VCs hunt for food delivery business that’s sustainable

Sprig, also in San Francisco, which is backed by Accel and other venture capitalists, is burning through $850,000 a month and is reportedly seeking a buyer.

Eat Club offers similar options to Munchery or Sprig, with about 20 entrees per day, but delivers only to offices with 20 or more employees.

By delivering an office’s meals together, the company estimates it costs 90 percent less per dish compared with on-demand startups.

Eat Club said that its couriers drop off 20,000 meals a day, mainly to midsize technology companies such as Flipboard.

Global investors had high hopes for on-demand meal delivery, doling out $4.1 billion in 2015, according to research firm CB Insights.

Startups competed by offering elaborate marketing campaigns and steep discounts to customers.

While it looks for a buyer, Sprig has started selling its food through competing apps, such as Caviar, to keep its kitchens busy.

Brian Frank, who invests in young food companies through his FTW Ventures fund, said working with offices might be the best option for meal delivery.

“It has become obvious that you can’t make money on individual deliveries; the cost of a single meal is too low to hide your associated fees,” Hartenbaum said.