Cater2me, ZeroCater Bring Food-Truck Lunch To Startups

7/3/12Follow @xconomy

Free catered lunches for employees aren’t just for tech giants like Google anymore, thanks to Bay Area startups that are bringing food to even the smallest tech companies. San Francisco-based Cater2.me and ZeroCater are two startups that make it possible for tech outfits to outsource their lunches to mom-and-pop food shops, from taco trucks to pop-ups to tiny restaurants. Now, instead of brown-bagging it or dispersing to check out nearby options, colleagues can sit down together over more exotic, company-provided meals—from empanadas to crepes to vermicelli bowls and smoothie bars.

Zach Yungst, co-founder of Cater2.me, knows just how important feeding employees can be. His own catering company just got big enough to provide lunch for its staff.

“For the first year we were just catering every body else’s meals,” he says. “The first day that we reached the proper headcount to cater ourselves, it was an amazing experience. It really helps with the culture; it’s a break in the day when the whole team can come together and socialize, but it’s not a formal meeting.”

To ZeroCater founder and CEO Arram Sabeti, it’s all about encouraging creative collaboration amongst colleagues.

Arram Sabeti, co-founder of ZeroCater

“Steve Jobs is famously said to have designed the Pixar offices with the common area and bathrooms in the center in order to encourage chance meetings,” Sabeti says. “Bringing teammates together in an unstructured way so they can just talk about whatever is on their minds is a great way to generate ideas.”

The idea is a win-win; the caterers’ clients get to bring their employees together for a meal and help build the start-up culture that’s so revered in Silicon Valley, while small food entrepreneurs have the opportunity feed their delicacies to a larger audience, and bring in more revenue than they would simply serving food from a truck on the street.

“It’s all about understanding needs,” Yungst says. “As a farmer’s market vendor, food truck or pop-up, you don’t have a great sense of corporate culture. You don’t know how to schedule a meal for an office. If it’s 15 minutes late they’re not going to order it again.”

Until late 2010, Yungst was working for a big company in the financial district in downtown San Francisco that served catered meals every day. But he found himself skipping the free eats in favor of picking up food from the small shops at the Ferry building.

“I tried to figure out how we could get mom-and-pops to feed my big company,” he says. “What are the pain points? I tried to break it down and help the office manager connect with local foods. That was the genesis of the idea.”

He and cofounder Alex Lorton—friends since their freshman year at the University of Pennsylvania—decided to quit their jobs and bootstrap Cater2.me themselves. “Going into this we wanted a business we could support on our own,” Yungst says. “I came from a background of private equity. There’s tons of value and insight in a board of directors, but other things I don’t want to be beholden to. The business we’ve built doesn’t require a ton of investment.”

Sabeti came from the other side—he was the one in charge of ordering meals for the Justin.tv, where he worked as a project manager, and realized how hard it was to find a restaurant that appealed to everyone and would deliver exactly what people wanted on time. In 2010, he decided to strike out on his own and see if working as a middleman between businesses and food purveyors might be a legitimate business idea. “I went to one of these companies to talk to office manager and said ‘Let me take care of it and you won’t have to worry about it,’” he says. “She seemed so relieved I thought I had something there.”

Last August, ZeroCater raised $1.5 million from SV Angel, Vaizra Seed Fund and angel investors like Keith Rabois and Yuri Milner. The company was part of the Winter 2011 class at Mountain View’s Y Combinator venture incubator.

For both companies, one of the challenges of getting off the ground was convincing food vendors they had a viable business opportunity. “Even we questioned if there was a market for this much catering,” Yungst says. “I think they were somewhat skeptical. But there was no concern for our partners because we weren’t charging them anything. The credibility piece was the thing to overcome.”

El Porteno empanadas delivered by Cater2.me

Now ZeroCater and Cater2.me each have partnerships with smaller food vendors, taking care of logistics like orders, food allergies, likes and dislikes, transport, relationships with companies, changing staff numbers at growing tech firms and special events. Cater2.me serves regular meals to companies of 10 to about 250 employees, and can cater events of up to 600. Clients include Square, DropBox, Eventbrite and Klout. ZeroCater serves companies with a minimum of 15 employees, and has gone as high as 500 for an event (and says it can go higher). They cater companies including Instagram and BitTorrent.

Cater2.me charges its vendors a certain percentage of every sale, but declines to disclose exactly how much. ZeroCater charges seven percent on top of the cost of food from their vendors, and Sabeti says that some of his top vendors are bringing in $15,000-$25,0000 per month in catering business.

Though both companies enjoy sharing foods they love with area startups, it’s not just about serving engineers a free lunch.

“Our real passion is watching these businesses grow,” Yungst says. “That’s how we find our reward.”

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  • JanAhrend

    Interesting from where startups get their ideas.