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AB 626

December 30, 2019

DishDivvy Partners with DoorDash to Deliver Home-Cooked Meals

Today DishDivvy, an online marketplace for home-cooked meals, officially announced its integration with DoorDash to facilitate food deliveries. Previously, hungry folks who had purchased a meal from a home cook over DishDivvy’s platform had to go and pick up their homemade lasagna/spanikopita/pad thai themselves. Now they have the option to pay a mileage-based delivery fee to have it delivered directly to their door.

DishDivvy may have just officially announced the news, but CEO Ani Torosyan wrote to me today that the startup had been making deliveries with DoorDash since 2019. “We held off on announcing because we wanted to test the integration and really understand delivery when it comes to home kitchen operations,” she wrote. Since then she said that they have iterated on their integration, but wouldn’t reveal exact details.

The official news comes just a couple weeks after DishDivvy announced it would be expanding from its home state of California into Utah. Torosyan said that they hadn’t tested DoorDash delivery in all of Utah yet, but that as of now there is some coverage in the state. She added that third-party delivery of home-cooked food is completely legal in both California and Utah.

DoorDash’s costs for the home-cooked food are a bit pricey: $6 for delivery within a 3-mile radius. That might seem excessive when you could just zip over and pick it up for free. However, adding the delivery option allows DoorDash to reach a wider audience: those extremely strapped for time, people without access to a car, anyone who is mobility-challenged, or doesn’t want to leave the house, etc. etc.

It may seem like a relatively small step, but integrating with delivery shows that DishDivvy is serious about making the cottage food marketplace a legitimate food option available to all — not just a niche audience. Well, at least in those states that allow the sale of home-cooked food.

December 19, 2019

DishDivvy to Expand Homemade Food Marketplace to Utah

Talented cooking hobbyists of Utah, you’ve got a new potential side hustle. Yesterday DishDivvy, a marketplace which connects home cooks with hungry neighbors, announced that it had begun operations across Utah.

DishDivvy is a mobile app that lets preapproved home cooks sell food to local consumers. The startup helps home cooks get certified and onboarded onto their platform. They also handle all ordering and payment internally, and can even help arrange for home delivery. Utah will be the second territory for Glendale, CA-based DishDivvy, the first being its home state of California.

DishDivvy wasn’t the first company to try and create a cottage food marketplace. Josephine was an early entrant in the food sharing economy, similarly connecting home cooks with hungry consumers. Due to regulatory issues they were forced to suspend operations at the end of 2017. However, with the passage of California law AB-626 (which was pushed forward by Josephine’s team), DishDivvy was able to commence operations in California at the end of 2018.

Utah has just passed a similar law with H.B. 181, The Home Consumption and Homemade Food Act. Under the law, home cooks in Utah are “exempt from any state, county, or city licensing, permitting, certification, inspection, packaging, and labeling requirements,” provided they comply with certain requirements set in the law. Therefore Utah residents, like Californians, are now able to sell homemade food directly from their home — as long as they have the proper permits to do so and follow some basic rules (food must be for home consumption, sold directly to consumer, etc).

We at the Spoon have been intrigued by the idea of a home cook marketplace for awhile. It’s an interesting way to give people a supplementary revenue source, keep money within a community, and connect neighbors, all while cutting down on food waste. That’s why we named DishDivvy one of our FoodTech 25 for 2019.

Last June, when Mike Wolf wrote about AB 626, he noted that “California often leads the country when it comes to forward-leaning legislation” and that the new law “could open the door for nationwide legalization and give a framework for home food entrepreneurs.” It seems like California has indeed opened that door for Utah — and I’m guessing we’ll see some more states pass laws to welcome cottage food industry in 2020.

March 21, 2019

91 Year Old Grandma is a Hit on FoodCloud’s Home Chef Marketplace in India

When it comes to cooking, grandmas might just be the killer app. At least, that’s what FoodCloud has potentially uncovered.

Based and operating in New Delhi, India, FoodCloud is an online marketplace where home chefs can sell food they prepare in their kitchen. Customers order from menus from more than 3,000 home cooks on the FoodCloud platform, and meals are then delivered via different third-party delivery services. Founded in 2015, FoodCloud has served 450,000 meals to date.

“Homemade food is held in great esteem in India,” FoodCloud Co-Founder and CEO, Vendant Kanoi told me by phone, “It is looked at as healthier.”

To participate, Chefs go through a rigorous on-boarding process, according to Kanoi. First, each home chef must be registered with the Food Safety and Standards Authority of India (FSSAI), which is the country’s equivalent of the USDA, for kitchen inspection and hygiene regulation. After that, a home cook’s food is taste-tested by not just FoodCloud employees, but also local food bloggers and critics.

“It’s not just employees tasting food,” Kanoi said, “It’s not just about what we like, it’s about getting independent views from knowledgeable people.”

Kanoi said that 80 percent of the home cooks on the platform are stay-at-home moms. Among the most popular is a 91-year-old who sells gujurati-style “Nani’s Nasta,” which translates as “grandmother’s snacks.” Customers are pretty evenly split between busy families ordering a homemade meal for delivery and corporate customers getting food for meetings and events.

FoodCloud generates revenue by taking a 20 – 35 percent commission on the total value of an order placed. Taking up to a third seems pretty steep, but then FoodCloud is delivering the audience and facilitating the transactions and delivery. DishDivvy, a similar service in California, charges just 15 percent, but things like cost of living are different in India so the economics play out differently.

Kanoi said that roughly 15 home cooks on FoodCloud make $20,000 USD per year, and roughly 100 make $2,000 USD. That too, doesn’t sound like a lot (California’s AB-626 law caps the yearly income generated by home cooking at $50,000). But consider that the average per capita income in Delhi is just a little over $5,300.

FoodCloud is also diversifying both its product line and its geography. Last year the company introduced its own line of homemade CPG snacks, and FoodCloud is expanding its marketplace to both Calcutta and Mumbai.

Kanoi said FoodCloud is not profitable yet, but is “close” to being breaking even operationally. FoodCloud has sixteen employees and has raised roughly $500,000 in angel funding as part of the FoodX accelerator.

The concept of home-chef-as-a-business is just taking off here in the U.S., and is at the beginning of its regulatory journey. I asked Kanoi if there were any cultural differences between the U.S. and India when it comes to buying food from someone else’s kitchen. He didn’t think so, saying “It’s global trend now. People are moving towards healthier food and people view homemade food as a better option. And you get something while supporting an entrepreneur.”

While home cooking as a business is just taking off here in the U.S., a positive outlook like that may be enough to convert skeptics, and make any grandmother proud.

February 19, 2019

Will California’s AB-626 Bill Serve Home Cooks, Entrepreneurs, or Tech Giants?

When AB-626 (also known as the 2018 Homemade Food Operations Act) passed in California last year it ushered in the start of what we at The Spoon have started calling the Home Cook Economy. Now, home cooks in the Sunshine State are allowed to sell up to 60 meals a week and make up to $50,000 in annual revenue.

Yesterday the L.A. Times ran a story on the Home Food Economy in which author Frank Shyong argued that AB-626 is not, in fact, helping the immigrant and low-income cooks that it promised it would.

Shyong certainly makes some valid points — especially when it comes to immigrants and immigration officials — but I finished the piece feeling that we had some very differing views on what exactly AB-626 would look like.

First of all, Shyong seems to think that most home cooks who will take advantage of AB-626 are trying to start their own food business. To that end, he argues that the bill is too vague in its language about what constitutes a “meal,” and the 60 meals per week/ $50,000 annual revenue caps make it too difficult for entrepreneurs to actually make a living off of sales from homemade goods.

True. But the way I understood it, AB-626 was never meant to facilitate full-fledged cottage food businesses. Instead, it was intended to offer economic empowerment through supplementary income via home-cooked foods.

To confirm this I called up Ani Torosyan, founder of DishDivvy, a Glendale, CA-based company with a mobile app that connects consumers with pre-approved home cooks in their area. She also had a few issues with the L.A. Times article. “If you get anywhere close to $50,000 gross revenue… you really should be going to an industrialized kitchen,” she said.

In short, AB-626 is not for people who are looking to start a full-fledged food production business. It’s for home cooks that are looking for a little bit of extra money, or maybe want to dip their toe in the food business before they decide to ramp up production and rent out a commercial kitchen space.

Reading the piece, I was a little surprised by Shyong’s argument that more than any other party, AB-626 would end up benefiting tech giants. He predicts that the home-cook economy will quickly be dominated by tech giants like Uber who will step in to help home cooks — many of whom have no entrepreneurial experience of their own — do things like manage payments, market their product, and ensure last-mile delivery. In exchange for a percentage of their profits, of course.

I agree that tech companies will play a role in shaping the home-cooking industry — this day and age, it’s inevitable. In fact, it was a tech company who first paved the way for the home-cook economy. C.O.O.K. Alliance, a group founded by the now-defunct startup Josephine which was one of the first to give home cooks a platform from which to sell their food, was one of the primary advocates for AB-626. Even without an official marketplace, sites like Craigslist, Facebook, and even Nextdoor have served as platforms on which people can buy and sell homemade food.

But I don’t think that tech companies will destroy the heart and soul of the home-cook economy. And neither does The Spoon’s Michael Wolf.

Back in June he wrote a piece responding to a different L.A. Times article which took a similarly worried view about the opportunistic role that tech giants could play in the emerging home cook economy. Wolf argued that even if Uber or Airbnb did enter the home meal sharing market and charge 15 percent fees (which is what DishDivvy currently charges), so what? As long as legislation is in place to ensure food safety and third party fee transparency — both of which are clearly outlined in AB-626 — why not open up a new, flexible market opportunity to budding food entrepreneurs?

The more I thought about it, the more I realized that the home cooking marketplace is another example of how complicated it is doing business in a tech-filled world. Yes, the home meal sharing economy is a ripe target for hungry tech businesses to take advantage of people. Which is especially dangerous when the target beneficiaries would be immigrants, people of color, and women.

But in the end, it boils down to what the home cooks want. If tech giants can give them access to an instant audience, providing a marketplace that new food entrepreneurs can easily plug into, then I say bring it on. But for now, it’s smaller tech startups like DishDivvy that are paving the way in the home food sharing economy.

Sure, Big Tech players will likely enter the home-cook economy in order to grab a piece of the (homemade) pie. In fact, AirBnB has already done so: Shyong references how the company sponsored the passage of AB 626, likely because homemade food preparation is a key part of some of its “experiences.” But there’s also a future where tech companies can help grow the home cook economy without destroying it.

February 13, 2019

Are Hourly Home Kitchen Rentals the Next Sharing Economy Opportunity?

Call it uberization, the sharing economy or collaborative consumption, the idea that people may have something others want and can rent or sell a portion of it frictionlessly through online marketplaces has changed the game for industries ranging from hospitality to transportation.

Food and cooking is no different. Uber Eats, virtual kitchens and the fast emergence of home cooking platforms in the wake of the passage of AB-626 has shown us food system business models are ripe for reinvention through the power of peer to peer.

But what about home kitchens? More specifically, what if we could simply rent a neighbor’s kitchen – built in appliances, blenders, countertops and everything else – by the hour?

While many of us have an oven, cookware and all the cooking gadgets needed to whip up a tasty meal, others are forced to eat out, have food delivered or impose on a friend either because they are kitchen-less or just don’t have the right set up to cook the big holiday meal or entertain in the way they would like.

What got me thinking this could happen is the recent news that by-the-minute hotel stay app Recharge has moved into the home market. If you’re not familiar with Recharge, they are known for offering access to hotel rooms on a by-the-minute basis so people can nap, shower or…whatever. It works with 50 hotels and now the company says they’ve signed up over one thousand homes for the platform.

With homes available by the hour, I have to think kitchens will be a central attraction for many. Whether it’s hosting a dinner party, baking cookies for the holidays or cooking a week’s worth of home meals for the family, there are all sorts of use cases where hourly access to a kitchen just makes sense.

In a way, hourly access to home kitchens is an extension of what we’re already seeing in the maker market, where concepts like that of Tinker Kitchen have emerged for people who want to get into a fully equipped kitchen to cook a souffle or try out a new cooking appliance.

“We are aimed at people who usually wouldn’t step into a commercial kitchen,” Tinker Kitchen creator Dan Mills told the Spoon last August.  “It’s food for personal enrichment,” he said.

Enrichment makes sense for the aspirational and hobbyist chefs among us, but there are probably lots others who just have an immediate need to make some food or host a party. A platform for renting a home with a nice kitchen would meet that kind of need quite nicely.

So will a sharing economy for the home kitchen take off? It’s too soon to say for sure, but my guess is yes. And the best part is? You can always book an extra hour to take a well-deserved nap on someone else’s bed when you’re done with that culinary masterpiece.

September 24, 2018

Appetivo and the Coming Wave of Home Cooked Meal Marketplaces

California’s AB 626 hasn’t even been a law for a full week and already we’re seeing startups step up to be the among the first to monetize the potential home cook economy. Case in point: Appetivo today announced the launch of its online platform for home based cooking businesses (and it’s the second one in a week).

Los Angeles-based Appetivo is an online marketplace that allows home cooks to sell their food to anyone. The app uses geolocation so someone looking for Italian food could see which home cooks are nearby offering that type of cuisine. At least initially, food will only be available for pick up, not delivery.

Appetivo will have a vetting process that involves site inspection and services to help home cooks get the proper permitting they’ll need to comply with AB 626 requirements. I say “will” because Appetivo hasn’t started onboarding people in the U.S. yet. As the law rolls out across the state, Appetivo will work with various municipalities to provide kitchens with an onboarding framework. Home chefs interested can learn more about timing and the process at Appetivo’s site.

The company has been operating in Mexico City for the past six months, where a less regulation-heavy environment has helped them build out and test their platform with a dozen kitchens. “What we’ve learned in Mexico, is that it’s one thing to build a platform. It’s a whole other thing to drive the business,” said Steve Voci, Chief Business Officer of Appetivo. “Anyone can build an elegant app, but how do you get kitchens to sign up? How do you get people to get permitted?”

So far, Appetivo is self and angel funded. In the U.S., it will first roll out in LA and other parts of Southern California. The company will make money by charging a 10 to 15 percent commission on orders to the consumer, so the home cook won’t have to pay.

Appetivo will be facing competition from DishDivvy, which launched last week in LA, and was actively involved in lobbying for the bill’s passage into law. In speaking with both companies, it seems like DishDivvy has a more rigorous on-boarding process for its home cooks, and has already started delivery discussions with DoorDash.

Rest assured that there will be many more startups like Appetivo and DishDivvy to follow. Home based cooking is an entirely new market and companies will be vying to become the “Uber for home cooks.” If other states adopt similar measures, these California-based companies will have more experience and an edge to scale out nationally.

September 19, 2018

Governor Brown Signs AB 626 Into Law, Opening Door to Home Based Food Businesses

After the California state senate unanimously passed the Homemade Food Operations Act (AB 626) at the end of August, the last step to making the bill into law was the signature of the state’s Governor, Jerry Brown.

Yesterday he provided just that.

With Brown’s signature, AB 626 makes it legal to start a home based food business in California. While it was always likely that Brown would sign the bill, it was not a foregone conclusion. The bill faced strong opposition from public health organizations who believe home based food businesses pose a potential health risk despite the safeguards built into the 626 in the form of home health inspections and permitting.

In the end, however, these voices of opposition weren’t enough to keep Brown from making AB 626 law.

The news is probably bittersweet for the founders of COOK Alliance, the advocacy organization which worked with lawmakers to shepherd 626 through the California state legislature.  The group was created by the founders of Josephine, which they shut down earlier this year in large part due to the difficulty of running a marketplace for home cooked meals in states like California where it wasn’t legal to do so.

And while it may be too late for Josephine, other entrepreneurs have been working on platforms to connect would-be home food entrepreneurs with hungry customers. One company, DishDivvy, launched their app this summer and is operating in California.

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