Mr. Jonathan Ferrari reports

GOODFOOD REPORTS FIRST QUARTER RESULTS WITH GROWING ACTIVE CUSTOMERS, STRONG GROSS MARGIN AND ADJUSTED EBITDA DRIVING POSITIVE CASH FLOWS FROM OPERATIONS

Goodfood Market Corp. has released financial results for the first quarter of fiscal 2024 ended Dec. 2, 2023.

"We are pleased to have started Fiscal 2024 with strong operating performance and delivered on our commitment to consistently growing our profitability, with Adjusted EBITDA1 positive for a fourth quarter in a row, reaching $8.5 million over the last twelve months. As we consistently optimize the efficiency of our operations, our gross margin continues to show strength and reached 39.4% in the first quarter, further supporting our growing Adjusted EBITDA1 profitability and cash flows," said Jonathan Ferrari, Chief Executive Officer of Goodfood. "Our lean cost structure has enabled our gross profit to translate into Adjusted EBITDA and in turn into positive cash flows as we generated adjusted free cash flows1 of $4 million, positive for the second quarter out of the past three," added Mr. Ferrari.

"As we build on the positive momentum of this first quarter, we are energized to have developed and implemented multiple customer-centric initiatives that helped grow Active Customers1 to 124,000, an increase compared to the last two quarters. In recent months, we have increased our customization options to include additional high-quality protein swaps and choices for customers. We launched mouthwatering bundle products to give our members great options for various meal occasions that have been a hit with customers. We also made browsing through our platform easier and more intuitive by introducing tags and simple categories that make selecting delicious meals in minutes even easier. Through these growth initiatives, our continued focus on our customers and consistent profitability with unit economics improvements, we are well positioned to continue growing cash flows and to deliver significant shareholder value," concluded Jonathan Ferrari.

RESULTS OF OPERATIONS - FIRST QUARTER OF FISCAL 2024 AND 2023

The following table sets forth the components of the company's consolidated statement of loss and comprehensive loss:

VARIANCE ANALYSIS FOR THE FIRST QUARTER OF 2024 COMPARED TO FIRST QUARTER OF 2023

The decrease in net sales is primarily driven by the company's decision to discontinue its on-demand offering and a decrease in the number of active customers partially offset by an increase in average order value as a result of price adjustments, increased variety in the meal-kit offering and a focus on meal-kit offerings with ready meal solutions and grocery products as add-ons. The decrease in active customers is mainly driven by the company's focus on attracting and retaining customers that provide higher gross margins and by changing customer behaviours.

The decrease in gross profit primarily resulted from a decrease in net sales partially offset by lower food costs and production costs as a percentage of net sales costs driven by improved efficiencies. Gross margin increased mainly due to operational efficiencies driving lower food and production costs resulting from exiting the on-demand grocery market last year and focusing on the meal kit market in the current year, as well as pricing optimization.

The decrease in selling, general and administrative expenses is primarily due to lower wages and salaries, software, operating leases, utilities, maintenance and other expenses primarily resulting from the company's costs saving initiatives. Selling, general and administrative expenses as a percentage of net sales decreased from 46.7% to 35.8%.

The decrease in reorganization and other related costs is mainly due to the completion of the company's costs reduction initiatives in Fiscal 2023.

The decrease in depreciation and amortization expense is mainly due to the reduction in right-of-use assets following exiting facilities as part of the company's costs reduction initiatives.

The improvement in net loss is mainly the result of operational efficiencies, reducing wages and salaries in cost of good sold, lower selling, general and administrative expenses, lower depreciation and amortization expense as well as lower reorganization and other related costs partially offset by lower gross profit mainly driven by lower sales.

FINANCIAL OUTLOOK

Goodfood's core purpose is to create experiences that spark joy and help our community live longer on a healthier planet. As a food brand with a strong following from Canadians coast to coast, we are focused on growing the Goodfood brand through our meal solutions including meal kits and prepared meals, with a range of exciting Goodfood branded add-ons to complete a unique food experience for customers.

The online meal solutions market continues to grow rapidly and meal kits are now estimated to have reached approximately US$1.4 billion dollar in size in Canada as part of the C$123 billion Canadian Grocery industry, with a penetration of only 4.8% of households (see Annual Information Form for details). We believe there is substantial runway for additional penetration of meal kits into Canadian households, as evidenced by industry research estimating the Canadian meal kit market to grow at a 16% CAGR between 2023 and 2027, to reach a market size of US$2.5 billion. We believe that consumers' willingness to simplify their weekly meal planning combined with their desire for joyful, exciting, and nourishing food experiences at home while reducing food waste provides for significant room to increase online food delivery penetration.

Before scaling our efforts to capture an outsized share of the meal solutions market, our focus has been and continues to be on further improving and growing cash flows. We are pleased to have now reported four consecutive quarters, which on a last twelve months basis stands at $8.5 million, of positive adjusted EBITDA1 in Fiscal 2023. The substantial rise in adjusted EBITDA1 profitability has led to significant adjusted free cash flows1 improvement which has now turned positive in two of our last three quarters. The improved adjusted EBITDA1 and adjusted free cash flows1 on the back of lower net sales highlights the cost discipline we have shown in improving our operational efficiency and reducing our selling, general and administrative expense. These improvements position Goodfood ideally to turn its focus to growth and to fund this growth with internally generated cash flows.

During Fiscal 2024, Goodfood will focus on key growth pillars to drive growth in top line and, most importantly, in profitability and cash flows: 1) customer growth, 2) order frequency increase, 3) basket size enhancement, and 4) continue to enhance our sustainability practices.

To grow our customer base, the first step is building customer acquisition cost efficiencies to enable adding more active customers to the Goodfood platform every week with the same investment. In recent months, we have completed a thorough review of and made significant adjustments to our acquisition channels. We have also made and continue to make investments in our digital product to elevate the customer experience by reducing friction and enhancing ease of use. Combined with reactivations of previous Goodfood members, these initiatives have reduced our customer acquisition costs substantially since the fourth quarter of Fiscal 2023 and improved the profitability and unit economics of customers as evidenced by the consistently increasing sales generating ability and profitability of our customers.

A key driver that can enhance order frequency is product variety. In addition to launching our VIP program, which rewards high-frequency customers, we have increased the diversity of our recipe and ingredient offering to provide additional choices to enhance order rate. With a focus on Better-for-You products like organic chicken breasts, organic lean ground beef, bison, sustainably raised steelhead trout and paleo and keto meals, combined with exciting partnerships with first-rate restaurants, we plan on offering a growing and mouth-watering selection to customers to drive consistently increasing order frequency.

The dollar-value of the baskets our customers are building is also increasing and we are building a differentiated set of meal kits, ready-to-eat meals and grocery add-ons to provide Canadians with an exciting online meal solutions option and increasingly capture a larger share of their food wallet. In addition, we have provided and continue to provide more choice of proteins to our customers, with the launch of upsells and upcoming launch of customization within our meal-kit recipes allowing customers to swap or double the proteins included in their chosen recipes. With these initiatives, we aim to provide customers with an array of options to easily make their meals better and their baskets bigger.

We are also continuously looking to enhance our sustainability initiatives by prioritizing planet-friendly options. Not only do we offer perfectly portioned ingredients that save from food waste, we also constantly look to simplify our supply chain by removing middlemen from farm to kitchen table. This year, we are also offsetting carbon emissions on deliveries and introducing packaging innovations that have helped us to remove the equivalent of 2.4 million plastic bags annually from our deliveries. Our goal is clear, build a business that helps our customers live healthier lives on a healthier planet.

In addition to focusing on these key pillars of top-line growth, we are currently testing the potential for multi-channel partnerships that can broaden Goodfood's customer reach and resilience.

With the steps we have taken, our strategic execution to drive profitability and cash flows continues to bear fruit, underpinned by consistent improvement in adjusted EBITDA1 and cash flows. Coupled with our unrelenting focus on nurturing our customer relationships, profitable growth remains our top priority. The Goodfood team is fully focused on building and growing Canada's most loved millennial food brand.

TRENDS AND SEASONALITY

The company's net sales and expenses are impacted by seasonality. During the winter holiday season and the summer season, the company anticipates net sales to be lower as a higher proportion of customers elect to skip their delivery. The company generally anticipates the number of active customers to be lower during these periods. During periods with significantly colder or warmer weather, the company anticipates packaging costs to be higher due to the additional packaging required to maintain food freshness and quality. The company also anticipates food costs to be positively affected due to improved availability during periods with warmer weather.

CONFERENCE CALL

Goodfood will hold a conference call to discuss these results on January 16, 2024, at 8:00AM Eastern Time. Interested parties can join the call by dialing 1-416-764-8658 (Toronto or overseas) or 1-888- 886-7786 (elsewhere in North America). To access the webcast and view the presentation, click on this link: https://www2.makegoodfood.ca/en/investisseurs/evenements

Parties unable to call in at this time may access a recording by calling 1-877-674-7070 and entering the playback passcode 209326#. This recording will be available until January 23, 2024.

A full version of the company's Management's Discussion and Analysis (MD&A) and Consolidated Financial Statements for the first quarters ended December 2, 2023, and December 3, 2022, will be posted on http://www.sedarplus.ca later today.

ABOUT GOODFOOD

Goodfood (TSX: FOOD) is a leading digitally native meal solutions brand in Canada, delivering fresh meals and add-ons that make it easy for customers from across Canada to enjoy delicious meals at home every day. The Goodfood team is building Canada's most loved millennial food brand, with the mission to create experiences that spark joy and help our community live longer on a healthier planet. Goodfood customers have access to uniquely fresh and delicious products, as well as exclusive pricing, made possible by its world-class culinary team and direct-to-consumer infrastructures and technology. Goodfood is passionate about connecting its partner farms and suppliers to its customers' kitchens while eliminating food waste and costly retail overhead. The company's administrative offices are based in Montreal, Quebec, with production facilities located in the provinces of Quebec and Alberta.

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