Lunch crunch: Fooda collects $5M to take its in-office service dining nationwide
Like “death and taxes,” eating is an unavoidable fact of life. But eating, and eating well are two very different things. And for those who work in offices, eating well can be a difficult proposition, with time, location, price, and discoverability each presenting a very real obstacle. Few office workers pack their lunch, and those who do likely aren’t winning any points for originality. For those who venture out, at best they rotate through the same three to five places immediately surrounding their building.
Virtual cafeteria startup Fooda was founded to solve this problem by connecting workplaces to local restaurants for in-office dining. The three-year-old company, which was founded in Chicago and has since expanded to New York, today announced $5 million in Series A funding from Valor Equity Partners. In an unusual twist, Valor insisted on completing the entire round at the exclusion of Fooda’s existing Seed investors, Chicago-based Lightbank and KGC Capital, who previously invested $1 million.
Fooda was co-founded by Orazio Buzza and Vip Sandhir, who adapted the idea from the beloved in-house dining program at Buzza’s previous company, meta logistics search platform, Echo Global Logistics. The rapidly growing company, which IPOd in 2009, sought a middle-ground between having its employees working through lunch and catering meals for the staff. That solution was to invite local restaurants to sell their food inside the office. The program was a hit and as word spread throughout the building, employees of neighboring companies began crashing the party. The demand was enough to convince Buzza that he was onto something, and when he exited Echo in 2010, he set out to turn Fooda into a standalone company.
Today, Fooda works with more than 150 restaurants in Chicago and another 50 in New York, where it launched in October. Companies see only one restaurant per day and each restaurant only once every few weeks. Meals are available at or below menu cost and the company aims to deliver full meals between $6 to $10, depending on the city and the restaurant. The company has expanded its offering beyond the in-suite service to include a small, but growing pre-order and delivery business, enabling it to better serve smaller companies.
For employers and their employees, Fooda offers a reliable dining experience that guarantees variety, affordability, and ordering simplicity, while eliminating much of the administrative burden of competing options like Grubhub Seamless or traditional caterers. All of the company’s restaurant partners are taste tested and subject to regular reviews as well as customer feedback.
The program isn’t just a win for busy and culinarily bored office workers. It’s a hit with restaurant owners too as it offers the potential to do robust lunch business, a rarity within the industry. In exchange for this access, Fooda charges its restaurant partners a flat fee of $100 to $300 per lunch service, depending on the size of the participating company.
With the New York market launch going smoothly, Fooda now plans to accelerate its expansion efforts with the goal of opening five to ten more markets in 2014. Fooda COO Jason Stulberg, who manages the company's day-to-day operations, believes there are as many as 50 cities in the US that could support the Fooda program.
The company has 30 employees today, the majority of which are in Chicago with a “skeleton crew” on the ground in NY. Stulberg expects to hire between 50 to 100 more people over the next year in conjunction with the nationwide rollout. Shockingly, he believes that Fooda will be able to hire and sustain this staff without raising additional capital – the company expects to be profitable on a per-market basis – although he concedes that raising more to accelerate the land grab remains an option.
Fooda is hardly the only dining service available to office workers. Stulberg points to the company’s curation and quality control, as well as its full-service program administration as differentiating factors.
“One extreme is only eating at the two or three restaurants within walking distance of your building,” he says. “The other extreme is having to navigate through a directory of 10,000 restaurants [such as that offered by Grubhub Seamless]. There’s a middle ground that’s needed. We strive to keep our customers excited about lunch, and eliminate the need to worry about choices, quality, prices, and whether their food will show up.”
Fooda will serve its 1 millionth meal in the coming weeks, Stulberg says. It’s a remarkable feat for an upstart company that not too long ago entered a highly competitive and seemingly commoditized market. But since the earliest days of the concept inside Buzza’s Echo Global office, the virtual cafeteria concept has proven to be a hit.
The company has a long way to go (literally) to expand the service nationwide, but Fooda has proven itself capable by tackling two of the three largest cities in the country. Then again, every market has its own dynamics and there is no one-size-fits-all solution. Fooda's biggest obstacle may be fatigue among merchants and consumers that have tried and been pitched repeatedly on every flavor of the month startup service. The best solution to this problem is high quality service and the word of mouth that it creates. Fooda looks like it's delivering both.
The next time you’re wondering what to eat, or dreading a meal from the same place you’ve eaten each of the last three weeks think of Fooda. It may not be in your neighborhood today, but you might not have to wait too long.