The Billion-Dollar Frozen Food Empire That Owns Hot Pockets

Hot pockets have been a popular speedy lunch or hearty snack for decades. These frozen, doughy pockets are loaded with savory fillings like cheese, meat, and sauce. Plus, Hot Pockets have a decent amount of protein, especially with some extra chicken or a side of cottage cheese. They were first invented in 1983 by brothers Paul and David Merage. The Iranian immigrants recognized the interest in easy, portable meals among American consumers, and the idea for the iconic Hot Pocket was born. The Merage brothers produced Hot Pockets — and later Lean Pockets and Croissant Pockets — under the parent company Chef America, which they'd founded in the 1970s. 

In 2002, Nestlé bought Chef America for $2.6 billion. The massive food brand, worth more than $250 billion today, owns many other well-known favorites — Gerber, DiGiorno, and KitKat, to name a few. And the love for these handheld sandwiches is real. "Chef America is an ideal and strategically important complement to our own frozen food activities in the USA," Peter Brabeck-Letmathe, then-chief executive officer of Nestlé, said in a press release. Brabeck-Letmathe also referred to Chef America, which was anticipated to do $720 million in sales in 2002, as a "high-growth and high-margin" business.

While it's easy to make your own Hot Pockets at home, the store-bought version did well in the frozen food aisle, and the Merage brothers wanted to continue to build on the brand. The year before the acquisition, in 2001, they launched breakfast Hot Pockets, which did more than $50 million in sales during the first year on the market. As a result of the success, Hot Pockets then increased the filling in the pockets without increasing prices, which led to an even bigger surge in sales — 32% — the following year.

While the sales are likely what led Nestlé to jump on the brand that same year, there was another big reason: Nestlé wanted to expand its frozen food portfolio. "We had been looking at Chef America for 10 or 15 years," Joe Weller, then-chief executive of Nestle USA, the company's American division, told Los Angeles Times of what many considered a steeply priced purchase in 2002. Nestle already had other brands, such as Stouffer's frozen meals, but it wanted to acquire a brand with a younger target audience. Hot Pockets fit the bill, and Nestlé has retained ownership of the brand for more than two decades.