PAUL MCBETH: It’s in the My Food Bag

Paul McBeth is the editor of The Bottom Line and Curious News, and previously worked at BusinessDesk for 15 years.

It’s easy to lose sight of the fact that in 13 years, My Food Bag built itself up to employ about 200 people and generate annual revenue of roughly $170 million.

That’s no mean feat for most normal people, although institutional investors aren’t necessarily what you’d tip into the everyday Joe and Jane category.

They are, after all, desensitised to the vagaries of big numbers and often have the burden of making decisions on how to deploy the hard-earned savings of tens, if not hundreds, of thousands of people.

When they switch off, it’s very tricky to get them to pick up the phone, no matter how many Christmas greeting cards you send them.

And My Food Bag promised a lot when it went public in 2021, only to discover that the appetite for getting everything delivered during the covid pandemic wasn’t as sticky as the meal-kit company thought and that a bout of inflation squeezed margins.

So the missive from My Food Bag last week that it’s brought in the clear eyes of Cameron Partners to run the rule over the business and help work out why the subdued share price continues to languish makes sense.

I need you to see

The meal-kit company has been meeting its projections of late, tacking through the choppy waters of the never-ending recession and facing the headwinds of an initial public offering that didn’t deliver on its hype.

The obvious conclusion is that the meal-kit company is for sale. Which it undoubtedly is.

But that’s not to say that’s the only option available to chair Tony Carter and his fellow directors Jennifer Bunbury, Sarah Hindle, Mark Powell and Cecilia Robinson as they work to extract every last cent of value for the company’s owners.

One only has to go back to the 2021 product disclosure statement and have a gander at the company’s horizon two programme that envisaged disrupting the broader business-to-consumer market beyond its meal-kit bread and butter.

That encompassed the likes of using My Food Bag’s platform to make a bigger play into online food and grocery categories and other distribution channels such as its foray into providing ready-made meals for aged care facilities.

And it contemplated controlling more of My Food Bag’s supply chain – think bringing manufacturing inhouse or taking control of delivery currently done by partner NZ Post.

Did I take you by surprise?

It might make you wonder what could’ve been had My Food Bag’s IPO been weighted a little more heavily to raising new money for the firm to do things with rather than provide the founders and Waterman Capital a healthy payday, but the dopamine hit of a gentle snark is, unfortunately, as useful as the perennial what ifs of regret.

Because chief executive Mark Winter and his team have been putting in the work to get the company back on a steady footing and, despite the board’s evident frustration, the share price has markedly improved.

The 17% jump on the strategic review reveal was My Food Bag’s best week in almost a year, and the stock has been clawing itself out of the mire of its 11.4 cent low in 2023 to deliver a 30% gain in 2024, a 17% increase in 2025 and is up 14% so far this year.

That’s obviously not fast enough for the board, who seem to still be smarting from the embarrassing slumps in My Food Bag’s first three years that left it a far cry from the $1.85 offer price in 2021.

Regaining investor confidence is a slow business, even if the early signs have brought out bargain hunters with the patience to wait longer than the next quarterly rebalancing.

One look at you and I can’t disguise

Still, Cameron Partners’ appointment probably shouldn’t be read as a foregone conclusion that a sale is in the bag. Rather, that seems more like the money option posed by Selwyn Toogood in the long-running ‘It’s in the Bag’ game show of yesteryear.

Turn your mind to New Zealand Rural Land Co’s recent strategic review to bridge the gap between the share price and the rural landlord’s net tangible assets.

Some shareholders would’ve preferred the rural landlord to slide into the shadows of private life, but its board stuck to its listing, taking on feedback from various market players that building a reputation of paying reliable – and growing – dividends would go some way to convincing investors of the lower risk and longer tenure of rural land than other types of property.

And with NZ Rural Land Co’s share price down 17% so far this year compared to the 6.7% decline for the S&P/NZX all real estate gross index, the fact that it’s not a quick fix will be something for My Food Bag’s board to consider.

I’ve got you in my sights

Similarly, Comvita’s experience finding a buyer when the price is languishing is a warning that a deal’s never done until the ink is dry.

In fact, investors shouldn’t be surprised if My Food Bag’s advisers and board contemplate whether a cashed-up cornerstone investor could pave the way for a push into one of those aforementioned future projects to win over a greater share of the consumer market in the same way that Comvita’s partnered up with Singapore’s Fraser and Neave.

We often talk up the ease with which listed companies can raise new capital or theoretically enjoy the fair and efficient pricing of a liquid market for their shares.

But it’s easy to overlook that a public company also benefits from a higher profile by virtue of making those semi-regular statements to the stock exchange – something that comes in handy when mounting a fresh marketing campaign or trying to build a high-calibre workforce.

Tony Carter and his fellow directors are bound to receive all kinds of unsolicited advice on where the meal-kit company’s value is hidden.

It’ll be up to My Food Bag’s 5,800 or so owners whether their eyes are bigger than their bellies.

Image from Curious News.