How We Started A Successful Food Delivery Business

$50,000
revenue/mo
1
Founders
8
Employees
product
MealPro
from Sacramento
started January 2017
$50,000
revenue/mo
1
Founders
8
Employees
616K
alexa rank
1.56K
followers
148
followers
0
subs
blog

Hello! Who are you and what business did you start?

Hi, my name is Andy Sartori. I am the founder of MealPro, a food delivery startup that specializes in pre-cooked and pre-portioned meals. Our typical customer is a busy, health-conscious individual who has no time to shop, prep, portion and cook meals to support their nutrition objectives, hence our call-out “Eat with Purpose”.

Our meal plans vary from high protein to low carb and your portion sizes can be customized based on your activity and nutrition goals. Our website includes a unique calorie calculator that customers use to help fine-tune their nutrition and design the meal plan they need.

Since I started the company three years ago we have doubled in size every year, we have served about 5,000 customers across the US, hitting an annualized revenue run rate of one million dollars.

Every week we move two pallets of quality ingredients through our kitchen. We have now 11 employees, and constantly on the lookout for more!

how-we-started-a-food-delivery-business-and-grew-to-1m-year

What's your backstory and how did you come up with the idea?

I hatched the business idea for MealPro almost by chance, while I was out with two friends to grab a bite.

Since I started the company three years ago we have doubled in size every year, we have served about 5,000 customers across the US, hitting an annualized revenue run rate of one million dollars.

They were different in a lot of ways – gender, lifestyle, body type, and much more – and both were on a diet, but they ordered the same meal. The girl was eating too much for her diet, while my other friend was eating too little.

I realized that restaurants are standard but people are unique and recognized the business opportunity for customized meal prep.

My motivation behind starting a business: While there are many food delivery companies (Uber eats, DoorDash...) all of them leverage a network of existing restaurants and act as “middlemen” between the food maker and the final customer. What I wanted to do was build a company where the technology used to order food is in perfect sync with the Chef that is making the food. This means that through MealPro you can use our intuitive web platform to order a custom meal and our Chefs are on the same page as our technology.

So, I started MealPro. Today MealPro is an online food delivery service that specializes in custom, ready-to-eat meals made with natural ingredients. Unlike other startups, MealPro’s biggest advantage is that we make and sell the product - we then give the user more control over customizations.

Take us through the process of creating meals and starting the business.

Initially, MealPro was strictly a website and we partnered with a local kitchen to make the meals. Our kitchen partner would cook, package and label the meals using our brand name. On the surface it seemed like a good arrangement, however, this turned out to be a “learning experience” to put it mildly.

We were required to place large orders with limited customization. Production had a 10 day lead time and we had no supply chain visibility. This motivated us to develop our own product and packaging:

Iteration 1

  • We used paper trays and a film sealing mechanism
  • Initially, we had a batch supply chain. We got to this stage by “copying” the leaders in the industry. While this method is widespread, the drawbacks are that few customizations are available for the end-user. This industry best practice was actually not best for our business.

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Learning 1: Circular trays needed to be 0.5 inches deeper than rectangular trays in order to fit 20oz of cooked food. This resulted in us not being able to pack more than 14 meals in one meal box, and the cost of shipping was distributed over 14 meals.

Learning 2: While paper trays are more affordable and serve their purpose the presentation is what gives. These trays bend out of shape while in transit and their flexible property also makes stacking meals difficult.

Reaction: We moved to rectangular trays that made good use of the fridge and meal box space. Our new rectangular trays are 1.2 inches deep and are at their widest point are 8 inches wide - this means we can stack two rows of meals side by side in one box, not to mention the better presentation and stackability.

Iteration 2

  • We went more ‘boutique’ with high end, more expensive trays and a ‘just-in-time’ supply chain.
  • We developed a just-in-time supply chain with a small, but the appealing menu. When a customer orders, the order goes directly to our kitchen so the chef knows exactly what to make. We could have never done this with our original model of leveraging a kitchen partner.

how-we-started-a-food-delivery-business-and-grew-to-1m-year

how-we-started-a-food-delivery-business-and-grew-to-1m-year

This second iteration was a great breakthrough > The black trays were more rigid and gave the meals a classier presentation. Also, the meal trays were rigid and held their shape while being vacuum sealed. In this iteration, we spent $0.15 more per tray but we saw an increase in customer satisfaction that resulted in more sales. We learned just how important investing in packaging is.

With our current online meal delivery service, our offering is customized, the technology barriers to entry are high, and we can provide real and unique value to our customers.

Describe the process of launching the business.

The next step was to find our own kitchen and to make the leap away from the safety of the well-oiled machinery of our initial partner.

I decided to leave the Bay Area for a move to Sacramento, CA where I could afford a commercial real estate space. I rented a former donut shop and reinvested all my funds into new equipment, and I became highly skilled at stretching the limits of my credit cards. MealPro was on shaky ground, and any small issue would have derailed my efforts for good.

how-we-started-a-food-delivery-business-and-grew-to-1m-year

One of the biggest challenges was to find skilled and stable personnel. MealPro’s approach is that quality comes first and foremost, so I took pains to interview dozens of candidates until I was satisfied I had identified the best. There were days when I spent all my time interviewing, it could become a frustrating process. I also realized that to retain the best chefs I needed to pay them above market, so I did, against the advice of my controller, and I was able to build a team I could trust. As I look back, I can say that the core organization driving our growth today was the result of those long months of screening and that the time I invested in developing our staff is the best investment I made.

Of course, our cash position suffered in those early days, to the point that I started asking myself how long I could go for. I am sure everybody who has launched a startup knows that cold feeling in your stomach every time you look at your balance … it is always a bit lower than you expected it to be, and your constituents keep asking hard questions about the turnaround. I took it as an adrenaline injection that pushed me to try even harder.

how-we-started-a-food-delivery-business-and-grew-to-1m-year

Prior to launch, I had put together a list of writers and publications that have an emphasis on health and wellness. In the early days, we were getting published frequently and leveraged existing news platforms to spread the word. This is how we got our early customers.

Finally, the market responded. Our customers kept reordering, our web traffic grew and grew, and most importantly cash started rolling in. As a result of our increased momentum, our vendors started taking us seriously, we improved prices and margins, which allowed us to give back to our market in terms of enhanced offerings, loyalty programs, and more. Finally, we were in business!

Since launch, what has worked to attract and retain customers?

We have established our presence by focusing on one message – healthy meals for active individuals – and we built our web presence around this.

how-we-started-a-food-delivery-business-and-grew-to-1m-year

We made the conscious decision to exclude some promising market segments from our strategy, like specialty meals for people with medical conditions, because it would have diluted our brand and ultimately confused our prospects. Some startups attempt to build a portfolio of messages, to broaden their audience and hopefully increasing the response, but I do not believe in “throwing the spaghetti against the wall and see what sticks”.

Our focus has allowed us to build a presence on social media, with videos, educational posts addressing best practice in nutrition (for example this one, or this one) that bring independent value to casual readers and of course motivate them to learn more about our offering.

Any opportunity to generate content is really a sales call that the power of the web magnifies thousands of times, and that search engine algorithms latch on to enhance rankings. Our strategy is based on three tears including organic web traffic, social media, and some ad campaigns, where we seek to capture all synergies.

Outside of cyberspace, we have built a network of partners, e.g. personal trainers, nutritionists, fitness professionals, gym operators, that can act as a reference for new customers and can provide invaluable feedback on emerging needs, inflections in demand, as well as immediate evaluation for new products.

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We are cautious about partnerships with the likes of Amazon, particularly at this stage of our development. Our pricing policy is to give back to our customers any increase in productivity, and cost-efficiency that we can achieve as we ramp up, keeping just the healthy margins to stay self-funded. A distribution giant like Amazon would demand a sizeable share of those margins, offering a leap in volumes in exchange. However, our financial muscle might not be enough to handle the explosion in demand, challenging our whole business model.

How are you doing today and what does the future look like?

Today we are doing well. We become cash flow positive in early 2018. Our next financial priority was to produce enough funds to invest in a larger space where we can have both a production facility and office under one roof.

In the last year, we have reached 3.28 million impressions and 151k clicks. See screenshot below:

how-we-started-a-food-delivery-business-and-grew-to-1m-year

Business-as-usual tasks are like a gas, which fills all the space you give it. Set yourself a limit! Do not allow urgent matters to take control of you.

We have located the building of our new facility. We will be moving to after doing some leasehold improvements that are to be completed by the end of 2019.

how-we-started-a-food-delivery-business-and-grew-to-1m-year

In this facility will be able to ramp up our volumes enough to sustain investments in automation equipment such as an industrial silo with an integrated portioning scale that can dispense exact ingredient quantities to ensure recipe compliance.

Right now recipe compliance is done manually by a cook or chef over a scale and is prone to human error. I think having the square footage to increase volumes can justify investments in automation that will help us stabilize quality at the highest levels.

In the new space, we will also focus on growing our digital presence. Our goal is to do live cooking videos and online nutrition seminars. The new facility will allow us to carve out some dedicated space for this purpose and if we are successful we hope to inspire millions to become the best, healthiest versions of themselves by optimizing their nutrition.

Through starting the business, have you learned anything particularly helpful or advantageous?

The task list that stares at me every day can be broken down into two major buckets: Growing the company and operating the company. Most of the day is devoted to operations – negotiating with vendors, managing staff and … fighting fires – there is no shortage of that!

Business-as-usual tasks are like a gas, which fills all the space you give it. Set yourself a limit! Do not allow urgent matters to take control of you.

Be driven but not stubborn. If what you are working on does not work, dump it and cut your losses.

As I keep repeating to myself, our success ultimately depends on how good we are with growth oriented tasks, whether they involve scouting real estate for a new facility, interviewing a new chef, or experimenting with packaging options for a new product line. I try to listen to customers, employees, partners to understand what they need and how they think about their nutrition, even before they can articulate it in a conscious fashion.

I developed an approach to prioritize my ideas based on the impact they have on our customers. What brings the most people the most value tops the list. I do a detailed feasibility assessment and if the idea still has business merit, I put together a realistic action plan that takes into account the constraints I am operating under. I do not believe in throwing money at a problem until you have taken the time and effort to mitigate everything that can go wrong – because it usually does.

What platform/tools do you use for your business?

Our website is written in PHP and uses an open-source WordPress CMS. This is great since it facilitates integration with other technology like our Zebra kitchen printer. This is a real life-saver for the line cooks. The printer prints an itemized list of the items in a customer’s order and makes is an easy reference to organize and package the meals.

What have been the most influential books, podcasts, or other resources?

Read books gradually as solutions to the challenges you encounter. As you progress in your business you will inevitably come across hurdles that you could not have predicted at the outset.

Keep a catalog handy of your local learning center with available online or in-person classes. As you encounter knowledge gaps try to find online documents or books that can help you progress in your company.

This will help ensure that your learning is very targeted and it will give you plenty of practice by providing a real-life scenario that you can apply your learning to.

Advice for other entrepreneurs who want to get started or are just starting out?

  • Prioritize your ideas based on impact and let your desire to make your customers successful drive your product development roadmap.
  • Be driven but not stubborn. If what you are working on does not work, dump it and cut your losses.
  • Mind the details, but think big. Entrepreneurship is hard, growth is what makes it worthwhile.
  • Be focused on listening to the market. The next trend is out there already, be the first to recognize it.

Are you looking to hire for certain positions right now?

  • We always are. You can browse openings at Mealpro. If you do not see an open position right now please check back at a later time. We are always updating the job boards.

Where can we go to learn more?

If you have any questions or comments, drop a comment below!

-  
Andy Sartori,   Founder of MealPro

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