Food-delivery startup Plated is celebrating its third birthday this month, but despite the company's young age, it's already gone through plenty of growing pains.
Demand for chef-designed meals that consumers can cook at home has grown so rapidly that the New York-based company has had to move into larger fulfillment centers 14 times. And while co-founders Josh Hix and Nick Taranto have already attracted an investment from Shark Tank's notoriously ruthless host Kevin O'Leary--and secured $5 million last year in a round led by New York seed-stage investment firm ff Venture Capital--Plated still lacks the one crucial ingredient all businesses need: profits.
"We're prioritizing growth over profitability," says Hix, adding that the business expects to be profitable within the next 12 months. Plated expects to generate more than $100 million in annual revenue in 2015 and is averaging revenue growth of 500 percent per year.
So how has the company grown so fast? Here are three keys to Plated's growth.
1. Feed into consumer preferences. One of the main drivers of Plated's success is Americans' desire for fresh, healthy ingredients they can use to prepare home-cooked meals. "The way that we've grown so fast honestly has more to do with what people want than anything that we've done," Hix says. "Because it's so hard for the evolved eater to get good, adventurous, healthy food on the table, they're buying from us and they're doing it over and over."
One lesson Hix and Taranto have learned from their customers is the importance of variety. "They really like choice," Hix says, adding that the different combinations of recipes and quantities of recipes Plated offers can be used to create almost 200 million unique meals.
2. Mix convenience with scalability. Plated sends out ingredients for roughly 10,000 meals per day from its fulfillment centers across the U.S., charging a minimum of $12 per meal. While that may sound pricey to some, Hix says much of the value comes from Plated's supply chain that sources ingredients directly from farmers and delivers them to customers' doors.
Though Plated has come a long way a short time, the business has had its fair share of setbacks. On top of massive spending to move into larger facilities, the business lost $100,000 when one of its refrigerated food containers was stolen in Chicago.
"You have a history of screw-ups in the last year on logistics," O'Leary told the co-founders during an episode of ABC's Shark Tank spinoff Beyond the Tank.
3. Devour big data. To optimize how and when Plated buys its ingredients, the company uses algorithms that take into account things like weather patterns, previous order patterns and customer demographics.
One of the most recent changes Taranto and Hix have made to the company involves reducing its environmental footprint. On Monday, Plated began shipping all its meals in new packaging made from recycled jute plant fiber that can be composted. Developed by Washington D.C.-based TemperPack, the 100 percent recycled liner represents a big cut in CO2 emissions over the polyurethane the delivery company previously used.
While Hix concedes that Plated faces competition from "any company that's competing for share of stomach," the difference between Plated and meal-kit delivery startup Blue Apron, he says, comes down to the quality of the ingredients.
"You can think about us like Whole Foods and them like Walmart," he says. Blue Apron declined to comment.
Though competition from more traditional food retailers remains fierce, Hix says he's never lost faith in Plated's business model and is not concerned about grocery stores or take-out shops eating into the company's marketshare.
"We've got 10,000 plus [customers] in the kitchen every day who wouldn't necessarily otherwise be there cooking," he says. "Confidence has never been higher."