Munchery, a dinner delivery service that has so far only launched in the San Francisco Bay Area, now has $28 million in Series B funding.
It’s the first venture investment from Sherpa Ventures, the new firm from former Menlo Ventures partner Shervin Pishevar and former Goldman Sachs banker Scott Stanford.
Munchery, which employs eight of its own chefs and runs its own kitchens in addition to generating leads for independent chefs, now delivers 5,000 meals per day, not just in the core Bay Area cities but also to outer towns like San Rafael and Cupertino.
“We’re officially the largest takeout restaurant in all of America,” CTO Conrad Chu told Re/code. He and his co-founder and CEO Tri Tran said Munchery now has a $10 million run rate.
But still, Munchery is only available in one area so far. It plans to launch in Seattle at the end of this summer. Why does it need so much funding?
To expand quickly, said Chu and Tran. They expect larger city launches to cost millions of dollars. Pishevar is also an investor in Uber, which has been able to edge out rivals in many markets by arriving early, pushing its way to launch and spending lots of money to attract customers.
The most interesting part of the Munchery pitch is about how it differs from takeout services like GrubHub, which just had a successful IPO, and startup cooking kit competitors like Blue Apron, which is also currently raising a big round of funding, as well as emerging local cooked dinner companies like Sprig and SpoonRocket. (Like many venture-backed things, these newer companies are primarily available in San Francisco. They also just both raised new funding.)
“Restaurants primarily make high-heat food that’s cooked at 500 degrees,” said Chu. “It’s food that when it comes to you, it’s a little wet, a little soggy. Instead, we looked at companies like Whole Foods. The whole prepared-food industry is optimized for shelf life, and prepared that morning.”
That requires some adjustment for chefs who are used to cooking at restaurants, but it also opens them to the options to change up what they make each night.
And as for home cooking kits like Blue Apron and Plated, Chu and Tran argue they are likely to have more limited appeal, because they take time, and it’s awkward to ship perishable goods to people in urban markets while they are out at work.
Munchery has raised a total of $32 million. Its other investors include e.ventures, Menlo Ventures, Kogi BBQ food truck creator Roy Choi, and the writer/director/star of the new foodie film “Chef,” Jon Favreau.