2018 INC. 5000 RANK: 3
HEADQUARTERS: Chicago, IL
YEAR FOUNDED: 2013
2017 REVENUE: $255 Million
3-YEAR GROWTH: 60,166%
Patrick Vihtelic's first experience with produce was a memorable one: He was helping his father harvest broccoli from his grandfather's garden when he accidentally cut himself. The cut was tiny, but Vihtelic's tantrum was not, marking the beginning of lifelong passion for growing and eating fresh produce.
"Food has always been a big piece of my life," says Vihtelic, the founder of Home Chef, the No. 3 company on this year's Inc. 5000, a tally of the fastest-growing private companies in the U.S. "Being around fresh food is something we've always enjoyed as a family."
Vihtelic's affection for cooking with fresh ingredients became the backbone of his Chicago-based meal-kit delivery business. Home Chef sends its customers pre-portioned ingredients and recipes every week, allowing them to select their menu ahead of time. Users pay by the meal, with dishes like coffee-rubbed steak, pecan-crusted chicken, and avocado detox farro bowl starting at $7.99.
That low-maintenance credo is deliberate, says Vihtelic (which is pronounced like VYE-tah-lik). His goal is to attract customers who crave Midwestern flavor profiles, and so far, it's working. Last year, Home Chef booked more than $255 million in revenue, up sharply from the $423,207 it saw in 2014. What's more, Home Chef added 830 jobs over the period, bringing the total to 865.
However, the space is crowded. Between 2011 and 2017, venture capitalists loaded more than $1 billion in funding into meal-kit startups. Then, Blue Apron hit the skids. That company's stock dropped 70 percent from its 2017 initial public offering. As a result, venture capitalists have been leery of investing more into the seemingly overheated business model.
"There aren't a lot of people looking at funding meal-kit companies anymore," Ellie Wheeler, a partner at Greycroft and an investor in Plated, told Inc. magazine this summer. "It's a tough ride to still be invested in one of those." For its part, Home Chef was acquired by Kroger, the largest supermarket chain in the world, for $200 million in May.
Entrepreneurship from an early age
Before launching Home Chef in 2013, Vihtelic was already an established serial entrepreneur. He once owned and operated a lemonade stand on a golf course near his home, mowed lawns, and even started a power-washing company--all before he became a teenager.
"I was a 12-year-old wielding a power-washer; those things can do some damage," says Vihtelic, adding that he had only one client. "I'm surprised even one person trusted me with that."
Vihtelic always had an entrepreneurial bug but decided to become an investment banker after graduating from college. Even then, he was attracted to the intersection of technology and business, partly because of his family: His father was a molecular biologist and his grandfather owned a real estate business.
After about five years of working in finance in San Francisco, Vihtelic and his wife moved from the West Coast back to their roots in the Midwest. Vihtelic left his job so he could focus on starting a business, even though he didn't have any ideas. Not long after they moved in the fall of 2012, he noticed more VC firms taking an interest in meal-kit startups. He liked the concept but noticed they were predominantly based in New York City and not thinking about the Midwestern customers who might be interested in the product. He founded Home Chef in June 2013, hired a chef the following month, and launched during Labor Day weekend.
Home Chef's biggest challenge, Vihtelic says, is making sure the company has the staff and infrastructure to support its growth. Since 2013, the startup has hired at a rapid clip and opened multiple facilities to expedite its expansion--Home Chef now has three facilities--in Chicago, Atlanta, and San Bernardino, California.
Additionally, the Better Business Bureau found a pattern of consumer complaints against Home Chef, alleging that users tried to pause or cancel their service but still received deliveries or were charged for services. Vihtelic says he didn't know about these complaints until Inc. surfaced them; however, the BBB website noted that Home Chef reached out to the Bureau in April and detailed the procedures it had in place to assist customers. Vihtelic added that Home Chef always had a pause and cancel button on its website.
Home Chef expanded its operations this year to include lunch recipes, which require no cooking, fruit baskets, and smoothie options, all still aimed at Midwestern palates. Vihtelic says the company has plans to expand its meal concepts across different spectrums, like convenience and taste.
"We have a big opportunity to change the way America eats," says Vihtelic. "The meal-solution space is certainly evolving as the customer needs evolve."