5 Companies That Own (Or Will Own) The Food Delivery Space
Food delivery is no longer limited to pizza and Chinese takeout. New startups are making it possible to order in from a greater variety of restaurants than ever before.
It started with GrubHub (NYSE: GRUB), which helped consumers find and order food from restaurants that deliver. Now a plethora of on-demand food startups hope to take this concept to a whole new level.
In the old days, consumers used the Internet to find restaurants that deliver. The list was often limited to pizza and sandwich shops. Location also played a role since many restaurants won't deliver if the customer is too far away.
Caviar is one of many startups that hopes to change that. The company partners with restaurants in Boston, Chicago, Manhattan, San Francisco and other cities to offer new catering and delivery options.
Caviar isn't a restaurant or catering company, so it doesn't actually produce any of the food that customers order. The startup simply takes care of the delivery process.
Thus far, Caviar has raised $15 million. Winklevoss Capital (the venture fund from the Winklevoss twins), Tiger Global and Andreessen Horowitz are among the firm's backers.
2 & 3. Munchery And Sprig
Sprig delivers hot meals to customers with a flat fee of $9 (for lunch entrées) or $10 (for dinner). There is an added fee of $2, which covers tax and tip.
Munchery delivers chilled meals in the San Francisco Bay area. Entrées vary in price, but most meals seem to fall within the $7.95 to $11.95 range (plus $2.95 for delivery). Sides are offered for an additional fee. Customers can also purchase iced coffee, alcoholic beverages and an insulated cooler.
This is easily one of the most expensive delivery services available, but the evolving menu looks appetizing. It could prove to be a hit with consumers who want to order ahead and heat their meals later.
Sprig's lower prices -- and ready-to-eat options -- might be more appetizing to customers that are already hungry.
HelloFresh is far from a typical food delivery service. Instead of seeking out restaurants with the best dishes, HelloFresh delivers recipes and ingredients for consumers to make their own meals.
The process is pretty simple: Every week, HelloFresh publishes new recipes that are created by its team of chefs. The company buys a plethora of ingredients, packages them up and ships them to customers. From there, the customer can open the box and start cooking.
Unlike competing services (such as Plated and Blue Apron), HelloFresh doesn't offer individual recipe options. Users instead subscribe to a weekly service ($69 for two people, $129 for four) that provides three out of five meat-based options. Vegetarians pay a smaller fee ($59 for two, $109 for four) but the recipe options are pre-selected. The company is trying to add more veggie recipes.
In the meantime, subscribers will have to accept whatever they receive. On the bright side, the recipes change every week (and weekly orders can be skipped in a couple clicks).
HelloFresh has a 4.2 average rating (out of 5 stars) on Google, but a few people complained about the customer service (the company is reportedly difficult to reach). One customer claimed that the produce was usually spoiled by the time it arrived.
Most other customers seem to be satisfied, however, which could be why HelloFresh has attracted $67 million from investors. The company thus far has delivered 10 million meals to its customers.
Fooda is a delivery service and a pop-up restaurant facilitator rolled into one.
Fooda delivers small orders of food from restaurants that don't offer the service internally. The company also provides a way for independent restaurants to temporarily set up shop inside of local businesses. This allows them to serve fresh food and get paid on the spot.
It's a simple concept that is helping businesses grow while providing consumers with better food options at work. As of December 2013, Fooda had partnered with more than 150 restaurants in Chicago and 50 restaurants in New York. The company, which raised $5 million last fall, plans to branch out this year and eventually serve customers all over the country.
Fooda on February announced that it had served its one-millionth meal. It should be interesting to see how many meals it serves once it adds more restaurants and expands to additional cities.
Disclosure: At the time of this writing, Louis Bedigian had no position in the equities mentioned in this report.
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