Startup Backed by Former McDonald's CEO Survives 85% Sales Drop
Pandemic a Blessing in Disguise for Vending Machine Startup
(Bloomberg) -- Farmer’s Fridge looked headed for disaster when Covid-19 hit the U.S.
The venture-capital-backed firm had its refrigerated vending machines—stocked with its pesto pastas bowls and other healthy options—located in the offices, college campuses and airports that were deserted during the pandemic. Sales collapsed at the 200-person company, which had been expanding.
Luke Saunders, the company’s 35-year-old CEO and founder, kept Farmer’s Fridge afloat by taking out a $2.6 million loan from the federal government’s Paycheck Protection Program. That helped the firm make a quick pivot to home delivery in its existing markets, including New York, Chicago and Philadelphia. It later expanded to more parts of the country and added new distribution partners like retail giant Target.
By May, the successful shift in strategy helped the company raise another $40 million from investors. That pushed its total funding from firms such as Cleveland Avenue, founded by former McDonald’s CEO Don Thompson, to about $75 million, according to Saunders. It added another $2 million PPP loan two months ago.
Bloomberg recently spoke with Saunders about how the Chicago-based startup survived, and what’s next.
The pandemic halted life in America—especially in city centers where Farmer’s Fridge thrived. The company was growing and looking at new markets. How did the firm withstand that initial hit?
We lost 85% of our revenue over a two-week period in March, after having our best month ever. We launched a home delivery website and program over a weekend.
On Friday, it didn’t exist, and on Monday, it did.
It turns out that selling via vending machine was almost the perfect response to Covid. It’s a contactless way to sell food, and you saw business at hospitals surge. How crucial was that?
That really kept us afloat in crisis mode. By May, we were back to 95% of pre-Covid revenue.
There’s been a lot of debate about how much people will work from home when Covid recedes. How are you preparing?
We launched a line of heatable plates that people can order for delivery. One is a sweet potato enchilada. We launched a falafel plate.
In some ways, the pandemic might have been a blessing in disguise because you’re expanding faster than expected.
We always planned to be everywhere, but the pandemic really accelerated that because we needed to survive. We’re now partnering with UPS to ship food to reach over 45 million people. We launched in Dunkin’ Donuts in January. We launched in Target—23 stores for the first set. If we do well, then we go to more.
Our mission is to be ubiquitous, so we would like to be in all of them.
Editor’s note: This interview has been edited and condensed.
©2021 Bloomberg L.P.