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Food Tech Startup Marries In-Office Catering with Recurring Revenue Model to Surpass $2 Million ARR

During lunchtime at the Warby Parker offices, you won’t find many sad desk lunches, bags of potato chips or microwavable meals. Instead, you may find a menu offering grilled basil walnut pesto chicken and a kale caesar salad.

You can thank the in-house culinary team at Sifted for that delicious sounding meal. Catered lunches are becoming a popular perk among tech companies looking to attract the best talent. The corporate catering market is at $9 billion and growing, and funded startups are adding $500 million to their in-office catering budgets each year.

Kimberly Lexow and Jess Legge were working at Qualifacts, a health tech company in Nashville, TN, when they identified a huge demand for catered lunches among the city’s burgeoning startup community. They founded Sifted to capitalize on the local market, and they brought a software-inspired, culture-centered approach to their food services startup.

“We partner with the fastest-growing companies and become an integral part of their culture. As they grow, we grow.” said Sarah Zadd, Sifted’s Nashville City Manager.

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A Food Business Built Like a Software Company

Sifted’s mission is to provide an “experiential lunch program” that will enrich team cultures and power innovation.

“Good food is powerful. When teams come together over chef-made lunches, the experience extends far beyond the lunch hour,” said Zadd. Watch her pitch below to learn how Sifted bootstrapped to $2 million in annual recurring revenue in just two years

With the food delivery market growing nationwide, Sifted isn’t alone in the office catering space. Cater2Me, ZeroCater, Foodee, and Fooda are just a few of its most prominent competitors.

Sifted sets itself apart from other services through its recurring revenue model, end-to-end process and in-house meal preparation. By contrast, most of its competitors source food from local restaurants and prioritize one-time transactions. Because Sifted has control over the entire process, it uses data to predict behaviors to scale.

“We serve the same teams day after day. This means we know exactly who we’re serving and when,” Zadd said. “It’s the predictability that’s been missing from the food tech industry, and what’s allowed us to build a playbook to scale the formerly unscalable.”

Sifted serves national brands like Eventbrite, Lyft, Warby Parker, CallRail and BitPay. Businesses choose their preferred schedule (daily, weekly or somewhere in between) and pay the full annual fee at the beginning of the service period. Sifted then delivers meals created by its in-house culinary team on the designated schedule, with the average price per meal at $12–$18 per person.

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Scaling a Culturally-Enriched Catering Service

A downside to catered lunches is the limited choices offered to employees. Sifted’s culinary team strives for variety in their weekly menus, and employees can request substitutions for dairy-free, gluten-free, vegetarian and vegan diets, but meals have no alternative entreés or side dishes. As a result, some might be forced to opt out if they don’t like the food being offered that day.

Under the current pricing model, businesses pay the full cost of the meal plan for their employees. This policy could be depriving Sifted of revenue from startups that aren’t quite ready to foot the entire bill, but would be open to subsidizing their employees’ lunches. According to Zadd, Sifted’s clients have expressed interest in subsidized plans, and the idea is under consideration.

Maintaining a high quality of service will be especially important as Sifted moves into new locations. The company has already opened offices in Atlanta, Austin and Denver without issue, but its commitment to culturally-enriched catering could be strained as it expands to a planned total of 10 cities in 2017. The team will need to be vigilant about hiring and proper training in order to bring the true Sifted experience to new locations.

A Strong Start in a Booming Industry

Sifted has gained impressive traction in its first two years of operation. In Nashville, it has a close relationship with the fast-growing email marketing startup Emma, and it has received positive press coverage there, as well as in Austin.

Although investments in tech-enabled food businesses dipped in 2016, online food delivery still presents a $210 billion market opportunity. Sifted’s initial success indicates it could capture a significant slice of that market, while making an attractive prospect for investors as confidence in the sector rebounds.

“Sifted is how tech companies create community.” Zadd said. If Sifted continues to add innovative, high-profile companies to its client base, it could demonstrate the perks of catered lunch to the tech industry at large.

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