Home-Cooked Meals From the Cloud

Mobile food startups are moving beyond delivery into food prep

If Nicole Jensen craves a hot meal prepared by an experienced chef, she simply taps an order into an app on her iPhone. Within 20 minutes, Jensen’s dinner—today it’s a vegetarian goat cheese tart with a side of lentils—is hand-delivered to her San Francisco home, courtesy of Sprig.

In a kitchen once occupied by a Chevy’s Fresh Mex restaurant near the Civic Center, Sprig’s Nate Keller, a former executive chef at Google, whips up meals from healthy, locally sourced, organic ingredients. “It feels like eating from a restaurant,” says Jensen, 26, a sales representative at a technology startup.

Courtesy Munchery

Sprig is one of a handful of online food companies in San Francisco, along with Munchery and SpoonRocket, that are doing more than facilitating takeout orders. These restaurants in the cloud operate their own kitchens and employ professional cooks to make meals that customers order via mobile apps. The startups trumpet delivery times of 30 minutes or less.

Items on a recent Sprig menu included a quince, beet, and persimmon salad and black pepper braised beef. Lunch entrees cost $9; dinners are $10. Munchery charges an average of $10 per meal; SpoonRocket’s items are the cheapest, at $8 per dish.

“We want to become the food you need every day, without negative consequences,” says Gagan Biyani, 27, who co-founded Sprig in April 2013. The company has 60 employees—30 work in the office, another 30 in the kitchen. “It’s the healthy replacement for fast food,” he says.

Courtesy Munchery

SpoonRocket started as a late-night food delivery service on the campus of the University of California at Berkeley in 2013. It evolved into what Steven Hsiao, its founder and chief executive officer, calls “fast food 2.0,” which you can get with just three clicks on your phone. The 50-employee company has a kitchen led by Barney Brown, who worked at several fine restaurants in San Francisco before joining SpoonRocket last year. “Being able to make a difference in the way people eat was very intriguing and exciting,” Brown says.

According to CB Insights, investments in food startups—which include delivery services such as GrubHub and Seamless, as well as food-prep outfits like Sprig—are at their highest point since the first quarter of 2009. Greylock Partners, Foundation Capital, and other investors pumped $788 million into online food companies in the first quarter of 2014, up from $82 million a year earlier.

Munchery has raised $32.1 million since its opening in 2010, including a $28 million round in April from investors SherpaVentures, the actor-director Jon Favreau, and street food impresario Roy Choi, among others. “Most people don’t want takeout food or restaurant food several days a week, so we were attracted to solving the current customer dissatisfaction,” says Pravin Vazirani, a venture capitalist at Menlo Ventures, a Munchery investor.

The money helped finance Munchery’s expansion to Seattle this summer and covers expenses that GrubHub doesn’t have: renting and maintaining a commercial kitchen and employing people to staff it. Munchery has about 50 full-time employees in San Francisco and Seattle, including software engineers, operation managers, designers, and marketing staffers. It works with about 150 drivers and bikers in San Francisco, who deliver meals between 4 p.m. and 8 p.m. For now, Munchery offers dinner only. Staff drivers (the company also uses some contractors) earn $11 per hour, plus tips; bikers make $15 per hour.

For chefs, the companies provide an opportunity to operate on a more regular schedule, avoiding the late nights of a restaurant job. Bridget Batson, 45, who works for Munchery, cooked at San Francisco restaurants Gitane and Claudine for 15 years before joining the startup in November. “Life is so much more normal,” she says.

Lenora Royal, a legal secretary in Oakland, is a big fan of SpoonRocket—the company has dubbed her “Loyal Royal” for her daily orders. “They are so fast, I’m spoiled by them,” Royal says. “Nothing beats getting food fast and going right back to where you were at work.”

Before it's here, it's on the Bloomberg Terminal.
LEARN MORE