Lockdowns are lifting, but VCs remain bullish on food delivery start-ups

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LSEG-GBTaster CEO and founder Anton Soulier.Taster

Venture capitalists are continuing to pile in on food delivery start-ups, backing them with hundreds of millions of dollars even though the margins are often small and people can increasingly visit restaurants. In Britain, people can already eat outside in groups of six, and they’ll be able to dine indoors from May 17.

Several food delivery companies have boomed during the Covid crisis as they offered people a way to keep eating food from their favorite restaurants and avoid venturing out to the supermarkets.

London-headquartered Taster became the latest food delivery firm to secure a significant round of financing, announcing Thursday it has raised $37 million from VC firms including Octopus Ventures, LocalGlobe, Battery Ventures and Heartcore Capital. It said it intends to use the money to expand across the U.K., France and Spain.

Founded in 2017 by Deliveroo’s seventh employee, Anton Soulier, Taster operates five delivery-only digital restaurant brands including Korean fried chicken restaurant Out Fry, Vietnamese street food restaurant Mission Saigon, and vegan burger brand A Burgers. It claims 1 million meals were delivered by its brands last year and that revenues more than doubled, although it refused to share revenue numbers.

Food from these brands can be ordered from takeaway apps like Deliveroo, Uber Eats and Just Eat Takeaway, as well as from Taster directly. But customers won’t necessarily know where it’s made. While traditional restaurants tend to use their own kitchen, or maybe even a dark kitchen, Taster’s brands use kitchens that aren’t being fully utilized in other restaurants and hotels. It says that staff in these kitchens are provided with training and that its meals are relatively straightforward to assemble, with complex sauces and other items made before they’re sent to kitchens.

“The food category in general is barely online,” Soulier told CNBC on Wednesday when asked why so much money is flowing into companies like his. “It’s like about 10%. When you look at other industries such as travel, it’s like 60%.”

The French entrepreneur believes that people are starting to realize the move to online in the food industry has been accelerated