Goldbelly grows footprint with FoodyDirect acquisition
- Goldbelly, an online food marketplace that provides overnight meal shipment from restaurants, has acquired FoodyDirect, a competitor in the online food market space that was founded in 2011. The acquisition was confirmed at a press event though no formal announcement has been made, according to Skift Table.
- FoodyDirect accounts for 10% of market share in the long-distance food delivery marketplace with 165 merchant partners.
- In October, Goldbelly received a $20 million round of funding led by restaurateur and Shake Shack founder Danny Meyer and his company, Enlightened Hospitality Investments.
There are two types of acquisition targets — those that grow a company’s footprint in a category and those that grow a company's competencies beyond its core. Goldbelly's acquisition of FoodyDirect is squarely in the former, and the combined company now offers choices from nearly 500 merchants nationwide and really doesn't have much competition in the long-distance delivery space. There are companies, like iGourmet and Mouth, that focus on niche and specialty foods, but not restaurant signatures, and that differentiator is what compelled Meyer to invest.
Goldbelly's entry into food delivery disrupted the space by offering cravings based on nostalgia versus ease. Goldbelly offers Chicago natives living in Sedona, Arizona, the chance to order a Lou Malnati’s pizza within a day, for example, whereas Uber Eats brings you McDonald's within 30 minutes. In other words, it's a want versus a need, so the model should do well in a thriving economy.
The market landscape seems ripe for Goldbelly, as the company caters to two major industry trends — a rising demand for local/artisanal food and the growth of food e-commerce. Mintel predicts the specialty foods market will grow from 14.8% of the total market to 18% in 2021. Between 2008 to 2014, local food sales increased from $5 billion to $12 billion, and could jump to $20 billion in 2019, according to Packaged Facts.
Goldbelly's expanded footprint will enable small businesses and mom-and-pop concepts to scale to a national audience, providing them with an e-commerce presence necessary to survive in the new marketplace. The concept also fits a growing demand for consumers forging a stay-at-home economy.
There are some challenges with the company's model. There are higher costs associated with the logistics needed to ship a Philly cheesesteak across the country, for example, but Goldbelly founder and CEO Joe Ariel told the Wall Street Journal in October that economies of scale should push those costs down as the company continues to grow. He also told the publication that the marketplace could grow to thousands of restaurants. FoodyDirect’s acquisition is a big step toward hitting both of these objectives.
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