ENTREPRENEUR Kevin Dorren is cooking up ambitious growth plans for his online Diet Chef business after buying out the company’s private equity backers.
“Only about 40 per cent of the UK population have ever heard of Diet Chef, so there’s still 60 per cent of the market to go after,” Mr Dorren said. “We easily believe that we can double or triple over the next couple of years.”
Based in Edinburgh, Diet Chef is the UK’s largest diet meal delivery company with 150,000 subscribers. This month it will ship around 900,000 individual calorie-controlled meals from its warehouse in Newbridge outside Edinburgh. It is also spending between £800,000 and £900,000 in January on TV advertising.
“Obesity is not going away and a larger percentage of the general population than ever before are now overweight,” Mr Dorren added. “We seem to be going into a new phase of weight loss which is less about traditional classes and more about being able to get weight loss advice online.”
He referred to the announcement in October that Oprah Winfrey had bought a 10% stake in Weight Watchers, the weight loss programme founded in 1969. In recent years the company has seen a dramatic shift in its market to online channels.
Mr Dorren became one of Scotland’s highest profile tech entrepreneurs after leading Orbital Software to an £80 million flotation in 2000. He set up Diet Chef with co-founder Andrew Veitch in 2008 and sold about 40 per cent of the business to London-based Piper Private Equity in 2010. In 2015 Diet Chef hired advisers Grant Thornton to explore a possible sale of the business.
“Because of their fund [life] cycles, [Piper] have been pretty keen to exit in the last 12 months,” Mr Dorren said. “Coming from a tech background, it’s generally been all about building a business and selling it. But interestingly we’re now seeing quite a lot of tech businesses and businesses in general staying in for longer and not selling. So we decided to buy the Piper guys out. Andrew and I now own about 95 per cent of the business and are focusing on how we grow the business.”
The buyout was funded with £1.5m from Lending Crowd, the ‘peer-to-peer’ lending platform set up by fellow Edinburgh tech entrepreneur Bill Dobbie. Mr Dorren believed this was probably the biggest management buyout to be backed by crowdfunding.
To give customers more choice, Diet Chef has launched a lower-cost version of its product called Diet Now. This is roughly half the price of the £180 monthly subscription to Diet Chef.
“The number one reason people don’t buy Diet Chef is that they don’t feel they can afford it,” Mr Dorren said. “So we’re trying to give them a lower cost option. The big challenge is that those suffering most from obesity are typically from a poorer socio-demographic.”
Mr Dorren’s other investments include Scottish start-ups Brewhive, Flavourly and TVsquared. He was also one of the first angel investors in FanDuel, the fantasy sports platform currently fighting a New York lawsuit that claims its business is illegal gambling.
“FanDuel is a great business,” Mr Dorren said. “When you get to the size and scale that FanDuel is, you’re going to hit regulatory challenges. I find it amazing that, back in 2008, no-one knew about FanDuel – and they’ve now become a household name in the US.”
Amazon has been Mr Dorren’s best-performing investment, with its stock price up about 120 per cent year on year.
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