Venky Ganesan, an investment partner at top Silicon Valley firm Menlo Ventures, isn’t coy about his optimism for MealPal.
“We think MealPal is going to change how people think about lunch across America,” he told GeekWire.
The food startup today launched in Seattle with a new service that uses a subscription model and a catered food preparation process to offer daytime meals for less than $6 per day.
The Seattle lunchtime market is already crowded with tech-fueled services from companies like Uber, Caviar, Peach, Amazon, GrubHub, DoorDash, and many others.
But MealPal, which debuted in 2016 and is already live in 14 markets worldwide, differentiates itself by giving bulk orders to restaurants and targeting hungry workers who don’t mind stepping out of the office.
MealPal offers two subscription tiers: a 20-day package for $5.59 per meal, or a 12-day package for $5.99 per meal.
It has more than 150 restaurants around downtown Seattle and South Lake Union on the app at launch, including eateries like Din Tai Fung, Evergreens Salad, Pike Place Chowder, Pokeworks, 206 Burgers, Pasta Casalinga, Kigo Kitchen, and more.
Each will offer one dish per day. Customers submit their order the night before or morning of, set a pickup time, and grab their meal without waiting in line.
“We think that what consumers want for lunch is something that is convenient, affordable, and, of course, delicious,” Mary Biggins, CEO and co-founder at MealPal, told GeekWire. “With MealPal, we’re able to combine these consumer desires.”
MealPal is able to offer lower prices because it gives restaurants large orders for individual dishes in advance. It’s similar to a catering model, which Biggins said is typically the most profitable order for restaurants. MealPal lets many restaurants make more money per meal versus serving individual customers, she said.
“We expect the MealPal model to be especially beneficial in Seattle, where the minimum wage is among the highest in the country,” Biggins added. “Many Seattle restaurateurs have expressed the challenges they face with rising labor costs and have embraced MealPal as a way to manage this growing cost. Given the operational leverage restaurants enjoy from the aggregated orders, MealPal is able to pay restaurants a discounted rate, and pass those savings along to the consumer.”
MealPal tested this theory with Freshii, a fast casual salad chain. They had 22 friends stand in line, order off the menu, and wait for the meals to be prepared. It took the restaurant 28 minutes in total.
It then asked Freshii to make 100 orders of the same meal.
“They were able to complete this order in 29 minutes — almost the exact same amount of time, but, for a fraction of the labor cost per meal,” noted Biggins, who previously co-founded popular fitness subscription startup ClassPass.
MealPal uses a similar model to Peach, a Seattle-based startup that also offers customers daily lunch dishes from various restaurants but instead actually delivers the orders to office buildings, versus doing pickup.
“Of course, there are conveniences to delivery services, but we think there’s a lot of value to getting out of the office most days,” Biggins said.
Nishant Singh, CEO of Peach, said there’s a big opportunity for companies to tap into the corporate lunch market in the U.S. He said the market is large enough in Seattle to have multiple players.
“Whether it’s the case of Peach delivering the added convenience of delivering lunch right to the employee’s desk or MealPal’s charm of getting out for a lunch on a sunny day, it’s about tapping into the employee (customer) share of wallet,” Singh said.
MealPal is available to anyone, but it is targeting office workers with a new product feature that is launching in Seattle called WorkPals. It lets users see what their colleagues are ordering each day and allows customers to coordinate lunch pickups and see the most popular selections in the office.
MealPal uses plenty of technology and data analytics to figure out what types of food consumers like and don’t like. Users are able to rate individual ingredients and provide feedback to restaurants.
New York City-based MealPal employs 60 people and has raised a $35 million to date, including a $20 million round led by Menlo Ventures last year. Ganesan, the partner at Menlo, said his firm likes the food space, but didn’t want to invest in companies that make or deliver meals — and that’s what was attractive about MealPal.
“What they do is connect people with restaurants in a way that is a ‘win-win’ for both restaurants and diners,” he explained. “The diners get a very high quality lunch at an unbelievable price ($6-to-$6.50) while restaurants get very valuable incremental revenue during their non-busy time. This coupled with an amazing management team led by Mary Biggins made this investment a no-brainer.”
MealPal has found a unique model among a flurry of venture-backed startups and larger companies like Uber and Amazon that are using technology to develop new ways to feed people. Food delivery startups collectively raised more than $6 billion across 300-plus deals from 2014 to 2016, according to CBInsights, which also reported that investment in the sector has cooled “as competition has increased and startups have struggled to find a financially viable business model.”
Startups like Sprig, SpoonRocket, and Maple have all gone out of business in the past few years. But there are others like Dominos, which is using lots of delivery technology and continues to post impressive earnings, or Uber, whose CEO said in January that UberEats is “exploding,” that seem to be finding success.
Seattle is MealPal’s second west coast city after San Francisco. The company has served more than eight million meals from thousands of restaurants in cities like New York, Washington D.C., London, Sydney, Paris, and Toronto. It is now offering dinner service in some markets.
“We were attracted to Seattle for the strong food culture, growing tech community, and opportunity to help restaurants build more profitable businesses as labor costs rise in the Seattle market,” Biggins said.
