VCs Hunt for a Food Delivery Business That’s Sustainable

May 24, 2017
Over the last year, meal-delivery businesses have mostly served up pessimism. Several have closed their doors, the most recent being Maple, a venture-backed New York startup that shut down last week. Others, including Munchery Inc., Postmates Inc. and Zesty Inc., have cut workers. Sprig Inc., which is backed by Accel and other venture capitalists, is burning through $850,000 a month and is seeking a buyer, said people familiar with the matter.

 

But VCs aren’t giving up on the dream of getting food delivered cheaply through an app. They’re just trying to find ways to do so with fewer subsidies, or even profitably. One promising niche is targeting the hungry office worker. Investors recently put $30 million into Eat Club Inc., which delivers premade lunches in the San Francisco Bay area and Los Angeles. The company, which said it’s profitable, plans to use the money for an expansion to New York.

Eat Club offers similar options to Munchery or Sprig, with about 20 entrées per day, but only delivers to offices with 20 or more employees. Workers can order from an app or website. By delivering an office’s meals together, the company estimates it costs 90 percent less per dish compared with on-demand startups. Eat Club said its couriers drop off 20,000 meals a day, mainly to midsized technology companies such as Flipboard. Eat Club declined to say how many corporate customers have signed up but said it expects to generate $50 million in revenue this year.

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