The price is described as an initial cash offering of £16 million, with a possible further payout due if City Pantry achieves agreed operational and financial targets over the next three years.
The premise of the acquisition is to enable consumer-focused Just Eat to further expand into the U.K. corporate catering market by leveraging City Pantry’s brand, technology and sector knowledge. City Pantry claims more than 1,000 monthly corporate customers.
Founded by Stuart Sunderland in 2013, City Pantry set out to improve the catering options available to companies in London. Its marketplace connects local caterers to businesses that need quality food delivered to their offices or to cover events, meetings and regular team meals.
When the startup first launched, Sunderland viewed its main competitors as traditional corporate caterers, sandwich retailers, pizza delivery places and, to a lesser extent, the newer breed of restaurant delivery companies such as Just Eat, Deliveroo and Uber’s UberEATs. However, as mindshare of these services has grown, it is likely that consumer and corporate catering has increasingly encroached on one another.
In this context, Just Eat’s acquisition of City Pantry makes a lot of sense for what is a relatively low price to gain a stronger foothold in the corporate market. Given that publicly listed Just Eat is coming under increasing pressure from Deliveroo and UberEATs, it is also smart to demonstrate continuing momentum to the public markets. Small incremental acquisitions like this are a tried and tested way of doing so.
City Pantry is thought to have last raised funding in early 2018: a £4 million round led by Octopus Investments, with participation from Newable Private Investing. The startup’s other backers included Angel CoFund, The London Co Investment fund (both of which are part-funded by U.K. tax-payer money) and various angels. City Pantry was also a graduate of retail startup accelerator TrueStart.
In a statement issued to TechCrunch, Tim Mills, investment director of the Angel CoFund, comments:
This deal is credit to founder Stuart Sunderland and his team for recognising a need for quality of choice in the corporate catering market and building a marketplace that has been adopted by restaurants and corporates alike. The team has successfully grown the business in the U.K. and demonstrated the commercial opportunity in the B2B market, which is what has made it such an attractive investment for Just Eat. The acquisition is a great opportunity for the company to continue to scale beyond the U.K., with Just Eat opening up new markets for the business. City Pantry has achieved a lot in the past four years and delivered a good return for investors, I look forward to seeing the team reach new heights with Just Eat.
Adds Peter Duffy, interim CEO of Just Eat, in a statement:
Working with City Pantry to accelerate its mission to improve and modernise the workplace dining experience is a great opportunity for Just Eat. It’s the right time for us to enter the corporate market and expand our offering.
City Pantry has a well-established business, fantastic expertise and an entrepreneurial spirit that matches our own. We look forward to bringing the company into the Just Eat family and working with them to grow in the UK and internationally in this exciting and dynamic market.