For food startups, could the way to consumers' bellies be through their employers?

By Carmel DeAmicis , written on March 18, 2014

From The News Desk

Here's the problem with launching a food startup in a city full of techies: They don't need your food.

In tech company culture, free grub from employers is the norm. Chefs cook dinners or restaurants cater three, four, sometimes five days a week. It's the insidious way startup founders convince their employees to work later than they might otherwise. It's also just a perk of the job, alongside bean bag chairs and ping pong tables.

It might be welcome fodder for the rank-and-file tech masses, but for anyone hoping to launch a business feeding people in San Francisco, it makes it a little harder. That's what David Langer learned after starting Zesty, a company that works with local restaurants to prepare their dishes in a healthy manner -- less oil, less sodium, less fat -- for people who order through its app.

Langer successfully onboarded 30 merchants, but had less luck with consumers. The app was growing, but not as fast as he would have liked.

When he tracked potential customers to their source, he realized they were getting so many free meals from their companies they didn't need to order takeout much on their own. Langer realized to win over consumers, at least in San Francisco, he'd need to take a different tack.

"To access users in SF, we needed to feed them at work as well," Langer says. "Since we started experimenting [with catering], it has exploded. We've grown to a seven figure run rate doing catering in San Francisco."

In January, Zesty opened its catering arm. Now, it delivers the same healthy versions of foods from local restaurants, but in much larger quantities. Tech companies like Instacart, AngelList and Homejoy use Zesty for their employee catering.

Catering isn't exactly changing the world of course. Langer cited a bunch of "technical" reasons that software is reinventing the process, something about automated recommendation engines and algorithms. But the more innovative aspect of Zesty catering is the same thing that's unique about the Zesty app: Healthy versions of local restaurant dishes that might otherwise be soaked in oil and salt.

"On the face [catering] is not as sexy [as the consumer app], but if you look at what we're doing it's serving the same food to the same people at the same restaurants," Langer says.

In Zesty's shift is a lesson for the myriad new food preparation and delivery companies. As Sprig, Chefler, Munchery, and SpoonRocket try to grow, they might have the most success tapping enterprise markets before consumers -- particularly in San Francisco, where companies love their catering.

B2B feeding means bigger portions, more revenue, and bigger margins. And it's also a way into consumers' bellies without spending a cent on marketing. "The [consumer] app is growing being fed by the catering service," Langer says. "Employers who we cater for promote the app to their employees."

The catering approach wouldn't work as well in cities where most companies don't foot the food bill for employees. But in the Bay Area, it could give these fledging food startups the revenue and grassroots growth to go after the consumer market they care about.

[Image courtesy 松林L]