Meal kit co Sun Basket raises $15m in Series C financing round
Sun Basket raises $15m: 'Our goal is become America's favorite way to make healthy organic meals'
The funding round - led by Sapphire Ventures and supported by Baseline Ventures, Pivot North Capital, Accolade Partners, Founders Circle Capital, Shea Ventures, Relevance Capital, Vulcan Capital, Filter 14, and angel investors – brings the total sum raised by the company since its 2015 launch to $43m said co-founder and CEO Adam Zbar.
“Sun Basket’s values of health, sustainability, and personal choice are really resonating with consumers, resulting in the company growing $80m in annual run rate (ARR) since Labor Day 2016.”
Sun Basket, which saw revenues surge 1,300% in 2016 and its employee base rise from 100 to 700, has inspired confidence in investors with its “highly-positive unit economics, strong margins, and industry-leading retention rates,” said Zbar, who said the growth had been “highly-capital efficient.”
"We get payback on our marketing spend in 90 days which means we can grow quickly in a capital efficient way."
The size of the meal kit delivery prize
While some industry commentators and investors have questioned the long-term viability of meal kits, Zbar told FoodNavigator-USA he was "very confident this is a long-term trend, not a fad. The three things consumer want are healthy, easy, delicious meals. We are hitting all three, which is what is making Sun Basket a compelling, habit forming service.
"Our Series C was oversubscribed because investors see a huge total addressable market. Over 80% of Americans cook three to five times per week and over 50% are interested in a solution that makes healthy cooking easy and delicious."
As for consumers, especially those that lack time, energy, imagination or cooking skills, the experience of shopping at grocery stores is stuck in the last century, he said.
"The experience is poor as it is organized by category - meat, produce, and so on, rather than by consumer need: ‘I want to cook easy meals or Paleo meals or Gluten free meals.’"
'This is actually a much larger market than the 'Learn To Cook' positioning of the 1.0 meal kits that first launched'
As for the sustainability of the business model, people always ask whether the meal kit trend is a fad, he said, but meal kits are just designed to make life easier for people that enjoy cooking, but don’t always have the time and energy to find new recipes and shop for all the ingredients, which is arguably a pretty ‘mainstream’ proposition.
“This is actually a much larger market than the 'Learn To Cook' positioning of the 1.0 meal kits that first launched in the market. As a result, we are growing two times faster than the 1.0 meal kits grew when they were at our stage of development (two years old).
"The market is so big that we believe that there will be more than one winner. That said, Sun Basket is going after the top two unmet needs in the market, which are health and ease, and Sun Basket is now the leading healthy organic meal kit delivery service in the US."
Co-founded by Adam Zbar and Chef Justine Kelly (pictured left) in 2014, and launched in 2015, San Francisco-based organic meal kit brand Sun Basket enables consumers to cook restaurant-quality meals at home without having to do any of the legwork.
HOW SUN BASKET WORKS: You choose your meals from the website (the recipes are developed by Chef Justine Kelly, former head chef of the James Beard Award-winning The Slanted Door restaurant) and Sun Basket does the rest: collating and delivering the ingredients for three organic meals-for-two to your door once a week, so all you have to do is cook (that’s $11.49/meal/person or $68.94/week). There are vegetarian, gluten-free and paleo options and users can skip weeks as desired.
ZERO WASTE: As part of its mission to generate zero waste, Sun Basket now uses recyclable insulation liners from PET fiber, and fully compostable ice packs (from cotton and water rather than petroleum-based ingredients), ingredient bags and clear containers. While users have always had the option of returning their packaging, 90% of users were not doing so, prompting a new approach, says the company.
The economics of meal delivery kits
While $11.49 a meal might sound a little steep for something you’ve still got to cook for yourself, there is zero waste as everything is pre-portioned, while you are also paying for someone else to do the planning and the shopping for you, said Zbar.
While ultra-efficient shoppers could buy the ingredients from the store and use the leftovers for other meals during the week, meanwhile, most of us are not this organized/efficient, and end up wasting a lot of fresh food when we purchase ingredients for a particular recipe/meal, he said.
"Sun Basket’s direct to consumer model delivers food from farm to fork two to three times faster than traditional grocery models since it cuts out the middleman - grocery stores - resulting in fresher food, higher margins, and lower CAPEX," he added.
"With this new funding, we will be scaling out our marketing, technology, and operations to build our brand nationally and continue our leadership position as America's favorite to cook healthy organic meals, which is a multi-billion opportunity. Our mission is audacious which is to become America's favorite way to make healthy organic meals."
Adam Zbar, co-founder and CEO, Sun Basket
Who uses Sun Basket?
As for the customer base, as an organic meal provider, Sun Basket appeals to more affluent shoppers than some of its rivals, but it’s not a service that just appeals to affluent urbanites, he said.
"Our customers tend to be couples with no kids or young kids, who are living in suburbs in big metro areas. They tend to be mindful consumers - concerned with eating 'clean' foods (organic, fresh and minimally processed), making good choices around health and sustainability, and choosing brands who share the same values.
"Our most loyal customers are those who enjoy our most customized recipe options, like Paleo and Gluten-free. Sun Basket is solving a real need by providing a convenient and delicious way to cook meals that adhere to their dietary needs."
As for gender, he said: "Most surprising is the number of men cooking with Sun Basket. From younger fitness-oriented single guys looking for a healthy alternative to takeout, to older divorced men learning to cook for the first time and connecting with their older children over a great meal, we've found a lot of men are loving the Sun Basket experience."
