How Startups Are Rethinking Delivery (Again)

Startup founder Gagan Biyani says he gained 20 lb. eating greasy takeout four years ago. The 27-year-old entrepreneur didn’t have the time or energy to prepare healthy meals while running his first company. “I’d frequently just eat what was readily available,” he says. “The food system today has forced people to choose between quality and convenience.”

Biyani’s latest venture, Sprig, aims to marry the two. The San Francisco–based food-delivery service is essentially a restaurant without an actual storefront. Customers order their meals via a smartphone app from a limited menu that changes daily. The emphasis is on healthy options that can be cooked and delivered quickly–Biyani says the average wait time for a meal in San Francisco is 15 minutes. Prices for the high-end meals (think flank steak and grilled mahimahi) range from about $9 to $14.

Services like Seamless and GrubHub have allowed users to order delivery online for years. But Sprig, as well as competitors such as SpoonRocket and Munchery, represents the next step in on-demand food. Each provider owns kitchen space, hires chefs to prepare meals and pays drivers to deliver them. While delivery is an “afterthought” at traditional restaurants, according to Munchery CEO Tri Tran, these startups are specifically cooking up meals that will maintain their flavor and texture after a 20-minute trip in a box. Venture capitalists have warmed to the concept: Sprig, Spoonrocket and Munchery have raised $100 million in funding among them.

Whether there’s an appetite for elite conveniences like these outside Silicon Valley remains to be seen. The food startups, which are not well established away from the West Coast, have yet to prove that their high-cost, logistics-intensive operations can be effective across many different cities. (None of them would disclose whether they are profitable.) Meanwhile, taxi-hailing service Uber is experimenting with its own food-delivery service, which expanded April 28 to New York City and Chicago. And chains such as Chipotle, Starbucks and McDonald’s are all piloting delivery services.

Though it’s growing quickly, the market so far is pretty small. Revenue from online ordering at full-service restaurants nearly doubled from 2013 to 2015, to $4.4 million in the U.S., according to the researcher Euromonitor. But we already buy everything from books to appliances online, so why not our meals too? “People just want to save time in the kitchen,” says NPD analyst Darren Seifer.