Marché Goodfood was able to stem the decline in its customer numbers and generate cash flow. Now that operations appear to have stabilized, the ready-to-cook meals specialist is considering the possibility of making acquisitions.
“There may eventually be an opportunity for us to make acquisitions or consolidate certain parts of the market because we are in a better financial position,” responds Goodfood president and CEO Jonathan Ferrari in an interview. Tuesday, on the sidelines of the shareholders’ meeting.
The company “does not have any announcements to make at this time,” but Mr. Ferrari says discussions are taking place with potential targets.
“We are in continuous contact with several players in the industry, whether it be ready-to-cook meals, ready-to-eat meals or other types of home meal delivery.
“I think we will have opportunities in 2024,” he explains. We will have to think about finding the best opportunities that will best position Goodfood in the long term. »
Discussing the possibility of an acquisition would have been impossible just a few months ago, when Goodfood was restructuring its activities and obtaining a financial boost of $10 million from Investissement Québec.
Mr. Ferrari believes that the “difficult decisions” the company has made, notably the abandonment of the grocery service during the fall of 2022, now make it possible to consider this avenue. He believes that Goodfood is in a better position than some competitors. “We will be able to take advantage of these opportunities because we made difficult decisions last year, which put us in a good financial position. »
On paper, Goodfood still posted a net loss of $2 million in the first quarter ended December 2, but it still managed to generate cash during this period. Cash flow thus reached $4 million. “We are currently in the process of repaying the debt. »
Difficult months
Goodfood has gone through a difficult period. After a surge in popularity for its services during the pandemic, the number of its customers began to decline from one quarter to the next. Consumers returned to the pleasure of eating out, then the surge in food inflation made households more price sensitive.
The company ended the decline in the most recent quarter, after skimming its customer base to focus on its highest paying and most loyal customers. At 124,000 active customers, this figure is higher than in the previous two quarters.
Mr Ferrari believes Goodfood’s offering remains relevant at a time when households are closely monitoring their spending. He sees his pre-prepared and make-ahead meals as affordable alternatives to dining out.
“For us, it’s to really focus on this alternative to restaurants and to demonstrate to our customers how delicious and economical meals we can offer at home,” he says.
Even if the average cost of acquiring a customer has decreased at Goodfood, the question remains open as to the efforts the company will have to deploy to attract new customers, underlines Frédéric Tremblay of Desjardins Capital Markets. “We continue to have limited visibility regarding the promotional incentives that will be necessary to restart sustainable sales growth,” comments the analyst in a note.
Goodfood has adapted its marketing strategies, which has had the effect of reducing the cost of customer acquisition, answers Mr. Ferrari. She has partnered with local restaurateurs to offer some of their products. It also improved its website and application to make them easier to use.
He gives the example of a partnership with the dating app Bumble to sell meals at home for the famous third date. “We have just launched this collaboration. This will continue until Valentine’s Day when we will have other special recipes. »
However, the entrepreneur does not want to get ahead of the trajectory of promotional spending in the short term. “In the current economic context, it is difficult to make forecasts. […] What we can certainly say is that we will adapt to the context. »
In the first quarter, Goodfood’s sales continued to decline, but the company’s efficiency gains allowed it to increase its gross margin, generate cash flow and narrow its net loss.
The company’s sales fell 14.2% to $40 million, notably due to the withdrawal from the grocery sector. The company reported a net loss of $2 million, an improvement from last year’s loss of $11.7 million. Diluted net loss per share was 3 cents.
Before the results were released, analysts expected a diluted net loss per share of 4 cents and revenue of $40 million, according to financial data firm Refinitiv.
Shareholders reacted well to the results. The stock gained 3 cents, or 10.34%, to 32 cents on the Toronto Stock Exchange in early afternoon trading.