Fresheasy, the leading meal kit provider suffering from chronic losses, is rapidly recruiting renowned celebrity chefs. Experts evaluate this as a strategy to enhance intellectual property (IP) by attracting well-known figures from the restaurant industry, who possess both fame and differentiated skills.
According to the restaurant industry on the 9th, Fresheasy secured the IP of Chef Lu Ching Lai starting in November, following a strategic IP distribution contract with Chef Choi Hyun-suk in July.
Fresheasy currently holds the IP of the restaurant Choi Dot, operated by Chef Choi Hyun-suk, and the Central Reducer IP. Chef Choi led his team to victory twice in the Netflix original variety show 'Black and White Chef: Culinary Class Warfare,' which gained attention last year. He was already a well-known chef, but his popularity has increased significantly through this program.
Fresheasy reported that during November last year, following the airing of 'Black and White Chef,' the sales of products made using Chef Choi Hyun-suk's Choi Dot IP reached 170,000 units. In the meal kit industry, products are considered hits when sales exceed 100,000 units.
Fresheasy determined that its collaboration with Chef Choi was successful. It immediately added menu items from the staff cafeteria, which are enjoyed by the actual lunch and dinner staff at Chef Choi's restaurant, to its lineup. Following this, Chef Lu Ching Lai, who gained popularity in the same program, was also brought on board. Chef Lu is a master of Chinese cuisine, serving as the president of the Korean Chinese Cuisine Association and as vice president of the World Chinese Cuisine Association.
Lee Hyun-bok, head of the sales division at Fresheasy, noted, 'We plan to release products that reflect the chef's identity more deeply than a simple collaborative relationship' and added, 'We will enhance competitiveness by combining the culinary expertise that chefs have built over decades with Fresheasy's meal kit manufacturing and distribution technology.'
Fresheasy started as a startup in 2016, promoting the philosophy of 'liberating the world through cooking.' In its first year, revenue was 100 million won. The following year, in 2017, it was 1.5 billion won.
However, the COVID-19 pandemic hit in 2020, and Fresheasy began to thrive. As the government tightened social distancing measures, a boom in meal kits arose, allowing people to enjoy meals similar to restaurant menus simply by cooking at home. In 2020, the Korea Development Bank invested 50 billion won in Fresheasy. The Ministry of SMEs and Startups identified Fresheasy as a prospective unicorn company. 'Unicorn' is a term used in the information technology (IT) industry to refer to startups valued at over 1 trillion won.
In 2021, Fresheasy aggressively pursued acquisitions. With over 300 billion won in cumulative investments, it successively purchased Line Logistics System (refrigerated transport), Doctor Kitchen (specialized meal kits), HERDAK (chicken breast specialty processing), and Tasty Nine (meal kit manufacturer). Subsequently, Fresheasy transformed into a corporation that encompasses business-to-business (B2B) transactions as well as business-to-consumer interactions, covering everything from meal kit production to logistics, distribution, and sales.
As its size increased, so did its revenue. In 2022, Fresheasy recorded a revenue of 214.9 billion won, growing 143 times in five years.
However, chronic losses also increased. According to the Financial Supervisory Service, Fresheasy recorded a cumulative operating loss of 330.4 billion won over six years, from 2018, when it first submitted an audit report, to 2023.
Meal kits are a business with an unusually high proportion of ingredient costs. Fresheasy also faced considerable challenges in cost management. Last year, Fresheasy's cost of goods sold ratio was 86%. Typically, food companies manage their cost ratios around 50-60%. At most, it doesn't exceed the low 70s.
Fresheasy lowered prices excessively to dominate the initial meal kit market. As a result, the cost ratio exceeded the mid-80s. When calculating the individual standard cost ratio, which includes shipping, labor, marketing expenses, and other selling and administrative expenses, it reached 141% in 2023. Considering these expenses, it means that the more they sold, the more they lost, as they could not make a profit.
To make matters worse, the meal kit market's growth has stalled. According to the market research company Euromonitor, the meal kit market grew more than 190 times, expanding from 2 billion won in 2017 to 382.1 billion won in 2023 due to the pandemic. However, following the endemic, growth stagnated, and it has remained stagnant at around 300 billion won for three years.
Brand positioning expert Kim So-hyung, a consultant at Davis & Company, noted, 'Since the late pandemic, large food corporations have entered the meal kit market as latecomers, leading to a contraction in the market but increasing competition.' He added, 'In the process of Fresheasy trying to quickly catch up with the vast distribution infrastructure and procurement networks held by large corporations, improving profits likely took a back seat.'