I didn’t end up in Chicago on purpose. I grew up on the East Coast and lived in New York for a few years. When my wife graduated from law school, we were ready to try something new. We picked Chicago after living here for a summer because of the cost of living relative to the incredible opportunities to live, work, and play.
Once we picked Chicago, however, I had to figure out what I was going to do for work, and I definitely didn’t know at that point that I’d be founding a food-tech business. In hindsight, being in Chicago has been one of the key ingredients to the success of my company, Farmer’s Fridge—and that’s not a coincidence.
Chicago is the home of a number of successful food-tech startups, including disruptors like Grubhub, which accelerated online food ordering, meal kit pioneer Home Chef, protein snack RXBar (now part of Kellogg’s), and emerging players like Tovala and Nature’s Fynd.
Being surrounded by so many food-tech startups makes it clear that I ended up in exactly the right place. The city’s startup ecosystem has embraced Chicago’s roots as a food center—and I’ll explain how and why that’s been a boon for our company and others—and offers a great roadmap for founders and economic development officials in other communities seeking to leverage their traditional strengths to encourage innovation and win in new, technology-enabled industries.
Production and Distribution Epicenter
While many Americans might think of California’s avocado farms or New York City’s restaurants, Chicago, located in the middle of the largest food-growing region and in the geographic center of the country, is at the heart of this country’s food production and distribution. Chicago has long been a national transportation hub, and that is still the case today: Six of the nation’s largest railroad freight carriers operate terminals here, and it is the third-largest intermodal system in the world. We can reach 30% of North American consumers with a one-day drive.
In short, Chicago was well-situated from the start to birth and house many of the biggest consumer packaged goods companies. It’s home to 1,500 food manufacturing firms, and nearly 400 food companies have a presence here, including Kraft Heinz, Oscar Mayer, MillerCoors, and Conagra. And let’s not forget to mention that the largest restaurant chain in the world, McDonald’s, scaled from its headquarters in the Windy City as well.
The fact that big food has flourished in Chicago isn’t exactly news. Where it really gets interesting is when we look at the emerging generation of food-tech companies that has blossomed here. Why hasn’t another city or region been able to shake Chicago’s crown? There have certainly been attempts. Silicon Valley has their fair share of food companies, and places like Boulder, Colorado have been pivotal to innovation in the natural food industry. But nowhere else has the concentration of companies that we have here. What Chicago has going for it is more than pure geographic advantage.
Food is a physical, tangible thing, and launching a company with a physical product is inherently more cost prohibitive and logistically challenging than launching a services business. It requires manufacturing space, labor, and access to raw materials. In 2013 in Chicago (when I started Farmer’s Fridge), the cost of renting a table to work in a shared industrial kitchen was $15 per hour. A similar space to prepare meals in New York ran for $100 per hour. Lower startup costs are definitely a reason why so many food-tech companies have planted roots here.
In addition to being less expensive, starting up here is also easier. The infrastructure is readily available, and often centrally located. Chicago has the largest industrial real estate market in the U.S., with more than 1.2 billion square feet of processing and manufacturing space available. That’s 50% more industrial space than Los Angeles has, and more than Dallas and Atlanta have combined. Because so many large food companies are in Chicago, there’s also an ease to scouting these spaces, engaging suppliers, and securing logistics partners. For our first manufacturing facility, we were able to lease space right in the West Loop previously used by meal kit and home delivery business Home Chef, less than half a mile from the Google headquarters and a brand-new Nobu hotel. When we outgrew that space, we followed in Home Chef’s footsteps again and moved into the next tier of facility they had recently outgrown.
Just as important as the existing infrastructure is the institutional knowledge. Chicago has provided the support system necessary to grow Farmer’s Fridge. This city has both the infrastructure and, crucially, the talent base needed to succeed as the food system is once again revolutionized in America. The rise of tech and the digitization of our lives allows for a complete transformation in how we interact with what we eat (think ordering your meal from an app, a software-enabled smart oven, or a digitized vending machine, not to mention the advances in technology enabled on the manufacturing front). When you overlay technology on top of the solid industrial and logistical base already present in Chicago, it’s clear something special is forming here.
To that end, it’s not hard here to hire team members who have worked in food, manufacturing or logistics to help grow your organization. Chicago has the highest concentration of food scientists and food-manufacturing workers of any large American city. I hired a director of quality and food safety with a background at Kraft Heinz, and a director of operations who came from Imperfect Foods. When you begin to scale, Chicago is a large enough city to support a roster of tech talent. In fact, as a hub for top engineering programs, the midwest is producing an increasingly large percentage of the country’s tech workforce. The University of Michigan, University of Illinois, and Purdue University are ranked among the best in the nation. Michigan is the state with the highest number of engineers per capita, and 7% of Illinois’s workforce is in tech, which is equal to roughly 440,000 jobs. Of course, with so many big food companies headquartered here, Chicago is also home to talented professionals from every other walk of life. My Chicago-based leadership team has backgrounds across Garrett Popcorn, Groupon, Trunk Club, and Feeding America.
Chicago as a Food City
Chicago’s history as a food city means that I’ve found my fellow Chicagoans to have sophisticated taste buds and curious palates. We also have an unyielding desire for quality and value, coupled with a devotion to no-nonsense Midwestern prices. Put simply, our history as a food city means that we’re accustomed to the best, and Chicago’s top-tier restaurant scene has influenced our menu offerings over the years. We’ve collaborated with chefs like Stephanie Izard, Brian Jupiter, and Paul Kahan here in our home city, and had the chance to source amazing ingredients. We used bread for sandwiches from James Beard awarded baker Greg Wade of Publican Quality Bread for a number of years, and still use tortilla chips from Rick Bayless’s Frontera Foods in our snack items. I know I won’t settle for food that isn’t amazing, and neither will many of my friends and neighbors.
If you are planning to do something in the food industry that is big, innovative, and leverages new technology, I strongly suggest you join us in the Midwest and make Chicago your headquarters. If you’re a founder, take a page from the City of Big Shoulders by finding startup opportunities that embrace and capitalize on your hometown’s roots.
Luke Saunders is founder and CEO of Farmer’s Fridge, a fresh food distribution company with nationwide delivery and a network of more than 400 smart fridges stocked with fresh meals and snacks.