Marley Spoon is buying Melbourne-based meal delivery company Chefgood for $21 million as it seeks to rebuild its stake in the Australian market.
It said the Chefgood was operating at a $26 million net revenue run rate, which had seen a 137% increase year on year, with the acquisition expected to be completed next month.
The second-biggest player in the $500 million meal kit delivery sector, Australia was Marley Spoon's strongest market in 2020, with sales jumping 70% as consumers experimented with alternatives to eating out and groceries during the pandemic.
While the company grew 50% in the 2020 December quarter, thanks in part to its partnership with Woolworths, the company has struggled to maintain momentum this year.
In September Woolworth's venture capital arm W23 sold its 9.9% equity stake in Marley Spoon for $54 million.
The company experienced notable growth in the first quarter of 2021 but witnessed a significant 22% per cent drop in share prices in July of 2021.
In a statement Marley Spoon said the acquisition would give the company a "foothold in a growing and complementary category" that would allow them to "leverage its operational, digital and customer assets, providing synergies for both companies."
The addition rounds out the global company's portfolio of brands including Martha Stewart & Marley Spoon and Dinnerly, and means it can gain a greater foothold in the accelerating growth of the food and meal delivery sector.
Rolf Weber, Australia managing director of Marley Spoon said he was looking forward to working with Chefgood founder and CEO Michelle Sievwright and the company's wider team to grow the brand and better serve Marley Spoon customers.
"We are very excited to be partnering with Michelle and the Chefgood team since we share the same vision of making our customers' lives easier with easy, tasty and high-quality meal solutions," Weber said.
The sale comes amid an acceleration in growth for start-ups servicing the food and hospitality industry.
Restaurant supplier marketplace FoodByUs achieved a $10 million series A raise in mid-November led by Macquarie Capital, with support from Base Capital and New York marketplace investor F J Labs.
It told Business Insider Australia that despite the strains on the restaurant industry during the pandemic, the company saw its annual sales increase by more than 600% since 2019 and grew its staff from 38 to 55.
Similarly Providoor, a premium meal delivery service now operating across Sydney, regional NSW, Melbourne and Canberra, has seen $70 million in sales since launching in mid-2020, and recently announced it is looking to raise capital to further expand in 2022.
Melbourne-based mobile food ordering platform Mr Yum pocketed $89 million in a Series A funding round in late November, the third-largest raise in Australian history.
The eye watering raise for the mobile ordering platform, which streamlines customer ordering processes, is indicative of growing VC interest in hospitality and food ventures as customer behaviour continues to be transformed by the pandemic.
Pre-COVID, just 100 restaurants in Australia used the platform for in-house and takeaway ordering. Now, the company says, it has some 1,500 venues using its services, which are home to some 13 million users.
Marley Spoon's shares surged 18% following the announcement on Tuesday.
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