COVID also taught us about the global food delivery market, all $200 billion worth. But I'm not talking about your local pizza delivery guy, Food Delivery 1.0, or the person bringing me DoorDash (DASH) or Uber Eats (UBER) , Food Delivery 2.0. I'm talking about the evolution of food delivery.
Food Delivery 3.0. The next generation of food tech courtesy of prepared food delivery.
Premium branded, direct-to-consumer meals that can be shipped anywhere in the country, overnight.
I want a meal I can prepare quickly at home without the feeling of home, without the mess, without the cleanup, and without sacrificing taste or quality.
Don't mistake this for me wanting a meal-kit service. Those services ship pre-portioned ingredients along with a recipe. That doesn't solve any of the challenges above except shaving a few minutes off of my prep time.
What I want is next level evolution. A company that can solve the problems plaguing the industry:
Inconsistent Quality - Most meal delivery companies are locked in a race to the bottom in terms of price. This means they are forced to make tradeoffs with the food quality to compete.
Meal Fatigue - Eventually, people get bored eating the same meals repeatedly, even if it's their favorite dish from their favorite restaurant. I know I do.
Poor Experience - Even if you get a great meal delivered from a high-quality restaurant - or you cook the meals yourself - eating at home is still eating at home.
Fortunately for Home Bistro, this market appears to have a huge upside. Statista estimates the platform-to-consumer segment of the U.S. food delivery market will reach $9.7 billion by 2024. Brandessence Market Research and Consulting estimates the global read-made meal delivery market will be more than $11 billion in 2027.
A large and growing Total Addressable Market (TAM) is a key component here.
Anyone can prepare a meal and ship it out. That's true, so how do we separate quality from an average meal?
Home Bistro has done it by teaming up with well-known celebrity chefs, some of the best in their respective fields.
COVID created a problem for even the best chefs in the world. Maintaining existing brick and mortar restaurants became a challenge and opening new ones an impossibility. A chef can only sell so many cookbooks and recipes, but serving folks your fantastic cuisine, fresh and in their homes, became a reality thanks to Home Bistro.
The first celebrity chef Home Bistro signed was Cat Cora. Don't mistake "celebrity" with popular but untalented. Cat Cora is plenty talented. She won the Iron Chef on the Food Network's hit show, "Iron Chef America," the first female chef to win such a prestigious honor.
Since then, they've added Roblé Ali, Chef Claudia Sandoval, Daina Falk, and, most recently, Ayesha Curry.
All of these chefs are renowned, so I'm not going to rank one above another. They all possess unique talent, creativity, and proven success.
The newest addition, Ayesha Curry, is a two-times New York Times best-selling cookbook author, a television host, and a producer along with co-founder of the Eat. Learn. Play. Foundation. Her 7.3 million followers on social media could bring new subscribers in waves to Home Bistro's ready-to-eat meal plans. That's exciting.
Home Bistro didn't just sign her, but also her company, Curry's Homemade Meals, LLC, a weekly-delivered service of her family inspired recipes, sold both in major grocery stores as well as direct-to-consumer.
Ali is one of the most recognizable chefs and one of the very few young African-Americans in the culinary world with national fame. He's also been featured on Bravo's docudrama, Chef Roble and Co.
Chef Claudia Sandoval, was the winner of the sixth season of MasterChef U.S., and has been a judge on two seasons of MasterChef Latino on Telemundo. She was most recently seen earlier this year as a judge on Food Network's Easter Basket Challenge and is currently in production on a new series she will be hosting and producing for Food Network.
Diana Falk is the creator of Hungry Fan, Fangating and other brands that marry sports and food for the ultimate fan experience.
Home Bistro's CEO, Zalmi Duchman, continues to land talented chef after talented chef, so I have no reason to believe he's done. This experienced CEO checks another big investment box for me: a prior successful venture. Zalmi grew The Fresh Diet, an online meal delivery service from startup to over $30 million in annualized revenue before selling the company. Now, he's bringing that experience and knowledge to Home Bistro. One of the first major changes he's implemented is moving from frozen to fresh food.
Using a state-of-the-art plastics material that's specially engineered to create an attractive and reliably sealed package, the service lets consumers receive a celebrity chef-inspired fresh meal good for 10-14 days in the refrigerator or up to 6 months when frozen. It is called "vacuum skin-packaging"; not only is it cheaper than many flash-frozen processes, but it's more environmentally friendly and easier to ship.
Vacuum skin-packaging seals the product like a second skin while eliminating air, providing package durability and optimal product presentation, and shelf-life extension.
In July 2021, Home Bistro announced it has begun shipping meals utilizing this vacuum skin-packaging technology. It could represent a significant opportunity to not only win new customers but increase repeat purchases from existing customers.
But what is the best part about eating out, rather than not having to cook or clean up?
It is what elevates great food to a great eating experience.
Home Bistro has that, too. The company recently announced a partnership with Red Velvet NYC, a subscription-based service specializing in DIY gourmet baking kits.
DIY may sound like work, and it is, but the Home Bistro offering will be fully prepared desserts from recipes created and developed by Red Velvet.
All of this added up to record first quarter 2021 results. The company saw online meal orders skyrocket over 200% year-over-year as Home Bistro reported revenue of $350,474 for the quarter. That revenue number was twice last year's number.
These results come prior to the company adding chefs Curry, Ali, Sandoval, rolling out Falk's line of offerings, or the Red Velvet dessert line. They also don't take into account the switch from flash frozen to vacuum-sealed fresh shipped overnight. With more partnerships expected to come, Home Bistro is in prime position to scale this model with multiple chefs who can serve up a diverse portfolio of gourmet meals. Even better, these chefs are influencers with huge followings. The marketing almost takes care of itself with little to no cost for Home Bistro. I don't mean to imply this is without risk. Technology platforms and meal delivery are competitive industries with its share of both winners and losers. Like anything else, there is risk in any investment, including this one, but Home Bistro could be on a path toward becoming a success story.
Another potentially big push for revenue is the company's recent acquisition of Model Meals, a ready-to-eat, healthy meal service. Home Bistro paid approximately $2.1 million for a company that produced $2.2 million in revenue in 2020 delivering to only three states: California, Nevada, and Arizona.
The current CEO and CFO of Model Meals will be retained and run the Model Meals subsidiary. Combining Model Meals distribution facility with Home Bistro's will provide the company with bi-coastal operations and the ability to ship overnight to most customers in the 48 contiguous United States. Additionally, Model Meals will be able to expand outside its current three state distribution platform, so I'm optimistic revenue can potentially grow quickly.
As the company continues to partner with more and more chefs plus roll out food technology that will permit quality prepared food to be delivered fresh and overnight, the market and consumers could respond.
What the company really needs to grow and become profitable is cash, and it is getting that through its current Reg A+ unit offering. Buyers of the Reg A+ offering receive units that represent one share of stock plus a five-year warrant to buy additional shares at $1.50.
The stock is trading around $1.20 right now with both its 50-day simple moving average and a 200-day simple moving average locked in around $1.00.
But right now, you can buy a unit for $0.75. Each unit includes one share of stock PLUS one full warrant to buy a share for $1.50 any time in the next 5 years.
I am a huge fan of buying stock at a big discount to the current market prices.
In exchange for the discounted share price along with the warrant, I need to make a minimum purchase of $501 (668 units) and hold my shares for 6 months after the closing of the purchase. The warrants do not have a wait period before they can be exercised; however, it is unlikely any unit holder would exercise the warrants until the stock is trading above $1.50 on the open market.
The company is willing to throw in some additional sweeteners for investors:
Those who invest $1,000 - $1,999 get 50% off their first meal up to a $200 purchase.
Those who invest $2,000 - $4,999 get 75% off their first meal up to a $200 purchase.
Those who invest $5,000 or more get a $350 gift card.
Remember that this offering is a Reg A+ from a public company, not a Reg CF (Crowdfunding) from a private company. Investors will get liquidity only six months after the offering closes. That doesn't mean I have a guaranteed profit. Far from it. Shares could fall below $0.75 on the public markets, which would put my purchase in the red. But unlike offerings in private companies, we have a much higher visibility as to when I can liquidate the share portion of my units.
I find that attractive. This one reminds me of the Draganfly ( (DFLYF) ) offering I discussed at the start of the year.
Over the past four months, I've had the opportunity to spend hours talking with the CEO and dozens of hours talking to the original venture capital behind the company, listening and learning the lessons they've endured growing this company along with their vision for the future.
Possessing that insight along with all the boxes Home Bistro checks for me when investing in Regulation A+ and Regulation CF offerings, it is the reason I have no hesitation recommending the Home Bistro Reg A+ offering in 2021 for those comfortable with these types of investments. Given there is a lock-up though and the stock falls into the highest risk category, this also falls into a category where position sizing is important. Deals like this are for your most speculative capital and capital you don't need to access any time in the next nine months.
If this potentially fits your risk profile and goals, you can access the opportunity through Equifund, the platform Home Bistro selected to host their Reg A+ offering.
Here's the link: