Minneapolis is landing on more radars these days as a destination for all things food related. It has a food startup scene, food halls, and accelerator programs backed by major CPGs. And it’s got Bite Squad, a food delivery service that’s changing the economies of smaller U.S. cities at the same time it drops meals off at customers’ front doors.
The service works much like any other third-party food delivery operation. Users order and pay for food either online or via the Bite Squad app, with delivery fees based on the distance between customer and restaurant. Bite Squad functions a bit like Uber Eats in that users can see a detailed breakdown of where their order is in the preparation process: the five-step status checker lets a guess track their meals’ progress after placing an order, notifying them when an order is sent to the kitchen, when it’s being cooked and quality checked, and, finally, when it’s on the way.
Bite Squad may be based in Minneapolis, but it is in over 300 U.S. cities now, thanks to a recent expansion; they aim to be in 400-plus cities by the end of 2018. But unlike a lot of food-delivery services, Bite Squad focuses on Middle America’s big towns and small cities, rather than trying to grab a sliver of major hubs like NYC and LA. “[Delivery] is still a very new part of a Middle America city economy,” Bite Squad’s Chief Marketing Office, Craig Key, who adds that “the most exciting thing we’re doing is that we’re reinventing economies of these towns.”
They do this by tackling new cities neighborhood by neighborhood, sometimes also acquiring local food-delivery businesses that can give Bite Squad access to new audiences. That was the case with the company’s recent 100-city expansion, where they acquired 13 regional restaurant-delivery services across Florida, Minnesota, Texas, Mississippi, and a few other states. “We really build this business one neighborhood at a time,” says Key. “We optimize each zone, and we make sure we have the right number of drivers and restaurants [available]. We’re confident in our position because we’re not haphazardly going into markets.”
Part of that calculated growth includes Bite Squad’s approach to hiring drivers: almost all of them are W2 employees with a guaranteed hourly wage and access to things like workman’s comp and overtime pay. It may sound expensive to keep 5,000 drivers at employee status (not to mention the fleet of Prius cars Bite Squad company owns), but Key points out that other companies who hire drivers based on a gig-economy model have their share of frustrations, too: namely in the form of court cases and lawsuits around worker classification and treatment. Plus, Bite Squad claims the employee model is a profitable business. “We built a business based on employee drivers,” says Key. “As long as we’re keeping those drivers busy we can be profitable because our profits can be hourly, not based on a flat delivery fee.”
Bite Squad is able to do things like prioritize employees over contractors because so far the company has managed to keep its business going from its own profits, rather than having to raise funds and answer to investors. Since Bite Squad is private, Key didn’t disclose any actual figures to me. But he did mention the food-delivery service sector is growing at a rate of roughly 30 to 50 percent per year, and that Bite Squad’s growth rate is faster.
Even so, the company has no plans in the immediate future to expand into the major metropolises. Rather, Bite Squad sees years’ worth of opportunity still waiting to be grabbed up in small cities and big towns around the country. “We’re very bullish on the upside of Middle America’s appetite for restaurant delivery,” says Key. “By our own math, we’ve got hundreds of more markets we’re looking at and evaluating. Just to fulfill our own pipeline of markets will take years.”