What’s The Deal With EAT Club?

To be honest, I had never heard of EAT Club until about a month ago, when its public relations team reached out to me, and I’m glad that they did. EAT Club, which launched in 2010, is almost three years into its move from a consumer-focused company to a business-to-business one that focuses on corporate food catering. EAT Club’s ideal customer has always been the office employee, but back then, EAT Club was trying to acquire them at their office, rather than through their office, EAT Club CEO Frank Han told me. In the fall of 2013, EAT Club came to terms with the fact that B2C food businesses are hard.

Now, EAT Club focuses on corporate customers like Netflix, Tesla, DogVacay, Atlassian and Samsung. Every month, EAT Club serves an average of more than 700 companies, and has a fast-growing business with impressive margins and repeat customers (86% of anyone who has tried EAT Club is a repeat customer).

At EAT Club, the average delivery size is $300, which the company says is 10x the size of an average business-to-consumer delivery order (Sprig, Postmates, DoorDash, etc). EAT Club has made money on every meal it has sold since 2013, and makes a 25% contribution margin on every meal sold. The contribution margin is the money EAT Club makes after it pays for the food and delivery, but before it accounts for corporate expenses for paying employees.

Speaking of employees, all of EAT Club’s delivery people are employees, rather than 1099 contract workers. It’s been like that since the beginning because EAT Club has always wanted its delivery staff to adhere so a certain schedule and accept the company’s training.

“You can’t technically do that with contractors,” Han said. “We’re not interested in just having whoever is interested in working just showing up.”

EAT Club, which has raised $16.5 million to date, sees 96% of its revenue come from repeat customers, but declined to share exact revenue figures. That being said, Han confirmed that EAT Club’s revenue run rate is north of $25 million and growing rapidly. One of its competitors, ZeroCater, said in August that the company has facilitated over $100 million in revenue since launching a little over four years ago. Other competitors include Cater2Me and Zesty, which cited “eight-figure” revenue run rate in July.

EAT Club operates in San Francisco, Palo Alto, San Jose and Los Angeles. Companies subscribe to EAT Club to offer food as a benefit to their employees. Companies can sign up to offer employees $100 worth of EAT Club credit, or sign up for recurring weekly meals. In the next 12 months, EAT Club’s priorities are to bring on more corporate customers and launch in additional markets.