Tech Takes the Empty Calories out of Power Supply’s Meal-Delivery Model
Healthy meal delivery startup Power Supply quietly made several acquisitions in the last few months, merging operations with two other meal delivery startups, the company announced this week. The real impetus behind the purchases? Both the acquired companies weren’t quite “techie” enough to keep growing on their own.
“In both cases, these were founders that loved the space and are interested in making an impact, who didn’t have the tech underpinnings or capabilities to do that,” founder and CEO Patrick Smith told me. “That was the genesis of those deals.”
What the three companies have in common is a focus on delivering prepared, healthy meals to “busy, active people,” as Smith told me. But District-based Power Supply has taken the extra step of building out an internal technology platform that can handle the logistics of scaling out those operations — the company currently delivers daily meals from multiple chefs to nearly a hundred locations across the Greater Washington area, stretching as far as north of Baltimore.
This is where other companies in the space generally hit a wall, according to Power Supply partner Robert Morton. Once they set up shop and get some sales traction, it becomes harder and harder to coordinate deliveries to an expanding customer base.
“At some point they hit the scaling challenges that come with increased production, and among them is the tech side of the equation,” he said.
The logistics platform also allows the company to manage a “decentralized” network of chefs — six in the District and four in Los Angeles. The chefs work independently and create their own menus, which allows for better meal variety on the site. It’s also key to customer engagement.
By contrast, Elite Eats and Healthy Bites, the two companies purchased by Power Supply, manage their own central kitchens.
Smith and Morton said their approach wouldn’t be possible without a beefy tech infrastructure.
“You can’t have that decentralized network without the tech to pull it all together,” Morton said.
The customer-facing aspect has also been essential, not only in terms of managing a growing base of independent subscriptions, but allowing for customer reviews of chefs’ meals, which the founders said was uncommon in the food world.
“Reviews are core to what we do,” Morton said. “We use them to inform everything from weekly work with chefs to building out a smarter system in terms of menu creation.”
The company would not disclose the current customer count, but said that more than 800,000 meals have been served since its 2010 founding. Currently Power Supply operates in the Los Angeles and D.C. areas. The company has no concrete plans for further expansion — the founders noted the core approach is finding the right chefs in new cities — but they are evaluating cities for possible expansion over this year and 2016.
“The general approach here is, we’re building a tech logistics platform that can be applied in cities anywhere,” Smith said. “There’s nothing firm on the horizon, but there’s a ton of demand and a ton of opportunities.”
Los Angeles-based Elite Eats was acquired in April and District-based Healthy Bite was acquired in March. The terms of the deals were not disclosed. The companies will continue their own operations using Power Supply’s platform. The total team is now 13 full-time staffers, not including outsourced delivery teams.
District Capital Partners acted as the buyside advisor to Power Supply.