Only three weeks after falling into administration, culinary marketplace CoLab has struck an all-cash deal that will see it rescued by Melbourne-based ready-meal company Efoodz.
While the price of the acquisition is undisclosed, Efoodz managing director Andy Lam told Business News Australia it would see his brand take control of CoLab’s equipment, stock, intellectual property (IP), digital infrastructure and database.
He also confirmed CoLab, which has warehouses in Melbourne and Sydney, would see its operations in the latter city shut down as Efoodz looks to consolidate services from one central location.
According to an email sent to vendors by Ernst & Young (EY) administrators Morgan Kelly and David Kennedy, the sale of assets is expected to be finalised tomorrow.
It comes only eight months after Efoodz came into contact with CoLab to supply its ready-made meals on the platform. After being contacted by EY administrators to ask Lam what he would like to do with his unsold stock on CoLab, he asked if the business was up for sale.
“For us, it was a perfect match. Being in the ready-meals business, it opens a lot of doors for us - whether it's new customers or selling our own products on the platform and expanding that range in certain categories,” Lam told Business News Australia.
“What made it appealing for us was the fact that the platform had a lot of potential – an enormous number of resources was allocated to building it over the last year.
“It wasn't much of a diversion from the way we're doing business. We have the facility ready to roll in Melbourne, we've got the team. It was a very smooth transaction for us and a decision that we really couldn't say no to.”
Founded in 2021 by Elle Curran and Josh Abulafia, CoLab offers ready-to-cook meals from more than 150 restaurants nationwide, as well as gourmet pantry food and drinks, and gift packages for special occasions or corporate events.
At the time of the collapse, CoLab employed roughly 16 staff, all of which are not involved in the acquisition and are unlikely to rejoin the brand.
Lam noted he will be restructuring CoLab’s consignment model, which gave the company a 30 per cent commission while the remaining balance was paid out to the supplier.
“Because of everything that's happened, the suppliers will be very reluctant to provide stock to continue selling again. In my opinion, I don’t think a consignment model works in an online grocery business,” Lam said.
“We really need to be buying the stock low and selling high to control our margins. 30 per cent was simply not enough to cover the operating costs of a business. That's the model that they were doing and that's what I'm proposing to change.”
“Based on a few discussions with some suppliers, I'm certain a lot of them will join the platform again because it is a good channel to push their product - especially local producers when that don't have exposure.”
Founded in 2020, Efoodz is a ready-made meal company that promises to deliver healthy and convenient meals from ‘kitchen to customer in 48 hours’. The brand has 35 staff, and prepares around 50,000 meals per month.
According to Lam, the company is selling its products to petrol and grocery outlets like BP, IGA and Dohertys Gym.
“I was in the hospitality industry prior to Efoodz. With everything that’s happened around COVID, I was actually out of work for 18 months,” Lam explained.
“That’s when I went into the kitchen, started cooking up some meals and packaging them up. I sold them on social media - Instagram and a bit on Facebook. The sales week after week just grew – a year into the business we outgrew the little kitchen we had.”
“I thought: This is an untapped market that we're entering into. So we started building a massive production facility out in Clayton South purpose-built for us with some very high-tech equipment. What makes Efoodz different is that we're not a frozen product… [it] contains 30 to 40 per cent more protein than a lot of the other brands out there.”
The letter to vendors from EY states that Efoodz will continue to operate CoLab’s platform on a ‘business as usual’ basis.
“CoLab has got a very extensive database that those suppliers can leverage off - there's money to be made for both parties,” Lam said.
“We've got a marketing, operations and finance team with more capacity so we'll be able to take on CoLab and will consolidate both warehouses to one central location. The need for two warehouses in two separate states is unnecessary.”
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