Cybermeals, a leading online food delivery service announced on Monday that it has changed its name to Food.com, and has received $25 million (US$) in a second round of funding from venture capital and media investors. According to the company, whose site is already used by over 450,000 customers to order food from over 11,000 restaurants nationwide, the funding is part of a new strategy, launched this week, to create the “Internet Dining Network.”
“Our investors see the same market potential that we do to tap into two trends which are aligning in the marketplace,” said Richard Frank, Food.com’s chairman and CEO. “First, last year 51% of all restaurant meals were takeout or delivery, and this segment of the food industry is growing seven times faster than any other category. Second, Internet sales in the U.S. continue to skyrocket and are expected to hit $108 billion by 2003.”
“Combine these trends with the fact that 83% of all adult Internet users are takeout and delivery restaurant customers and there appears to be an opportunity to capitalize on Food.com’s substantial technology, partnership, and marketing assets. Our second round of funding is critical in helping us move swiftly to meet the needs of this market and create the Internet Dining Network,” he said.
We Knew Them When
In the Fall of 1998, the E-Commerce Times conducted an exclusive interview with Cybermeals, featuring the young startup as an “E-Commerce Success Story.”
Tim Glass, the company’s owner told the E-Commerce Times, “I came up with the concept after seeing the movie “The Net.” There is a scene where Sandra Bullock orders pizza over the Internet. I thought that was a concept that everyone could relate to, because everybody eats pizza. I pursued that and realized the size of the market was enormous, in the billions. From that, you just look into the concept, and the next thing you know, you’re in business.”
Indeed, these days, Cybermeals is not just “in business,” but poised to actually define “the business.”
Leading this second round of funding is Tribune Ventures, the investment arm of the Chicago Tribune. Food.com already has a partnership with the Chicago Tribune, which integrates Food.com with the newspaper’s local online entertainment site. Joining Food.com’s board of directors is Tribune Venture’s president, Andrew Oleszczuk.
Also participating in the company’s second round of funding, among others, are Accel Partners, which also participated in Food.com’s first round of funding. Two of Accel’s partners, Jim Breyer and Bud Colligan, are members of Food.com’s board of directors.
New Cash Enables New Moves
Food.com several new marketing initiatives, starting with its name change from cybermeals to Food.com and a new logo. With a light-hearted touch, the Food.com logo adds “mmm” after its name.
Starting this Spring, Food.com will reportedly launch newspaper, radio, television and billboard media advertising campaigns designed to raise consumer awareness in Los Angeles, New York, San Francisco, Washington, D.C., Chicago, Seattle, Dallas, Atlanta and Philadelphia. This is the first off-line marketing campaign since the company was launched.
In several of these markets, Food.com has signed exclusive agreements with local media partners, such as the Washington Post, the Chicago Tribune, the Los Angeles Times, and the Orlando Sentinel. Under these agreements, Food.com’s online restaurant ordering services are co-branded and integrated into the local entertainment Web sites produced by these newspapers.
Food.com also has signed a multi-year contract with America Online, making Food.com the exclusive online takeout and delivery service marketed by AOL on the AOL Service, AOL.com and Digital Cities. In this space, Food.com will compete for brand recognition mainly with Digital Chef, although Food.com is currently focused on takeout delivery, while Digital Chef is an online food vendor.