While it seems like a new food delivery business launches or gets funded every season in the U.S., several have scaled back, like Sprig, or shut down entirely like Spoonrocket.
Among those that have survived, however, are smart sites and apps serving the office-catering corner of the industry, a $20 billion market in the U.S. alone according to research from Technomic.
Now, one of the earliest players to focus on this space, ZeroCater, which was founded in 2009, has raised a $4.1 million Series A round of investment led by Romulus Capital and joined by Struck Capital.
ZeroCater CEO and founder Arram Sabeti said he started the company after feeling frustrated with the office managerial burdens of ordering for a small team at a startup he worked for, primarily to learn about entrepreneurship, Justin.tv.
He ran ZeroCater on simple spreadsheets for a long time before investing in developing a website, apps and back-end systems to connect restaurants with office teams that had plenty of demand for good eats, but a lot of different tastes and dietary needs.
The site lets an office manager or other person tasked with ordering for a group set up preferences– including around taste, allergies or lifestyle choices– for their team, and remember these for one-click ordering.
ZeroCater plans to use its new Series A funding to support growth in the markets where it is already operational, and invest in further product development and engineering the CEO said.
The San Francisco-based startup now facilitates office catering in Austin, Chicago, New York City and parts of New Jersey, the San Francisco Bay Area, San Jose, and Washington D.C. ZeroCater is not likely to expand to suburbs, as it focuses on areas that have a dense population of workers and lots of medium to large employers.
Sabeti explained that orders for groups at work represent a higher price per delivery made than single customer orders, and that means higher-end restaurants are willing to spend their time cooking to fulfill orders that come through ZeroCater, versus take-out ordering sites such as Grubhub.
Catering to businesses is also a more attractive notion to venture investors who want to see strong “unit economics,” alongside a great team, traction and technology, said Romulus Capital’s founder and General Partner Krishna K. Gupta.
“Companies that have raised twenty times the capital of ZeroCater aren’t doing as well,” the investor noted.
Romulus Capital has also invested in eLaCarte, another food tech business, and several marketplaces including EquipmentShare, which allows peer-to-peer rentals of machinery and tools used by contractors, and Classpass, the marketplace for fitness courses.
ZeroCater faces competition from a growing number of venture-backed startups engaged in food delivery to office workers including Bento, Cater2Me, EatClub, eZCater, Farm Hill and Zesty.
Some of its competitors are downright trash talking ZeroCater. Look up ZeroCater on Google and in among top listed results you’ll see a link to EatClub’s site, and a line of copy that claims they’re “Like ZeroCater but better.”
EatClub has raised $16.5 million in venture funding to-date. ZeroCater by contrast appears lean (if not mean-spirited) with just under $6 million raised to-date.
Sabeti said ZeroCater’s strongest differentiators are variety and on-time deliveries.
“It doesn’t matter if your site has cool features or your brand is well-known if the food does not show up to customers on time. We’ve nailed the ABC’s of making sure customers have a great experience of food and that involves operational finesse. Our results speak for themselves,” the CEO said.
ZeroCater surpassed $100 million in sales as of August 2015, but the CEO declined to disclose further revenue details or terms of the Series A deal, including a post-money valuation.
The company currently employs about 120 full-time and is headquartered in San Francisco.