The John Lewis Partnership is plotting the takeover of a fast-growing recipe box provider backed by the former Wimbledon champion Sir Andy Murray as it seeks to tap into consumers’ post-pandemic penchant for subscription services.
Sky News has learnt that Waitrose is in detailed negotiations to buy Mindful Chef, which provides meal-kits to thousands of customers and has seen sales explode during the coronavirus crisis.
This weekend, it emerged that Waitrose, the supermarkets division of Britain’s best-known retail mutual, is facing competition to acquire Mindful Chef from Nestle, the consumer goods behemoth.
Waitrose is plotting bid for recipe box star Mindful Chef
A takeover of the five year-old company would represent a bold step for Waitrose, whose parent company has launched a strategic review that will define its future on Britain’s high streets.
John Lewis, its department store business, has announced the closure of eight outlets, triggering the loss of more than 1000 jobs.
The decision to shut its Birmingham store sparked a public row with Andy Street, the West Midlands mayor who previously ran the chain.
Under Dame Sharon White, the JLP chair, it has promised to take a radical approach to ensure it can emerge from the structural changes reshaping the UK retail industry.
Waitrose recently announced the launch of a partnership with Deliveroo to make more than 500 products available to customers within as little as 30 minutes.
Like Britain’s other major supermarkets, Waitrose has seen an explosion in online orders since the country went into lockdown in March.
Its long-running relationship with Ocado has just come to an end, obliging it to seek new ways of forging ties with shoppers.
Both Waitrose and John Lewis have appointed new managing directors, while the partnership is seeking a seasoned retailer to work with Dame Sharon as the partnership’s deputy chair.
Announcing the first phase of its strategic review in July, Dame Sharon said in relation to Waitrose: “Outside of their regular grocery shop, we also know that our customers are spending a lot on food delivery services.
“We see significant scope for us to grow in this area, and are actively exploring early opportunities.”
She added that JLP would “create partnerships with other businesses who respect our ethos and can bring resources or capabilities we don’t have”.
She added: “We are already in a number of commercial discussions and are also looking at acquisitions.”
The cost of a deal to buy Mindful Chef outright was unclear this weekend, with some sources suggesting it could be between £35m and £50m.
John Lewis is understood to be plotting to buy Mindful Chef
JLP is understood to have drawn up plans to finance such a deal, although the details are uncertain.
One former employee, said it was questionable that it was considering spending tens of millions of pounds on an acquisition at a time of substantial layoffs from its 80,000-strong workforce.
Some retail executives believe the soaring sales trajectory enjoyed by meal-kit providers during the pandemic is not sustainable over the longer term.
However, people close to JLP said that Mindful Chef was “exactly the sort of deal it should be looking at if it wants to survive”.
Mindful Chef was established five years ago by a trio of Devon school friends, and markets itself on its supply of fresh meat, fish and produce sourced from independent UK farms.
The company sends weekly healthy recipe boxes, filled with recipe cards and pre-portioned ingredients to its subscribers.
To date, it has sent more than 8-million meals to about 145,000 customers.
It raised money from Sir Andy and his fellow Olympic champion, cyclist Victoria Pendleton, in a crowdfunding round in 2016.
Last year, it sold a £6m stake to Piper, a private equity firm specialising in investments in branded consumer businesses.
Mindful Chef said on Saturday: “In May this year, healthy recipe box brand Mindful Chef, announced it was commencing its Series B round of fundraising, under the direction of KPMG.
“The direct-to-consumer business has reported an unprecedented increase in sales since the coronavirus outbreak, including a +452% spike in new recipe box customers and a +387% spike in frozen meal sales (based on sales week on week).”
It said it anticipated seeing full-year sales more than treble from £16m last year to £50m in 2020.
“Mindful Chef can confirm that on the back of its successful results there has been a great deal of interest,” the company added, saying it could not identify its suitors.
It said the fundraising process “is still progressing and no party is in exclusivity”.
Insiders expect a deal to be concluded within weeks.
LDC, the private equity arm of Lloyds Banking Group, is also understood to have been in contention to buy the recipe box provider.
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A spokesperson for the John Lewis Partnership said this weekend: “We don’t comment on commercially sensitive matters.
“We’re conducting a strategic review, and as part of that we’re considering a number of commercial opportunities.”
Nestle declined to comment.