In an expansion effort that brings its service to 28 states, New York-based meal delivery startup Freshly says it is also stepping into competitor Sprig’s turf—at a time when this sector is ripe for consolidation.
On Monday, Freshly announced it scaled up its coverage area, including in states, such as Illinois, where San Francisco-based Sprig is available. Prior to the expansion, Freshly had been serving 10 states: Arizona, California, Nevada, Colorado, Washington, Oregon, Idaho, Utah, New Mexico, and Texas.
The 18 states added to Freshly’s coverage are Alabama, Arkansas, Georgia, Louisiana, Mississippi, Oklahoma, Kansas, South Carolina, Missouri, Iowa, Illinois, Tennessee, Kentucky, Wisconsin, South Dakota, Wyoming, Nebraska, and Indiana.
Last year, the company shipped one million meals to its customers, and it expects to deliver five million this year.
A plethora of companies want to be the go-to choice for meal deliveries. They often market themselves as alternatives—with supposedly healthier, homemade-style, or gourmet selections—to the usual takeout or delivery food. Rivals in this space, in addition to Freshly and Sprig, include Maple, Home Chef, HelloFresh, Blue Apron, and Munchery.
With such a throng of competitors, there is bound to be a shakeout and consolidation. There are signs it has already begun. Berkeley, CA-based SpoonRocket shut down in March, steered some of its clientele to Sprig, and sold its technology assets to Brazil’s iFood.
CEO and co-founder Michael Wystrach says he started Freshly, with its chef-created meals, to solve a problem he had where he was not in the physical shape he desired. He went back to the gym but did not see the results he wanted. A conversation with a friend who is a doctor compelled him to eat better. That posed a bit of a challenge for Wystrach. “I wasn’t a person who wanted to cook,” he says.
New York life made him accustomed to takeout food rather than spending time in the kitchen himself. Tapping his family background in restaurants, Wystrach contacted chefs he knew to put together healthy meals that eliminated the work of reading nutrition labels and preparing food himself.
Soon, others who knew Wystrach wanted healthy, all-natural meals without doing the cooking and asked him if they could make similar arrangements. That led to the founding of Freshly. So far, the company has raised $9 million from backers that include Highland Capital Partners, White Star Capital, and Seamless co-founder Jason Finger.
To scale up, Wystrach—who has a background in investment banking—hired technology professionals from the ready-made meal manufacturing sector. “We built a system that allows us to take raw ingredients from the farm, and within 12 hours have those meals shipped out to consumers so we’re not freezing foods and adding preservatives,” he says.
Freshly uses FedEx to deliver meals to people’s doors, but the company also has its own trucks to get meals to FedEx hubs around the country to extend its reach, Wystrach says.
Part of what makes Freshly different from its rivals, Wystrach says, is the price. Meals from Freshly cost an average of $11 and there is no delivery fee, he says.
Freshly’s distribution model is comparable to Blue Apron and HelloFresh, Wystrach says, but his meals do not require the cooking work. He believes that can appeal to millennials who do not have time to be in the kitchen.
Wystrach says his company is considering sites in the Northeast to set up another shipping facility late this year to reach even more customers, potentially starting in 2017.
