Marley Spoon (ASX:MMM) rival set to list on the ASX

The Youfoodz Holdings ready-to-eat meal brand is expected to list on the ASX in the second week of December. We take a closer look.

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The Youfoodz Holdings Limited (ASX: YFZ) ready-to-eat meal brand is expected to list on the ASX in the second week of December. The company's initial public offering (IPO) is currently underway, with Youfoodz looking to raise $70 million at $1.50 per share.

What does Youfoodz do?

Founded in 2015, the Brisbane-based company makes and sells fresh, pre-prepared meals and healthy snacks and drinks that are delivered to customers' doors. In addition, the business begun selling grocery essentials and fruit and vegetable boxes for home delivery amid high demand during the COVID-19 pandemic.

Growth goals

In the Youfoodz investment prospectus, chief marketing officer Simon Jarvis highlights the company's plan to double the size of its business.

Jarvis himself spent 10 years in the agency space before working as a business-to-consumer marketer with Telstra Corporation Ltd (ASX: TLS), TAB New Zealand and TheScore Inc. Youfoodz points to Jarvis' extensive cross-border marketing experiences as a tool to ensure the company can rapidly drive new customer acquisition, retain existing customers more effectively and maximise returns on marketing investment.

In the prospectus, the company outlined it is focused on executing five key growth initiatives:

  • capturing underlying market and category growth
  • growing segment market share and Average Order Value through new offerings
  • customer retention with a subscription model and loyalty program
  • manufacturing automation and other efficiencies from a new purpose-built manufacturing facility
  • selectively targeting new geographies.

Youfoodz is also working to understand customer segments through data-driven customer relationship management communications.

In a recent interview, Jarvis highlighted that Youfoodz has an audience profile that skews 70% female and around 25 years of age who are single or live with a partner, adding "[b]ecause our product is about convenience, time saving and healthy meals made easy, it tends to appeal to… people commuting to work with less time to cook and prepare meals." 

He commented that data shows that 4.9 million of Australia's 14.8 million main grocery buyers fit into this time-poor category.

Details of the offer

According to Youfoodz management, the IPO proceeds will be used for the following purposes:

  • 21% to help fund new manufacturing facilities
  • 35% for general corporate purposes
  • 36% for repaying shareholder loan to a major shareholder RGT Capital (which provided debt financing of $25 million, pre-IPO).

Youfoodz shares are expected to start trading on 8 December.

Motley Fool contributor Miles Wu has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

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