FoodTech Start-ups Enable a Cornucopia of Choice for Consumers
Over the past year, food sourcing applications have seen an explosion in investment as consumers increasingly look to avoid the hassle of shopping in person. Over the past year billions of dollars in venture equity investment has been put into a handful of companies working to make grocery shopping a minutes-a-month task instead of an hours-a-month chore.
Nearly all of these start-ups offer delivery as a core function of their services; enabling consumers without a vehicle or close proximity to a grocery store the same selection and ability to acquire food as everyone else. These grocery specific applications like Instacart, Supermercato24, PepperTap and ZopNow are some of the most popular food sourcing start-ups and are designed to replace and provide the same functionality as physically driving to, browsing around and purchasing items from a grocery.
Start-ups which deliver pre-packaged but raw and unassembled meals, including HelloFresh and Plated are another burgeoning area of the consumer food sourcing ecosystem. Just this month another company in this sector, Blue Apron , closed $135 million in series D funding at a $2 billion valuation. Quite often ingredients are sold in quantities that are impractically large when the consumer may only occasionally make a certain type of dish. These pre-assembled meals provide all of the spices and ancillary ingredients which a consumer may not wish to purchase at a store because of cost or space concerns. This significantly expands the dining options for an individual as they can order a pre-measured Indian meal, for example, when they normally would not have wanted to purchase all of those ingredients individually. Increased choice and convenience are the two major benefits which these food sourcing applications allow customers.
A variation of this meal-based approach involves delivering already cooked meals as opposed to packages of ingredients. This further increases the convenience to the customer if they do not want to spend the time preparing the meals themselves. Spoonrocket, Munchery and Sprig are examples of these sorts of companies. These companies offer a handful of meal options a day, often made by trained and accredited chefs, which allow for a restaurant quality meal at an affordable price; as the food can be made in larger batches and there is no cost to these businesses of maintaining a brick and mortar restaurant. Providing a delivery only experience lowers the necessary footprint of their operations, eliminates the need to be in a high foot traffic (expensive) area and reduces staffing costs by not requiring front-of-house staff.
Delivery start-ups working to offer a comprehensive selection of different restaurants from a single interface have been an extremely popular type of food sourcing application. Rather than painstakingly viewing menus on various restaurant’s proprietary sites one at a time, and then having to call in an order; apps such as GrubHub, Eat24 and foodpanda are offering consumers the ability to order from dozens of different restaurants from one unified interface. Delivery Hero, a Rocket Internet backed delivery start-up, raised $110 million at a $3.1 billion valuation just earlier this week. These aggregated delivery and ordering platforms are also beneficial for the business owners as it takes much of the burden of managing an online order service off of the business owners’ shoulders while greatly increasing exposure to potential customers.
Not to be left out of the food sourcing revolution, farmers markets are an additional business model being applied to these types of online platforms. Farmstr, Fresh Nation and Farmigo are all start-ups working to take the traditional “local and fresh” farmer’s market model to a new level. These platforms allow shoppers to browse locally grown produce, meats and more; from the comfort of their couch. The access to consumers granted by these platforms allows farmers to greatly increase their potential market, with very minimal time and capital investment on their part.
Ubiquitous GPS-equipped smartphone ownership has already changed how individuals communicate, move around cities and manage their daily lives. A new generation of companies has sprung up utilizing smartphones to increase consumer choice, convenience and access to fresh and healthful produce, meals and groceries.