The pandemic has taken an unimaginable toll on the restaurant industry. Over 1000 restaurants have shuttered their doors permanently in NYC. Those in the industry have been forced to adapt and transform to survive. Innovation has come in many forms and virtual restaurants and ghost kitchens have proliferated. Mealco is the platform that allows chefs to quickly launch and manage high-quality virtual restaurants without the upfront costs of operating a physical space. The startup, founded in 2019, operates several kitchens throughout the city and chefs are able to manage delivery-first brands without even stepping foot into a kitchen; everything can be managed via the platform’s proprietary backend. Customers are able to order directly from the Mealco consumer platform or on one of their preferred dining apps. The startup currently serves Manhattan, Queens, and Brooklyn with plans to expand.
AlleyWatch caught up with Founder and CEO Daniel Simon to learn more about how his experience working in restaurants as a student inspired the business, the impact the pandemic has had on the business and industry, the company’s latest round of funding, and much, much more…
Who were your investors and how much did you raise?
Mealco raised $7 million in seed funding. The round was led by Rucker Park Capital with participation from FJLabs, which also invested in Uber, Postmates, Slice, Delivery Hero, and Chowbus. Reshape, 2048.vc, and Oceans Ventures joined the round, together with angel investors including Jonathan Zabusky, former CEO of Seamless.
Mealco is a food-tech startup platform for chefs and restaurants to launch high-quality virtual restaurant concepts. With Mealco, chefs and restaurants can develop and manage their virtual restaurant brands from their mobile phone, while avoiding lease commitments and other prohibitive upfront costs associated with starting a restaurant.
What inspired the start of Mealco?
Prior to college, I worked at various restaurants to pay for rent and my education. I was amazed by how operationally complex opening and running a restaurant was. Many restaurant owners are forced to deal with things outside of the food or the customers such as P&L management, lease negotiations, labor, vendors, marketing, etc. When I began working at one of the leading hospitality groups in Tel-Aviv and saw that they too were dealing with the same issues, I was intrigued with how to leverage technology to help restaurant owners focus solely on the food and customer. With Mealco, we have the opportunity to streamline the process of opening and operating a restaurant.
How is Mealco different?
Mealco allows chefs to create delivery-first restaurants that are scalable; we make it easier and more cost-effective than ever before. The barrier to open a traditional brick-and-mortar restaurant is high, about $1 million in upfront costs, and is operationally complex. The risk you’re taking by opening a restaurant is substantial, both from a cost perspective and a return on your investment. Most importantly though, many restaurants are hyper-local, meaning their reach is only within the radius of the neighborhood that it’s located in.
The average dark kitchen or virtual restaurant is not solving the core of these issues, since they are not actually more scalable than traditional restaurants. Mealco is changing the landscape for chefs and brands who are opening restaurants from the ground up, optimizing the customer experience. Through Mealco’s digital and operational platform, chefs and restaurants are able to create food brands that can be fully managed from their mobile phone. Our platform streamlines all the heavy lifting so that chefs can reach consumers everywhere without ever stepping foot in our kitchens – all while receiving customer insights and feedback through our platform. This way, the customer gets the best of both worlds – access to any restaurant at their fingertips and the highest quality and consistency in preparation.
What market does Mealco target and how big is it?
Mealco’s current market is New York City and our goal is to have a geographical footprint that allows us to serve both nationally and internationally– we are getting there quickly!
What’s your business model?
Mealco’s business model allows chefs to create their restaurant concept with zero upfront fees, which is practically unheard of in the industry. Once the restaurant is virtually up and running, consumers can order via Mealco directly or through food delivery apps like Seamless or UberEats. Chefs can then use Mealco’s Chef Platform on their device to track revenue, consumer habits, and feedback.
How has COVID-19 impacted the business?
Although many virtual restaurant concepts popped up during the pandemic, we developed Mealco prior to the pandemic. While many have turned to delivery, as opposed to dining out, the pandemic has devastated NYC as a whole. Despite the obstacles that COVID-19 brought upon us, Mealco is working to revive NYC restaurants that were forced to close their doors during the pandemic. Mealco is aiming to create as many jobs as possible during this time!
What was the funding process like?
Getting used to meeting via video conferences was hard, but our investors were diligent and advanced in their thinking. I knew that they understood the opportunities with Mealco and had the urge to help as many people as possible and push Mealco forward.
What are the biggest challenges that you faced while raising capital?
When the first quarantine was put in place mid-March last year, the MTA system shut down, preventing Mealco team members from reaching our restaurants safely. Members from the corporate team, including myself, who lived relatively close to our kitchens, had to take on cooking and delivering, full-time. I was taking investor calls while filling tacos and delivering to customers!
What factors about your business led your investors to write the check?
Mealco is all about the team and the culture. Investors saw Mealco’s superior technological advantage, and that vision led to their investments.
What are the milestones you plan to achieve in the next six months?
We want to be the stepping stone for those whose dream is to open and operate their own restaurant and create new jobs for millions of people.
What advice can you offer companies in New York that do not have a fresh injection of capital in the bank?
Once you know the ins and outs of your own business, it helps others see what your vision is. Don’t be afraid to use your network, you never know what can come from it!
Where do you see the company going now over the near term?
We want to help struggling businesses and chefs, in general, achieve their aspirations within the restaurant industry. The current focus is bringing restaurants and chefs onboard and expanding their businesses within the Mealco family. With new concepts, come new job opportunities for millions of people.
What’s your favorite outdoor dining restaurant in NYC?
Vic’s is one of my favorites; the pizzas and pastas keep you warm in the cold winter months! Chef Hillary Sterling also developed a restaurant concept with Mealco, Cayenne; I love eating anything she cooks up.