When many brick-and-mortar businesses shut down or stalled almost overnight in March 2020 due to the pandemic, delivery services were uniquely poised to meet the needs of consumers who still wanted their products but were unable or unwilling to go out and get them. Two years later, those same consumers have for attempted to resume a semblance of pre-pandemic life amid changing protocols and new Covid variants while food delivery services continue to generate increasingly higher revenues by offering more convenient options.
The largest delivery service providers saw quick gains during the pandemic: After posting losses of $25 million a month in 2019, San Francisco-based grocery delivery and pick-up service Maplebear Inc., which does business as Instacart, netted $10 million in April 2020 and by the end of the year, reported $35 billion in sales for revenues of $1.5 billion, according to Bloomberg. Prior to being acquired in December 2020 by Uber Technologies Inc.’s Uber Eats for $2.7 billion, San Francisco-based Postmates Inc. generated $880 million in revenue for the year, up from $500 million from 2019, according to Business of Apps estimates.
Meanwhile, fellow San Francisco-based food delivery service DoorDash Inc. went public in Dec. 2020 with an initial valuation of $72 billion. At the time, the company reported working with 450,000 merchants and 1 million drivers to make deliveries to more than 20 million consumers.
Instacart reported 500,000 drivers (or “shoppers”) and 9.6 million users in 2020, and during that same time, Postmates counted 600,000 merchants providing 5 million items to more than 10 million monthly active users.
In 2021, these two companies alone claimed a 70% market share of Los Angeles’ food delivery services, according to Statista. But with such a hungry client base ready to order their favorite dishes, a handful of startups are following in these larger companies’ footsteps and trying to distinguish their services. Glendale-based DishDivvy Inc., for example, first launched in 2018, and the company announced Feb. 22 that it raised $1.3 million in preseed funding thanks to a 35% increase in year-over-year revenue and its business model as a food marketplace where individual chefs can prepare dishes from a variety of cuisines.
Comfort food
For founder and Chief Executive Ani Torosyan, DishDivvy came about in response to her expertise as an engineer and consultant for restaurant delivery services, as well as her personal experiences as a working mother.
The company grew steadily, onboarding more than 500 cooks capable of making everything from the most basic American comfort food to ethnic specialties that are more difficult to find at local restaurants.
“It’s really creating more of this holistic, homemade food experience, as opposed to transactional restaurant delivery,” she said. DishDivvy subjects its cooks to a multistep certification process including identity verification, food safety training, a virtual kitchen inspection and platform orientation for handling orders. Those certified cooks can then set their own prices according to the complexity of a dish, preparation time, cost of ingredients and other factors, so that they are receiving what they feel is appropriate compensation for their effort.
Expanding menu
The rapid growth of businesses like Fremont-based Weee Inc. only further highlights the growing appetite for food and food delivery services that give consumers access to more local businesses and a wider variety of cuisines. The self-proclaimed “largest Asian and Hispanic e-grocery store in North America” announced its Series E funding round Feb. 28 led by Japanese venture capital company Softbank Vision Fund 2, raising $425 million to add to the $315 million the company previously received during its Series D round in March 2021.
Weee announced plans on March 1 to expand operations into Los Angeles and New York City.
“Crazy Rich Asians” and “In The Heights” director Jon Chu joined the company in February 2022 as its chief creative officer. He grew up up around Chef Chu’s, the Chinese restaurant his father first opened in Los Altos in 1970.
“As the movie business is changing and shifting, the story business is actually growing across different mediums, whether that’s consumer products or services,” Chu said. “So, it just made sense for us to come together in something that I feel deeply personally connected to, which is the Asian food that I grew up with.”
While Weee caters to people who love Asian and Latino food, Black and Mobile supports local businesses within minority communities. Founder and Chief Executive David Cabello launched the Philadelphia-based delivery service after observing a lack of Black-owned restaurants on food delivery platforms when he was working as a driver for Uber Eats and Postmates.
Cabello created an app and website for Black and Mobile in 2019 and quickly cultivated a customer base that was interested in supporting his “mission-based business,” which spotlights Black-owned restaurants and provides second-chance employment opportunities for individuals with criminal records. Black and Mobile now services 75 restaurants across Philadelphia, Atlanta and Baltimore. The app has been downloaded more than 110,000 times and generated almost $1 million in sales. Last month, the company announced plans to expand its operations into Los Angeles and New York City.
According to a recent report by Business of Apps, food delivery app revenue hit $26.5 billion in 2020 and is expected to increase to $42 billion by 2025. That’s a tremendous pie from which these businesses based or operating in Los Angeles are poised to take a slice.
