Dinner service provider goes national, and eyes breakfast and lunch crowd
By any measure it’s a remarkable achievement: the building of a national presence with a concept that hadn’t been tried before in Canada – all within three and a half years.
That’s what TSX-listed Goodfood Market Corp., which defines itself as a dinner subscription service delivering fresh ingredients that make it easy for subscribers to prepare delicious meals at home every week, has achieved.
The latest milestone occurred this week when the Montreal-based company established a production and distribution facility in Calgary. Home to 40 employees and with its separate management team, the facility will serve customers in the western provinces.
“We are finally a national brand, able to service Canadians from coast to coast,” said Jonathan Ferrari, the Montreal-based company’s 29-year-old chief executive.
“We are close to a million meals per month,” added Ferrari who formed the company with Neil Cuddy, a former colleague at RBC Capital Markets. The company employs about 700 people.
And Goodfood’s achievements are being recognized. Last month, the company was awarded the Mercuriades award in the Successful Business Strategy category by the Quebec Chamber of Commerce. The next goal is profitability or at least a positive earnings before interest, taxes, depreciation and amortization (EBITDA). “We are profitable in our core mature markets,” said Ferrari.
Goodfood’s development played out via a number of key steps. It started with the assessment that a business could be formed on the basis of delivering meal kits, an idea taking root elsewhere but not known here.
“The big picture and the major consumer trend is the adoption of on-line grocery shopping. We spotted the trend internationally,” said Ferrari.
Originally, the company confined its operations to Montreal, with a plan to provide some of the meals (not all) and the recipes needed by a customer. From that base, Goodfood broadened out to serve customers first in the rest of Quebec, and then in Ontario and the Maritimes.
In its most recent financials, it said it has 61,000 active subscribers, up from 45,000 three months earlier. Three dinners a week for either two or four people is the company’s most popular product with each meal costing in the $8-$10 range, about the same price a customer would pay if the ingredients were bought at a grocery store.
Goodfood’s target market meant it didn’t have to compete with Amazon.com Inc., which bought Whole Foods last summer or “traditional grocery offerings. We are really focused on branded-meal solutions, which means better margins, the building of our brand and also gives us a differentiated product. And it’s a better business in the long term.”
And it’s even better when it’s national. “Since we started we had the ambition to be a national brand and service all Canadians but the capital required and the complexity is huge,” said Ferrari.
So began the task of raising the capital to achieve that ambition. Initially it came from the friends and insiders (who are still the largest shareholders). Then it came from EDO Capital, a private equity firm and then, a year back, it came from the public when $21 million was raised as the company went public.
A few weeks back, it raised an extra $10 million via a bought deal with shares priced at $2.50, with GMP Securities LP the lead dealer on both equity financings. The shares were trading at $2.19 on Friday. Analysts at GMP and National Bank Financial follow the company, and both rate it a buy.
Ferrari said the biggest challenges are “building the team, trying to attract talent, of figuring out how to get scale and trying to grow very quickly while maintaining the quality.”
So, what’s next for the company?
A different menu option for different regions of the country is on the agenda, as is providing kits for the day’s other two meals.
Financial Post