Monday, October 3, 2022

A $ 100 million bet on rural restaurant delivery

When the pandemic began last spring, Di Fara, one of New York’s pizza makers, asked the same question as countless restaurants nationwide: how would it make money if customers were not allowed through the door?

One answer quickly emerged: Ship frozen (and slightly smaller) versions of its classic pies across the country in partnership with the eight-year-old e-commerce platform Goldbelly.

Sales increased so much that Di Fara transformed his two-year-old second place in a food hall into essentially a Goldbelly production line. Margaret Mieles, the daughter of the founder of Di Fara, who already signed an agreement with Goldbelly in December 2019, gives the platform recognition to the help of the pizzeria to avoid layoffs.

It’s not just iconic pizzerias that have relied on Goldbelly to survive lock orders. More than 400 of the 850 restaurants selling food on Goldbelly’s platform have joined since the start of the pandemic, an influx that, according to the company, has more than quadrupled sales over the past twelve months.

At the end of the blessing, Goldbelly plans to announce this week that it has raised $ 100 million in new funding.

The question now is whether the trends on which Goldbelly and its new investors plan to make money will survive the pandemic, or the increase in the home business will slow down as more people feel comfortable eating in restaurants again.

Founded in San Francisco in 2013, Goldbelly began serving foods such as Lou Malnati’s deep-fried pizza in Chicago and Texas-style Salt Lick in Austin. What it offers restaurants is primarily logistics: to provide the boxes and cold packets for delivery orders, and to help restaurants ship directly from their premises. In return, Goldbelly charges a fee that leads to premium pricing. For example, shipping two classic Neapolitan pizzas from Di Fara costs $ 89.

“We are the first platform for food e-commerce, national e-commerce for restaurants and food manufacturers,” said Joe Ariel, co-founder and CEO of Goldbelly, in an interview. “We basically open a radius of 3,000 miles for restaurants.”

While prominent chefs entered early, others were more reluctant. Justin Kennedy, the Chief Chef at Parkway Bakery & Tavern in New Orleans, recalling the evasive calls from Goldbelly representatives who had stored the platform for more than a year before conceding in September 2019. Even then, he said in an interview, he would have sent maybe 15 boxes within a week.

Then pandemic blockades devastated the restaurant industry. The National Restaurant Association has closed more than 110,000 restaurants nationwide permanently, and a survey that did so found that sales fell in October from a year earlier for 87 percent of full-fledged survivors.

Mr. Kennedy closes Parkway in March 2020. When he resumed business a few months later, he began signing his sandwiches through Goldbelly. At the height of the pandemic, Parkway shipped about 200 orders a week and did about the same thing it did pre-pandemic – right now its customers included people far from New Orleans.

“We called customers from Alaska and asked what we should do for leftovers,” he said. Kennedy said. “These are customers we would never have had.”

Some restaurants looking for alternative sources during the pandemic turned to local delivery services; the total orders on DoorDash’s platform in 2020, for example, jumped about threefold of the previous year.

But just like mr. Kennedy, many also turned to Goldbelly to send them pork dinner, bagel brunch and huckleberry cheesecakes to places as far away as Hawaii. (Goldbelly does not consider services like DoorDash as competitors because it usually takes at least a day to arrive and needs to be cooked).

Mr. Ariel recalled that the then 40 staff members took 18-hour days early in the pandemic to deal with the increase in demand. The average order size has grown by about 20 percent over the past year, and Goldbelly’s workforce has grown to more than 130 people, including a new chief operating officer and chief financial officer.

Meanwhile, Goldbelly has changed the way some restaurateurs think of their businesses. Danny Meyer, the restaurateur behind Shake Shack and Union Square Cafe and an existing investor in the company, said in an interview that his Gramercy Tavern items like a roasted eggplant parm – something that would never have been served with Michelin stars at the restaurant before – partly because it would go well on Goldbelly.

Spectrum Equity, the investment firm leading the new round of financing, issued Goldbelly last year to see how the company could connect local restaurants to a national audience.

“The pandemic has accelerated the trends that were already underway,” said Pete Jensen, managing director of Spectrum, adding that the growth of Goldbelly was ‘extraordinary’.

Mr. Ariel said the new capital – raised at an unknown valuation – would help Goldbelly expand further, including by hiring more staff and supplementing new offerings such as live cooking classes with well-known chefs, including Marcus Samuelsson and Daniel Boulud. The company wants more than 1,000 restaurants on its platform by the end of the year.

The purpose, according to Mr. Ariel, is to make Goldbelly the largest platform on which restaurants make money outside of their own dining room, while expanding their brands nationally.

As mnr. Ariel’s pitch sounds like the precursor to finally pursuing a listing on the public market, he does not deny it. “In the future, we want to be a public company,” he said. “We think we are just at the beginning of the food e-commerce revolution.”

The big question is whether the company enjoyed a temporary refusal or opened a permanent new level of business. Even Mr. Ariel admits that last year’s growth rate “is not going to happen forever.” But there are some promising signs that eating restaurant-prepared meals is not going home. DoorDash, for example, has tripled its revenue over the past quarter, even as coronavirus vaccinations have become widespread.

There is also the risk that Goldbelly’s success could attract other competitors. While Mr. Ariel downplayed the prospect of competition – the name of his company being a verb – he said, some chefs did not write it off.

“We will cook where the customers are,” he said. Samuelsson, whose restaurant, said Street bird is on the Goldbelly platform.

But others, like me. Mieles of Di Fara, said they remain committed to the service. “I honestly think Goldbelly is here to stay,” she said.

Nation World News Desk
Nation World News Desk
Nation World News is the fastest emerging news website covering all the latest news, world’s top stories, science news entertainment sports cricket’s latest discoveries, new technology gadgets, politics news, and more.
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