The food delivery market is looking very overstuffed.
More than 20 U.S.-based meal delivery startups have raised seed money and venture capital from investors during the past three years, creating new competition for companies like Plated and Blue Apron, which earlier this month earned a $2 billion valuation. While there's plenty consumer spending on home-delivery and mail-order food to go around--$25 billon per year, according to the U.S. Department of Agriculture--the rapid growth of businesses in this sector has raised the question of whether the U.S. is witnessing the creation of a food delivery bubble.
Some 25 U.S.-based companies are delivering either prepared meals or ingredients for home cooking, research firm CB Insights reports. Here are three of the most promising startups competing for share of stomach.
- Chef'd: Founded in 2014 by former investment banker Kyle Ransford, Chef'd is an anti-subscription "meal store" that lets customers order meals individually whenever they want. The company partners with celebrity chefs, restaurants, culinary brands and media companies to offer two-person meals for $30 or four-person meals for $50. Earlier this month, Chef'd announced a partnership with Men's Health to offer meals created by food and nutrition editor Paul Kita. Chef'd raised more than $50,000 on Indiegogo in January to help build a user base before Ransford and financial technology entrepreneur Chris Growney invested a combined $5.25 million in the business. Chef'd ships from its distribution center in Los Angeles to all U.S. states except Hawaii and Alaska.
- Green Chef: Founded in September 2014, organic food delivery startup Green Chef sends weekly meal boxes from its production facility outside of Denver, Colorado. Vegetarian meals cost $12 and non-vegetarian meals cost $15. The company recently launched a gluten-free line, and has plans to launch a paleo line this summer. Green Chef customers are located on the West Coast and Midwest, and the company has yet to ship east of the Mississippi. Green Chef represents the third startup attempt for founder Michael Joseph, who previously founded an organic produce delivery business and an e-commerce grocery shopping site. Green Chef expects to generate more than $10 million in revenue in 2015, and has raised $15.5 million from venture capital firm New Enterprise Associates. The company employs more than 60 people, and is looking to more than double in size by the end of the year.
- Home Chef: Chicago-based Home Chef ships meal kits to roughly 30 states across the Midwest and East Coast. Customers select their dietary preferences, choose meals and delivery days, and receive ingredients based on an algorithm that takes into account their taste profiles. Founded in 2013 by former investment banker Pat Vihtelic, the company charges $9.95 per individual meal, which takes about 30 minutes to cook. Home Chef has 80 employees and is generating nearly $160,000 in revenue per week. The company declined to disclose projected revenue for 2015. Monthly shipments have grown from 3,000 a year ago to 70,000, and the company has raised $2 million from investors including Guild Capital and Craig Ulliott, co-founder of customer rewards company Belly.