answer, and after reading and thinking more about the partnership, it makes a lot of sense. Here are a few reasons why:

  • Albertsons has a footprint in 35 states across 19 different brands and 2,200+ stores. That’s a distribution growth engine to rival Wal-Mart (well, almost). No doubt, expect to see Plated meal-kits showing up in most, if not all, of those Albertson’s locations.
  • More to the point though, Plated allows Albertsons the potential to offer a much more robust set of dinner-time solutions. In the future, a consumer could conceivably walk into the grocery store and have the option of doing their grocery shopping, grabbing a meal-kit, grabbing something fresh-and-ready to go, or taking one of the meal-kit recipes on-offer that day and having the groceries delivered same-day to their home. There are some assumptions in that evolution, but it allows Albertsons to own a much greater percentage of the possible dinner-time outcomes with one acquisition (especially because Plated can provide the logistics as well as the recipes themselves, which is important in the grocery delivery example).
  • Related to the above, a presence in Albertsons eliminates the 1+ week lag time between ordering a meal-kit and receiving it. And it allows for much greater customization (meal-kits just for that evening vs for three nights, etc).
  • With 35MM customers coming into their stores each week, and with the notoriously high CPA for meal-kit companies (into the $100s per customer), Albertsons effectively lowered Plated’s CPA for new customers to $0. And, if those customers are coming into Albertsons stores to get the kits, they likely will pick up other items while they’re there, increasing margins and overall basket size.
  • On Plated’s end, no doubt Albertsons will work to leverage their extensive inventory management to drive down COGs at the company. Margin improvement in the long-term could be substantial.
  • But perhaps the most interesting and important development is this: Albertsons was gearing up for their IPO earlier this year and shelved the plans after Amazon announced the Whole Foods acquisition. Shortly after, Amazon announced plans for their own meal-kit offering. With Plated onboard, Albertsons now has a company with more logistical know-how paired with Albertsons much larger brand footprint (relative to Whole Foods). While Amazon has an uncanny ability to hack the system, and a penchant for spending money to do it, Albertsons acquisition could give them enough of a foothold in this market to be both ahead of Amazon, and to make their dreams of an IPO come true.