Food brings people together — every grandmother worth the title reveres that wisdom. That’s only part of the story, though. A meal that’s handled badly, or doesn’t get off to the right start, increases the risk of disaster — or, at least, the risk of the ideal meal falling short of reality.
What holds true in personal lives holds true in businesses, where a well-catered breakfast and lunch can directly lead to new sales, new revenue, new product ideas and a higher level of organizational moral. (Just think of an experience at a company, sales event or conference.)
That knowledge serves as the foundation for ezCater, an online marketplace through which businesses can order large catered meals from some 60,000 restaurants nationwide — a market worth more than $60 billion per year in the U.S. Today (April 2), the company announced that it raised $150 million in a funding round co-led by Lightspeed Venture Partners and GIC, bringing ezCater’s total funding to $320 million. The company’s value now stands at $1.25 billion.
As ezCater Co-Founder and CEO Stefania Mallett told Karen Webster, the online marketplace originated from an earlier failure, an endeavor that sought to facilitate food delivery to sales reps to help them close deals with potential clients. “I didn’t have the idea,” Mallett said of that previous effort, which eventually ran out of cash, “but I am really good at taking an idea somewhere.”
She held on to the knowledge that “the most valuable time slot is lunch or breakfast” when it comes to business, and ran with the idea of bringing “disparate groups” together — that is, businesses and restaurants, which earn high margins from catering — via the ezCater online marketplace. More than 11 years later (the last eight of which have brought “hockey stick” growth for ezCater), the company is now a unicorn, with fresh funding that will enable restaurant expansion, among other growth-focused tasks.
The online marketplace occupies a niche that nearly every digital commerce and payments professional can probably understand. They know the adventure of trying to plan for a big, in-house, catered business meal — wrinkled menus are withdrawn from a central drawer, Google Maps and restaurant websites consulted, calls made to determine the details of pricing and delivery, then fingers crossed as meal time approaches (and as potential clients or partners arrive in the office). What if something goes wrong with the order? Getting the proper restaurant manager on the phone can sometimes provide another challenge.
“Catering is a high-stakes event,” she said. “It’s really, really embarrassing if food doesn’t show up or if it’s late.”
The online marketplace seeks to solve those problems. It can enable quick ordering and keep track of order histories, Mallett told Webster. The company handles customer service, too.
“The most reliable caterer can still run into a jack-knifed trailer,” she said by way of example. “If something goes wrong, we step in.” The marketplace offers some ratings and reviews of caterers, and the company offers deals with top business users. In addition, users earn points on the marketplace, with rewards payable via Amazon gift cards. “By late October or November,” Mallett said, “there is this giant sucking sound of all these redemptions as everyone orders Christmas gifts.”
Expense reporting is also part of the proposition, reflecting the larger trend in the B2B world — which is slowly, but steadily, moving away from paper-based processes. Users can put the catering expenses on personal or corporate credit cards, and expense reports can get “automatically sucked up” into the Concur expense management system, Mallett told Webster.
“We also offer credit lines if an office is of a certain size,” she added. “We will front and invoice you.”
The growth of ezCater has brought some lessons that can apply to other digital commerce operations as well. First, growth can come from the “bottom up,” Mallett said — in this case, from individual sales reps who become loyal to the marketplace. “We found that ‘bottom up’ works faster than anything else.”
Second, rolling out such a marketplace product city by city is not exactly the most desirable way to go. In fact, it’s “terrible,” she said, recounting the relatively slow pace of the company’s national expansion. “We invented a pretty clever technique, which I cannot tell you about,” to put that national growth into high gear, she said, “but it was legal and ethical.”
That’s not all. Mallett is often asked to mentor other entrepreneurs, or to at least offer them advice. “Build the supply first,” she said, “and the demand will follow you.” That’s the reason the city-by-city strategy proved lackluster — it represented a failure to have proper supply, she explained.
In fact, she added, “even if it’s just a handful of customers who are rabidly loyal, who would scream and come picket [at] your house, and throw things in the air if you took their services away, then you know you have a business.”
Another lesson, perhaps?
It’s not just about the catering. It’s about the catering management software, which ezCater sells to restaurants. “We’re getting deeper and deeper into that,” Mallett said, saying that the company is building a “very slick, modern, API-first platform” for catering. Furthermore, ezCater recently bought MonkeySoft Solutions to improve its power in software.
Another part of the future, as imagined by Mallett, includes making a play for the catering business of companies that need to serve food to smaller groups — say, between four and 10 people, which is not exactly the most lucrative part of the catering world. “We have some ideas up our sleeves,” she said.
No doubt those folded restaurant menus hold a nostalgic appeal for many people in the office (all the memories and experiences), but they represent a point of friction when it comes to catering. As all good grandmothers know, one shouldn’t bring unnecessary hassle to the practice of providing good meals.