Home Chef's sales rose to about $250 million last year, compared with about $100 million the year before.

(Bloomberg)—Home Chef, a competitor to Blue Apron Holdings Inc., is looking to learn from its rival’s mistakes by creating meal kits for the masses.

The Chicago-based company expects to turn a profit this year by going after more mainstream customers rather than the foodies that tend to use Blue Apron, No. 197 in the Internet Retailer 2017 Top 500.

Home Chef sees downmarket fare such as barbecue burgers and buttermilk chicken as helping keep customers loyal and proving that the volatile meal-kit model can be sustainable.

“Our food tends to be more approachable,” says CEO Pat Vihtelic. “The vast majority of it is really more familiar, with a little bit of a twist.”

The nascent U.S. dinner-delivery industry has been rife with problems. Blue Apron has drawn scrutiny since going public in June: It’s scaled back advertising after customer defections caused fourth-quarter revenue to decline. Competition also has surged, with rivals such as HelloFresh SE and Unilever-backed Sun Basket stepping up their presence.

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Sales growth

Despite investor concerns, Home Chef says its fourth-quarter profit shows it has a viable model. And growth has been rapid: Sales rose to about $250 million last year, compared with about $100 million the year before.

Founded in 2013, Home Chef meals include pot-roast steak, buttermilk-ranch chicken and barbecue turkey burgers, with all options taking about 30 minutes to prepare. This contrasts with Blue Apron offerings such as soy-glazed chicken that can take 55 minutes.

Sun Basket, meanwhile, has tried to appeal to a niche audience with organic ingredients and vegan options. It raised $57.8 million recently with August Capital to fuel growth.

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In 2016, Home Chef raised $40 million in a funding round led by private-equity firm L Catterton, but the company doesn’t need more cash for now. The company, which already sells kits on Walmart Inc.’s (No. 3) website, may consider a strategic buyout or a grocery-store tie-up. Home Chef may also turn to the public markets, as Blue Apron did.

“We feel like we’re an IPO-ready company now,” Vihtelic said. “It’s going to depend on market conditions.”

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