What’s For Lunch? ZeroCater Nabs $12M to Meet Corporate Catering Needs

Xconomy National — 

Many employees at young startups end up with multiple roles. Arram Sabeti says “ordering lunches was by far the most painful hat I was wearing.”

Finding a restaurant that everyone agreed on took more time than placing a lunch order should, he says. That experience led him to found ZeroCater, which uses software and analytics to more efficiently manage business catering.

On Tuesday, the nine-year-old startup announced that it has raised a Series B financing round of $12 million to fund its expansion to more cities. Cleveland Avenue LLC led the round, with participation from Romulus Capital and Struck Capital. In total, ZeroCater has raised $17.6 million.

Sabeti says ZeroCater enables an office manager, or whoever in the office that has been tasked with catering, to set up preferences—such as taste, allergies, or dietary restrictions—and match that to restaurant menus to create a one-click ordering experience. The company collects feedback after every meal through a dashboard, e-mail, and physical terminals located at the client site, he adds. That information is shared with the catering managers who can then track employee preferences, along with company spending data.

The San Francisco-based company’s catering service is available in the Bay Area; Los Angeles; Austin, TX; New York; Chicago; and Washington, DC. The snack service is only available in San Francisco. Sabeti says restaurants like to work with ZeroCater because it helps them get access to lucrative corporate clients. ZeroCater makes its money by negotiating with restaurants to provide discounted prices on items and pocketing the difference between that price and the retail price.

ZeroCater isn’t the only company targeting the $20 billion corporate catering market. In addition to traditional players such as Aramark and Sodexo, ZeroCater is also competing with other tech-focused startups such as Cater2Me, Eat Club, and ezCater. In fact, last May, Sodexo invested $30 million in Eat Club to help fund the San Francisco startup’s expansion into New York and broaden its footprint in Los Angeles and San Francisco.

Eat Club says it also offers its customers easy ordering and feedback mechanisms using technology.

A couple of weeks ago, payment-processing company Square bought Zesty, a corporate catering firm, for an undisclosed amount. Zesty will be rolled into Square’s food-ordering company, Caviar. “Expanding our corporate catering product with Zesty enables us to offer our restaurant partners another way to boost sales through higher-margin, large-format catering orders,” said Gokul Rajaram, Caviar lead at Square, in a press release.

Sabeti says he started running ZeroCater on spreadsheets but eventually saw the need to digitize operations even further with a website and app that could connect hungry office workers with restaurants eager for their orders. In 2011, the startup was a part of Y Combinator and it raised $1.5 million at the accelerator’s demo day event.

Today, ZeroCater works with more than 500 restaurants nationwide and plans further expansion, Sabeti says. “We plan to hire 100 people this year,” he adds.