THE GREAT FOOD BUBBLE 2013: Food Delivery Service EAT Club Lands $5 Million Series A


In the second food-delivery funding of the week, EAT Club has raised $5 Million in a Series A round led by August Capital, with participation from First Round Capital, Siemer Ventures, Great Oaks Venture Capital, and others, according to TechCrunch.

EAT Club founder and CEO Frank Han — a Stanford business school graduate — claims the company “differentiates” itself  by focusing on consumers, and curating menus to provide different menu items daily.

Based on his reasoning, I think what Frank means to say is that he wants EAT Club to be “exactly the same” as every other food delivery service.

Han also says he has led the company to “double-digit, month-over-month growth” in the past few months, and has delivered to super-hot Silicon Valley companies including Chegg, Bloomreach and Gunderson Dettmer (shut up, I’ve totally heard of Gunderson Dettmer). Members receive 10 to 15 daily lunch suggestions priced at around $8 to $10, and can order up to five days in advance, receiving lunch between 11:30 and 12:30 p.m. The company claims to have a 99.7% “on time” rate, and the average customer orders 1.5-2 times a week.

Earlier this week, Chewse — focused on office catering — raised $1 million, and I speculated that the market wouldn’t tolerate “more than one or two food-delivery millionaires.” Even Han of EAT Club seems to get the picture that the food-delivery space is way overcrowded, with GrubHub, Seamless, Cater2Me, ZeroCater and countless others gaining press in the past few months — he called the market “frothy.”

Basically, there’s going to be a shakeout — wish I could act like that’s insightful, but it’s simply the arc of history — and only one or two of these babies will survive. A lot of investors will be slapping themselves for thinking there was endless upside in delivering people food. Most likely, whoever can gain leverage in smaller markets fastest — effectively creating a national conglomerate of delivery services — will have a major advantage.

How do you guys think the “Battle of the Delivery Services” will turn out?