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The Spoon

Daily news and analysis about the food tech revolution

restaurant supply

Cheetah Raises $36M for its Wholesaler-to-Consumer Grocery Delivery and Pickup

Cheetah announced today that it has raised a $36 million Series B round of funding for its marketplace that allows consumers and small businesses to shop for groceries and other supplies direct from wholesale suppliers. The round was led by Eclipse Ventures, with participation from ICONIQ Capital, Hanaco Ventures, and Floodgate Fund. This brings the total amount of funding raised by Cheetah to $66 million.

Consumers looking for an alternate place to buy groceries and other supplies can download the Cheetah app, shop in its marketplace, and then go to a designated pickup point where orders are delivered into the back of their car, no contact necessary. Right now, Cheetah is only available in certain parts of the San Francisco Bay Area.

Connecting consumers with restaurant suppliers has become quite the trend during this COVID-19 pandemic. With supermarkets running low on items and the difficulties shoppers have finding a convenient delivery times, entrepreneurial startups are activating other parts of the food supply chain like wholesalers.

Cheetah is the latest such company that has shifted from strictly B2B for restaurants to D2C. Pepper, DineMarket and Choco all offer similar services. Of those Pepper and DineMarket are only available in the New York area, and earlier this month Choco raised $30.2 million (it has raised $71.5 million to date).

As I wrote yesterday, I’m curious to see if this consumer shopping from wholesalers becomes the new normal once the coronavirus outbreak recedes. Both Cheetah and Choco (which is fun to say out loud), have raised big money and are going to need to scale their businesses to get a return for investors.

Even though restaurants in some parts of the country are re-opening, they are doing so at a greatly reduced seating capacity (50 – 25 percent). Even then, questions remain as to how much people will want to even go into restaurants. Sure, there will still be restaurant delivery, but that can get expensive real quick, and a nation still recovering from a depressed economy may choose to make more economical meals at home. Which means more shopping in bulk, which means buying from wholesale suppliers might make more sense.

DineMarket is Another (NYC) Restaurant Supplier Marketplace Now Selling to Consumers

One trend emerging from this COVID-19 pandemic is startups that once connected restaurants with food supply companies are pivoting into direct consumers sales. DineMarket is the latest entrant we’ve come across in the category: the company launched its own D2C marketplace earlier this month.

Since 2011, DineMarket had been a service for restaurants to buy food and other supplies from wholesalers in the New York area. As the pandemic spread and New York shut down for sheltering in place, DineMarket changed up its business so consumers can buy and get home delivery from these restaurant suppliers.

DineMarket is the third such restaurant supplier marketplace making this type of shift that we’ve written about in the past month. Both Pepper and Choco offer similar services, also in the New York City area.

It’s not hard to see why so many restaurant-supplier services are making the consumer transition, as it’s a win-win. Suppliers, which can’t sell to restaurants at the moment, open up a new revenue stream, can keep at least some of their people employed and prevent all those perishables from going to waste.

These supplier selling marketplaces also provide another avenue for people to grocery shop online at a time when traditional retailers are struggling to keep up with the sudden crush of new e-commerce orders. Amazon is waitlisting new Fresh and Whole Foods customers, getting a FreshDirect slot in NYC has been like playing the lottery, and Instacart is bringing on another 250,000 of its shoppers nationally to keep up. Adding new sales channels like restaurant suppliers can help ease those strains and provide a means for people to get food delivered.

I’m curious to see what happens with these services once shelter-in-place restrictions are lifted. We’re already seeing restaurants re-open (albeit in a diminished, socially distant capacity) in some parts of the country. New York’s shelter-in-place order expires on May 15, though it will probably be extended for NYC. But if suppliers are finding good money in the consumer market, and consumers get hooked on buying restaurant quality food for their homes, perhaps the divide between B2B and D2C will become more permeable.

Choco Raises $30.2M for Restaurant Food Supply Management, Opens D2C Channel

Choco, a startup that in normal times allows restaurants to more easily manage and order food supplies, announced today that it has raised $30.2 million in funding led by Coatue Management. This brings the total amount of funding raised by Choco to $71.5 million.

But, as we are all well aware, these are not normal times. With a global pandemic forcing restaurants to close dining rooms or cease operations entirely, there isn’t much “B” to be had for a B2B operation. So the company is doing what most of us are being forced to do — pivot, at least temporarily.

As part of today’s announcement, Choco is also launching a direct-to-consumer market that lets everyday people shop from those food suppliers no longer able to sell to restaurants. The program is rolling out to all of the 17 global markets Choco operates with special consumer webshops created for each one where people can order meat, fish, produce, cheese and more. Orders will come with next day delivery and Choco is donating 100 percent of the profits (after it recoups its cost) to help provide relief to restaurants in those markets.

Choco isn’t the only restaurant supply management company that has had to change up because of coronavirus. Pepper is a similar New York-based software company that announced the same kind of temporary D2C pivot last month.

Opening up these new channels should actually be a win/win. Suppliers can sell their food, generate revue and hopefully keep more people employed. They also give consumers an alternate place to shop for food at a time when traditional grocery e-commerce is choked with new customers. And for a bonus third win, the entire endeavor helps reduce food waste.

Choco’s D2C offerings started in New York, where the company says it went from zero to 6,000 customers in the first three weeks. Choco says its latest figures for that location is 500 orders per day with an average basket size of $90. If you are interested in using Choco, it’s available in the following cities, with more on the way.