Not your typical delivery meal
Munchery has transformed meal delivery into an innovative, gourmet experience. CEO Tri Tran cofounded Munchery in 2010 with Conrad Chu when looking for answer to the question “What’s for dinner?” for their families – how could delivery go beyond pizza or Chinese takeout at an affordable price?
Five years later, Munchery has experienced explosive growth, and now serves SF, NY, LA, and Seattle (~5,000 meals a day as of April 2015 ). I am a fan of Munchery myself, having ordered frequently while in SF. Having a $12 steak dinner delivered to your door is incredible.
Transforming the food delivery business model
Munchery’s business model works by leveraging technology to create a best-in-class food delivery service.
First, customers log on to the Munchery app/website to review menu offerings. Munchery has an extensive product mix. On any given day, there are close to 50 restaurant-quality offerings, ranging from $9-15 per entree to $2-5 per dessert. The menu changes daily, as each item has been crafted by one of Munchery’s resident chefs (many are celebrity chefs). After reviewing their options, customers can pick a delivery date and time (either same day or a few days ahead), and pay online.
Contracted part-time employees then deliver the order. All food is freshly prepped earlier in the delivery day of choice, and served cold (to ensure freshness and control cooking temperatures). Families and individuals get to enjoy restaurant-quality meals at the click of a button in the comfort of their own home. Munchery focuses on dense, urban markets that have high proportions of their target market (families, couples, health-conscious mothers) and allow for ease of delivery.
Reinventing the food delivery model
The secret to Munchery’s success lies in their unique operating model:
- Munchery’s model utilizes its core labor (chefs) in a unique way. The Munchery team hires celebrity chefs and offers them great salaries, revenue share (% of sales of particular dish), personal recognition on the website, and regular, 9-5 hours. The restaurant world is notorious for overworking and underpaying chefs, and the Munchery provides chefs an attractive venue for their talents.
- High quality-contracted delivery drivers – these drivers are carefully vetted, trained, and paid higher wages than industry averages, resulting in better delivery times and lower turnover rates.
- Food prep process:
- Munchery operates purely through a delivery model, so they don’t own any expensive storefronts. Thus, capital expenditures are minimized (labor, rent, and utilizes costs are reduced). As an example, Munchery spends around 1% of revenue on rent, compared to the 5-6% industry average. Many kitchen spaces are leased, rather than owned.
- Food preparation is optimized for volume and high quality. All cooking is done in large, centralized industrial kitchens instead of traditional restaurant spaces. This space premium allows for more product variety (it’s impossible to have 50+ dishes in a traditional restaurant), and allows for better margins through economies of scale (higher product throughout volume, increased buying power for raw materials).
- There is also considerable investment in cooking technology within these large kitchens. Technology like Wifi-enabled high-capacity ovens allow more automation of the rote parts of cooking, which reduces cycle time and allows Munchery chefs to maximize their time on creative production. 
- Delivery process:
- By focusing solely on dinner, Munchery is able to aggregate online orders during the day and optimize delivery routes from their regional kitchens, much like FedEx or UPS. Their drivers work to ensure on-time delivery and customer satisfaction.
Munchery’s focus on people, food process, and delivery process undergirds its unique business model and sets them apart. While there are several competitors (Sprig, SpoonRocket), Munchery is maintaining its competitive advantage through its focus on high-quality chef partnerships and overall food quality. Munchery must make continuous investments in talent and innovation during this period of rapid growth to maintain its market lead.
Implications moving forward
Munchery’s success at reinforcing a business model with an excellent operational model has propelled them to the forefront of food retail. They just raised $85M in their fifth funding round (5-year total of $117M), and their ambitious growth plans relies on its ability to scale quickly and overtake food prep services such as Blue Apron. 
The implications on performance are clear. Some investors predict that at their current rate of growth, Munchery will eclipse Chipotle in the Bay Area in 2016. It is growing 9x faster than Shake Shack, a $2.7 billion public company. 
Munchery has been making some high-profile hires such as Pascal Rigo, the founder of upscale bakery La Boulange  to stay ahead in a competitive market. If they can continue to achieve excellence with their operations, I believe that the Munchery team can become a true food juggernaut.