HUNGRY raises $1.5M to build out its marketplace connecting chefs with offices that need catering

The service is available in the DC region, and will expand to Philadelphia and New York City next

Financial trends and news by Steven Loeb
June 13, 2018
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As more companies offer food to their employees as a company perk, they are running into three problems that make it difficult to sustain. First is the variety of food that they can offer, the second is the reliability of when that food is going to be delivered. and the third is the cost of feeding such a large group of people. 

HUNGRY is an online marketplace that connects independent chefs with the office catering market and it says it has found a way to solve all three of these problems. 

"For food variety, HUNGRY provides access to independent executive chefs throughout the region. It's these chefs who actually do the cooking. These independent chefs cook out of commercial incubator kitchens that are popping up all over the U.S.," Eman Pahlavani, Founder and COO of HUNGRY, told me in an interview. 

"For delivery reliability, HUNGRY has an incredible in-house delivery team called 'Catering Captains' whose jobs is to deliver and set up the office catering flawlessly. HUNGRY uses technology to track their captains and route them to ensure they're always on time. For cost, we strip out one third of the costs that are typically associated with ordering from restaurants or traditional caterers due to our streamlined platform and sourcing."

The company, which was founded in late 2016, has over 300 companies using its service. It made $1 million in revenue in 2017 year, and it is now tracking to exceed 4X that in 2018, and it also expects to be profitable by the end of this year.

"HUNGRY has been growing organically primarily through word of mouth and some digital marketing. One office manager tells another, who then shares with another, and soon enough we have companies spending thousands a month with HUNGRY. Ordering food for the office is a pain point for office managers so they are always looking for a better solution. They constantly are asking other admins and EA's about where they order food from. This pain point is the fuel that has helped our fire spread and grow so quickly," Pahlavani explained.

With that kind of growth, HUNGRY was bound to attract some interest from venture capitalists and, on Wednesday, it announced that it has raised $1.5 million in seed funding from Bob Hisaoka, Brent Thompson, Ahmad Ishaq, Daniel Klueger, RJ Jones, Matt Sonefeldt, Ahisma Investment LLC, GP Ventures and OnRamp Fund LP. This round brings its total to $4.5 million.

HUNGRY provides a benefit to both sides of its marketplace. It gives chefs a platform to sell their menus directly to corporate customers, who can place catering orders via web or phone, and it also raises their pay: chefs working on the HUNGRY platform make between $75 and $150 per hour, much higher than the industry average of $22 per hour.

"Until now, chefs' only career options were to work their way up in a restaurant or raise millions to open their own. HUNGRY has created a rewarding new career path for culinary artists," Pahlavani said. "HUNGRY levels the playing field for chefs by connecting them directly with companies that order food for their employees."

The platform also benefits the corporate customers who now have a greater variety of food choices for their employees, while also saving them money on food costs. 

"More and more companies are ordering food daily, weekly, or monthly for their employees as a way to enhance culture and create a better, more productive working environment. Many companies offer food as a perk/benefit. Companies spend over $25 billion annually on food for employees and HUNGRY provides a first ever platform that connects these companies directly to independent chefs for an amazing office catering experience," said Pahlavani.

"HUNGRY is a one stop shop for companies because they get all the food variety they need through it vast chef network, and reliability delivered vs calling a different restaurant each day and hoping that they can deliver it on time."

Typical customers are offices/companies that have over 20 employees. Some of those that currently use the service include Amazon, E-Trade, Microsoft and WeWork.

In addition to the benefit it offers to chefs and offices, HUNGRY also has a humanitarian side of its business as well; through its 'Fight Against Hunger' program, HUNGRY donates one meal to those in need for every two that are purchased. It also has a 'WeRecycle' program, which promotes environmental waste reduction by offering biodegradable plates and cutlery with its meals.

"HUNGRY is a revenue generating business with great margins and growth trajectory, but while we grow, its important to all of our team members that we use our voice to shed light on a commonly overlooked issue: hunger in the U.S. With our Fight Against Hunger program, our corporate buyers not only support independent chefs, but they are also joining us in funding the fight to end hunger. The more HUNGRY grows, the more people we can feed and the more we can help those in need. The plan is to keep it local, so for every new city we launch in, HUNGRY will donate meals to those in need within that city," Pahlavani explained. 

The company is currently available in Northern Virginia, DC, and lower Maryland, and part of this funding will go toward expanding to new markets. Next on the list for HUNGRY are Philadelphia and New York City, then the plan is to expand westward. 

"We are getting pulled into Philadelphia by both companies who want to use HUNGRY for their office food needs and by chefs who are looking to join the platform and build a brand. NYC makes sense because of the ripe market and proximity to D.C. We are looking to raise an A round in the fall of 2018 that will fund our national expansion throughout the country," said Pahlavani.

The funding will also go toward staffing the company, which currently has 17 employees. It plans to add more engineers to its technology team as it invests more into its online platform.

"When launching a new city, we only need a team of about three to stand it up. Our tech platform will run out of HQ and its what makes HUNGRY scalable across the nation," Pahlavani explained.

Finally, the funding will go toward developing its ordering and delivery platform.

"We are currently enhancing our tech platform to enable multi-city launches and expansion. We are also engineering new features that elevate the experience for our chefs and buyers including online chef profiles and chef store fronts, and office group ordering."

The changing food delivery space

The ultimate goal is for HUNGRY is to "expand into every major market, provide chefs with an incredible new career path, and provide offices with access to talented culinary artists that they never had access too before."

HUNGRY plans to do that is by taking advance of a shift in how the corporate world is looking at food delivery: rather than going B2C, which "doesn't work and isn't profitable," said Pahlavani, the company is taking a B2B2C approach.

"Delivering more food at the same cost to a bigger audience, for example office catering, is a fast growing, yet still under-the-radar, segment of the food space that HUNGRY is tapping into and disrupting with finesse. The food space is evolving to a place where people want to know who cooked their food, whats the story of the chef, where are they from, what inspired them to cook the meal, etc. People want an experience, not just a meal. HUNGRY is bridging that gap and building an army of loyal chefs who are realizing economic freedom along the way."

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Description: HUNGRY is the first-ever online marketplace that connects independent chefs with the lucrative $25B office catering market. Rather than o...