delivery

The race to win consumer’s bellies through home cooked meals is heating up. SpoonRocket has launched in San Francisco with its delivered dinners. That brings the city’s total number of tech-driven meal prep and delivery startups to four: Sprig, Chefler, Munchery, and SpoonRocket.

That’s not even counting the “non startup” businesses that will do the same, like Square Meals, Debbie Does Dinner, Luke’s Local, and Evolution Foods. It’s also not including Gobble, a startup that only services the Peninsula and makes you order the week prior (for that reason, I’m leaving it off the tech focused, meals-on-demand list).

This reminds me of how the launch of ridesharing app Sidecar was followed soon after by Zimride pivoting to Lyft and Uber eventually introducing UberX. Sometimes, there’s an idea whose time has come, and all it takes is one entrepreneur to go after it to encourage the others to follow suit. Spark on a lake of gas.

Each company has its own shtick. Chefler is beloved by the Gilt Groupe which features it for customers, one Gilt curator saying “We just adore Chefler!”

Sprig can call the former executive chef of Google its chief meal maker, planning and making all the dishes. Plus, Sprig’s co-founder is a serial entrepreneur with solid execution experience: Gagan Biyani, co-founder of Udemy and former head of growth at Lyft.

Munchery was the first company of the bunch, the leader of the pack, which offers customers a range of meals from a handful of different executive chefs. Munchery has also raised the most amount of money, with reports that it’s working on another $20 million round at the moment.

SpoonRocket is the cheapest offering for customers, at $6 a pop, compared to the $12-$17 of its competitors.

The question that remains unanswered: Is there room for them all?

Food is an undeniably huge market with roughly $798.1 million in venture raised in the first nine months of 2013 for all manner of food startups, from restaurant reservation systems to grocery delivery companies. But these four companies are situated in a very particular niche, one where they own every part of the meal-making and delivery process. In old-fashioned terms, these are restaurants, just sans the sit-down seating and with a smaller menu.

Because they’re startups that have all (with the exception of Chefler) raised venture, they won’t be looking to own the food delivery market in the neighborhood. They’ll be looking to scale and take over the world…or at least the country.

None of these companies have released up-to-date numbers yet on how many meals they’re providing, and on the surface it seems like they’re all still trying to hone their operations. Sprig and Chefler are new on the market, having launched in September and November respectively. SpoonRocket may have been around for awhile, but with its big move to SF it’s only operating in SOMA and only for lunch hours. Munchery has the largest scope, with by far the largest delivery range (Oakland, Berkeley, SF, San Rafael, San Mateo, Palo Alto and Sunnyvale).

In the case of ridesharing, success has correlated highly to the amount of venture raised and company branding, with Sidecar disappearing into the background and UberX taking the lead despite coming late to the game. Money allows companies to undercut their competitors, expand faster, and do more marketing to acquire customers and drivers.

In meal prep and delivery startups, a big venture backing will matter just as much. Even though the companies are bringing in revenue from the get go with customer orders, the margins on each meal are likely to be small given the cost of food ingredients, manpower to make it, kitchen rental space, delivery fees. As one investor told me, the trick to making money in this niche is to go big — otherwise you might as well go home.

Scale — and stickiness of customers — will be key to generating big returns on a meal delivery startup. And in order to achieve scale, companies will need deep pockets to reach into to launch new markets, acquire new customers, and hire enough staff. In terms of funding, as mentioned, Munchery is far in the lead with $7.92 million in venture (and $20 million more on the way if reports are accurate). SpoonRocket has an undisclosed seed amount in the pocket, Sprig has raised $1.7 million, and Chefler has bootstrapped until now.

The second element that could determine what separates the wheat from the chaff is  branding. At this point, all four companies are small and based solely in Northern California. They don’t have much name recognition nationally, or even locally. They’re also a new enough business model — Lyft for food, if you will — that they have a task ahead of them educating and informing the public about this option.

Chefler is the only company to roll out its version of a “Lyft pink mustache” branding move. Its delivery people drop off meals carrying a giant silver platter, like something out of Downton Abbey. They even wear black tie suits.

It’s that ridiculous silver platter that led me to discover Chefler myself, asking one delivery person in my building what he was doing. It mirrors Lyft’s marketing strategy perfectly. The word gets spread one strange hot pink facial hair piece (or silver platter) at a time.

None of the other services have made a visual stand a priority, so Chefler is the only one whose delivery people are trekking around town attracting notice.

The third element that could determine success or failure for meal prep startups is quality, and it’s not an easily replicable commodity. The food has to be good enough to keep people coming back. Healthiness matters, because again, if not for the health concerns, you could just order takeout from the Chinese food place next door.

Sprig, Chefler, and Munchery have all taken gourmet approaches to their food. Chefler and Sprig boast five star ratings on yelp with 41 and 55 reviews respectively, Munchery a nothing to sneeze at 4.5 stars with 110 reviews. Sprig is the only service I’ve tried myself and I can attest to its stickiness. It had me hooked in one meal, and I ordered from Sprig almost two weeks straight.

SpoonRocket, which started in Berkeley and is a student favorite, has taken a different approach. It’s going cheap. Its meal pictures are a testament to that, looking like something out of a high school cafeteria, but so is the price. At an unbeatable $6, with near-instant delivery — SpoonRocket is the most convenient and affordable of the pack. It’s so affordable it’s cheaper than cooking for yourself if you’re single.

Fortunately for Sprig, Chefler, and Munchery, SpoonRocket is only in SOMA for lunch hours…for now. Once it starts spread to other SF locations, its competitors will have a real pickle on their hands.

Lastly, a company may succeed or fail based on convenience and immediacy. To be the Lyft of food, you must arrive soon after the customer orders. At the moment, Sprig and SpoonRocket are the only two companies that do on-demand delivery. Chefler and Munchery make you order in advance that day. That’s the sole reason I wound up trying — and loving — Sprig, but haven’t given Munchery or Chefler a go yet.

At the moment it’s not clear which companies will succeed or fail. Customers will vote with their stomachs — and wallets. Then we’ll know.

[Image adapted from Thinkstock]