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Summary:

If your company gets its food catered every day, you’ve probably heard of ZeroCater. More than just an awesome service, it’s also a great story about one dude that created a business by solving a problem for himself and offering that service to others.

arram zerocater

If you’re one of the growing number of startups in Silicon Valley area that gets regular deliveries of catered food, you’ve probably heard of ZeroCater. And if you haven’t yet, you should: The startup is quickly becoming the go-to place for handling all the logistics of ordering lunch (and other meals). With a flexible delivery schedule and a huge number of food vendors that it’s partnered with, it could be the easiest and most efficient way to make sure your office gets fed.

What I really love about ZeroCater, though, is the story: It’s all about one dude with some entrepreneurial drive that created a business by solving a problem for himself, then offering up a solution to others.

ZeroCater founder and CEO Arram Sabeti moved to the Bay Area after becoming a bit obsessed with Paul Graham’s essays. Sabeti wanted to work in startups, so he saved up some cash, got a place in the East Bay and just started looking for work. He landed at Justin.tv, where he says he handled a lot of the office management, QA and all sorts of other things that no one else wanted to do.

While at Justin.tv he handled daily lunch orders for the startup, which was routinely the most problematic part of his job. From talking to other folks in similar positions, he found out he wasn’t alone — dealing with catering was a huge pain for everyone who handle such things. So he took on another startup client and began outsourcing his expertise to Justin.tv as well.

At first, ZeroCater was just Sabeti, a bunch of hustle, and a spreadsheet with about 500 columns in it. Then he brought on CTO Bill Moorier to build some code to automate some things. Like invoicing, for instance: Prior to getting a software platform in place for managing accounts, Sabeti was spending some 20 hours a week just filing invoices for various companies he worked with. With that simplified, the business began to operate a lot more smoothly and started to grow.

ZeroCater was part of last spring’s YCombinator class and raised $1.5 million last summer from investors like Keith Rabois, SV Angel, Start Fund, Stewart Alsop, Justin.tv founders Justin Kan and Emmett Shear, Alexander Goldstein and Starling Ventures. With financing in hand, it’s been aggressively expanding within the Bay Area: In the past eight months, ZeroCater has grown from three employees to 15, with six account managers and two salespeople now on board.

That’s translated into some real business, as ZeroCater is expanding beyond just word-of-mouth marketing and serving startups, and branching out into other verticals. It serves about 175 companies a month, offering a rotating menu from various caterers, restaurants and food trucks around San Francisco. Those companies range in size and in the volume of business they drive: Some are multinational corporations that you know and love, while others are startups you’ve never heard of; some order just a few meals a month, while others get food catered everyday. For taking care of all their catered food needs, ZeroCater charges just a 7 percent convenience fee on all orders.

On the vendor side, working with ZeroCater means regular business for a number of food service operators that otherwise would be reliant on the whims and fancy of the general public. In exchange for volume discounts, ZeroCater provides a steady stream of orders for a number of local businesses.

While ZeroCater has cut its teeth serving the Bay Area, Sabeti tells me he hopes to take this business worldwide. And there’s plenty of interest: ZeroCater has a waiting list of more than 165 companies in major metropolitan areas around the country. ZeroCater’s next market has yet to be determined, but it’s clear that the lunch problem is pretty universal, whether it’s a matter of feeding a 15-person startup or a large financial services company.

  1. I don’t mean to knock your idea, I think its great and you should be doing it but what I get out of this is that it is a investment bubble indicator: this exact business idea was done back during the height of the dot com era. Perhaps things are different now. Good luck!

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  2. Why don’t people walk outside and go to a cafe? Or bring a sandwich from home?

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    1. No Nup,
      The following was snagged from Urban Airship’s Blog:
      http://urbanairship.com/blog/page/2/
      Perks Don’t Cost You All that Much

      We started catering lunches over a year ago. We did two days a week to start and now do three days a week in the office, which still leaves time for our team to explore their love for the PDX food cart scene. Meals are healthy, diverse and always include a vegetarian/vegan option. Sales mingles with marketing, who mingles with engineering. This is a good thing, and while it costs us $10/head/meal it’s well worth it. Let’s do a little math.
      In our Portland office we have 53 people. Lunch is served promptly at Noon and people are usually back at their desks by 12:40pm at the latest, and they aren’t rushed at all. Twenty minutes x 53 people is 17 hours of saved time a day. The cost for that meal? $530. For the week we get:

      $530/day x 3 days = $1590/week
      20 minutes x 53 people x 3 days = 53 hours saved/week (or 1 hour saved per employee per week)

      That adds up and while this is a “perk” for the team it happens to turn a fantastic ROI for the company, both in real dollars and especially culturally.

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  3. Waiter.com has been doing this for 10+ years.

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