Munchery, the Bay Area startup that lets customers order healthy, high-quality meals from professional chefs, said it raised $3.3 million of an ongoing $4 million in Series A funding in a round led by E.Ventures. Also participating were angel investors (and die-hard users), Matt Mullenweg, founder of WordPress; Randi Zuckerberg; and El Dorado Ventures’ Tom Peterson. To date, Munchery has raised $4.21 million in outside funding, which includes a small seed round from November 2011.
The new investment will be primarily used toward national expansion efforts. Initially serving just San Francisco, today the company is announcing coverage for the East Bay, including Berkley and Oakland. With expansions into Marin County and the Palo Alto area over the past year, the company says it now covers the majority of the Bay Area, and is preparing to launch in L.A. in early 2013. Other markets will then follow, including New York and Seattle.
Munchery was founded in spring 2010 by CEO Tri Tran and CTO Conrad Chu, who in addition to working as engineers, were also young dads in search of a better way to serve healthy, but also convenient and affordable, family dinners. Scratching their own itch, as they say, the two created Munchery. After publicly launching in summer 2010, the company’s first year was spent focused on operations, playing with the business model, and learning from their users. By year-end 2011, things really started picking up, and today the Munchery reports 25 percent month-over-month growth, and a total of 60,000 meals served.
To use the service, customers can log on to Munchery from the web, via an iOS app, and soon, Android, in order to browse through the day’s available meals, and place an order for delivery using their credit card. Initially, Munchery charged customers a “marketplace fee” to help draw in additional revenue, but now, the company has worked with its chef partners, and optimized the logistics of the business in order to remove that fee from the customer’s side. Instead, Munchery now generates income off a flat fee (around 20 percent) which is built into the cost of the meal. The rest of the meal’s cost goes directly to the chefs. Munchery chefs plan their menu, cook the meals, optionally renting space in Munchery’s commercial kitchen, and plate the food. Munchery helps them to determine how many meals to make in a given day, and manages the ordering and delivery side of the business.
There are now over 50 chefs on Munchery, with 5 to 10 working on any given day. Chefs tend to start off thinking Munchery is a way to make some extra money on the side, but often realize that selling meals on Munchery’s marketplace is a better alternative to their full-time job.
“Most of them start dipping their toe in the water,” explains Michael Schaecher, Munchery’s Director of Marketing. “They might start off doing it on the side, but it makes sense from a chef’s perspective because we’re able to provide a lot of value to them,” he says. “The first way is that they can be their own boss. They’re not working for some restaurant owners – they’re creating their own menus and excelling at what they do best. Two, they can make more money working for us than cooking at someone else’s restaurant. And three, for the first time, they can work during the day instead of nights or weekends,” and, laughs Schaecher, “that’s actually a pretty good motivator.” He also notes that Munchery offers a lower-stress environment than the typically high-pressure restaurant industry does, which some of the chefs like, too.
With the new investment, Munchery is now focusing on the above-mentioned expansion efforts, figuring out the intricacies of each local market and growing the team accordingly. Currently a team of six, not including drivers and chefs, Schaecher says they’re close to hiring the GM for the L.A. office opening next year.