Investors are putting more juice behind Peach, the Seattle startup that delivers lunch to office workers.
A new SEC filing shows $5 million raised of a larger round. Peach CEO Nishant Singh confirmed the new funding, which came from existing investors. Scott Jacobson of Madrona Venture Group and Yongbai Choi of Vulcan Capital are listed on the filing.
Peach competes in a crowded food delivery market, but differentiates itself by focusing on delivering multiple lunch orders to office buildings. Hundreds of companies use the service across five markets.
Founded in 2014, Peach has rebounded after cutting 33% of its staff less than two years ago as it made changes to get to profitability.
After the job cuts, Singh said the company streamlined its delivery operations and office building activations. It also stopped hiring and reduced expenses.
“By digging deeper into delivery, we automated a lot of processes that would otherwise taken a team to tackle,” he said.
Food delivery is a low-margin business that differs from a traditional software startup. Companies large and small are still trying to figure out how to turn a profit while grabbing market share.
For example, Uber brought in $2.5 billion in gross bookings last year from Uber Eats, but took a $461 million loss due in part to investments in driver incentives. Uber also last month sold its food delivery business in India.
Even Amazon had trouble in the market, cutting the cord on its food delivery service in the U.S. last year.
Singh said delivering group lunch orders to multiple customers in one office building is a fundamentally different economic model than the 1-to-1 nature of Uber Eats, DoorDash, and others. He said Peach drivers “make healthy money per hour,” while restaurants get big bulk orders daily.
“We believe lunch delivery is going to grow exponentially and businesses with positive unit economics are going to reap the benefits,” Singh said.
Singh co-founded Peach with Denis Bellavance and Chenyu Wang — all three previously worked at Amazon.
Ironically, Amazon is a Peach customer. Other companies such as GoDaddy and Deloitte use the service.
The average cost for lunch via Peach is $10 total. Employees receive a curated menu from a handful of restaurants each morning and order via text message.
Bellavance left in August 2018 and is now leading engineering at Seattle real estate startup Loftium; he is still an adviser to Peach. Wang remains Peach’s vice president of product.
Last year Peach brought on a new COO, Prerit Agarwal, who was previously an executive at Locus Energy.
Peach has raised $15.75 million to date and employs 21 people. The fresh cash will be used to expand the company’s presence in major U.S. markets. It launched in Phoenix this past October.
Source: Geek Wire