The food startup known for prepping, cooking, and delivering healthy dinners throughout the Bay Area now has its hungry eyes set on Seattle. Munchery is planning to launch its second market later this summer, and is currently building out a commercial facility. It hopes to replicate the success it has in San Francisco: an anticipated $10 million in annual revenue for this year, 5,000 menu items ordered each day, and 20% growth in revenue and meals month over month.
The three-year-old company is being boosted by a $28 million injection, series B financing led by Shervin Pishevar of Sherpa Ventures. Pishevar, who claims he hasn't "been more excited about a company since Uber," will join Munchery's board. Existing investors actor-director Jon Favreau and famed Kogi BBQ truck chef Roy Choi—both of whom served as judges on the recent season of Top Chef—also participated in this round.
The $28 million—the largest round for food-delivery startups, according to data from Pitchbook—stands as a stark contrast to Munchery's early days, when cofounders Tri Tran and Conrad Chu worked out of Tran's living room. The two met when they worked at GetActive, a communication platform for nonprofits. Tran, who led software development for the company, bootstrapped Munchery with the money he made cashing out when GetActive was merged with Convio, which later went public.
With this new round of funding announced Thursday, Munchery plans to build out its Seattle facility—which will be overseen by Emily Moore, former executive chef of the Painted Table and culinary director of the nonprofit farm 21 Acres—and accelerate hiring in San Francisco across all departments, including recruiting resident chefs.
Back in 2011, Munchery began as a marketplace to connect professional chefs and hungry people seeking high-quality, healthy meals. However, as it grew, it realized in-house chefs could help meet spikes in demand that independent chefs couldn't serve. Last fall, it opened a resident chef program, adding professionals with 17 to 20 years of culinary experience to its payroll. The company now has eight resident chefs and close to 20 independent chefs—all of whom work out of its 5,600-square-foot industrial kitchen in the Mission district. How does a startup lure away some of the most renowned in the industry? It's actually an easy sell against a backdrop of mediocre pay, stressful hours, and evening and weekend shifts in the restaurant business, the cofounders say.
"You pay $50 for that meal—most of that went to the table cloth, the service, the lease. Very little of that goes to the house," Tran told Fast Company. In contrast, Munchery pays its chefs on salary 30% more than the industry—with some of the most experienced earning six figures a year. In addition to benefits and a stable paycheck, the chefs hold regular hours and don't work weekends or holidays because Munchery isn't open then. Plus, they also get to experiment with their food. "You're building your brand. Your name and photo are right there," he said, pointing to a label on a takeout box. "They really get to innovate and flex their culinary muscles."
There's also a corporate-good aspect to Munchery. Tran and Chu's nonprofit roots helped shape the company's sense of corporate responsibility. For every meal ordered, the startup donates one to the SF-Marin Food Bank, and excess meals at the end of each day are donated as well. Munchery plants trees to offset the carbon footprint of its deliveries, and also uses biodegradable and recyclable packaging.
To scale its service, the company is looking to apply its know-how in San Francisco to Seattle and beyond. "How do we bring food to the masses in an efficient and financially sustaining model and make it work for everyone involved?" Tran asked. The answer lies within the infrastructure Munchery built from scratch, including systems for managing its warehouse, inventory, quality assurance, customer service, fraud detection, delivery routes, and more.
The company also developed its own barcoding system and apps for drivers and food packers, so all meals can be traced back to their origin. Instead of piping hot dinners, Munchery's food comes chilled, with directions to top off in the oven or microwave. This allows it to serve the greater Bay Area, not just San Francisco. "[Hot food] is kryptonite to scale," Chu said. The alternative—open a ton of locations that each serve small neighborhoods, like Dominoes or Papa John's—just isn't feasible for him.
Though Chu wasn't able to divulge Munchery's secret sauce, he says the technology helps the company anticipate how much food to serve. "We studied Amazon. We studied a lot of inventory systems out there," he said. "That allows food to come in very fast and allow last-minute changes." Such changes include adding or canceling items, altering the delivery window, and even letting the driver know you want your meal dropped off a friend's house down the street.
That isn't to say Munchery in Seattle will be an exact replica of the service in San Francisco. "We don't want the food to be exactly like here," Tran said. "We want food to be uniquely created by culinary talents there and what people want to eat there. Each city will have its own footprint and its style."