Isn’t it frustrating when you want to order food from a specific restaurant, but that restaurant doesn’t deliver?
Caviar, a delivery site now available in four cities, seeks to fix that problem. So if you’d like pizza from Motorino in New York, or duck à l’orange from Cafe des Amis in San Francisco, or a lobster roll from Luke’s Lobster in Washington, D.C., or a brisket sandwich from Pete’s Fremont Fire Pit in Seattle — yes, you can order it.
It may not be the next Facebook (FB). But Cameron and Tyler Winklevoss, the Harvard rowers turned Facebook litigators turned tech investors, see big promise.
Winklevoss Capital quietly led Caviar’s $2 million seed round last year, putting in $400,000 along with Andreessen Horowitz and others. Caviar’s New York team, which accounts for 10 of its 46 full-time employees, works out of Winklevoss Capital’s office space in Manhattan’s Flatiron district. The Caviar logo sits among the rest in the Winklevoss portfolio, right on the firm’s website, but their investment in the service was never widely reported.
Today, Caviar announced a Series A funding round of $15 million, most of it from investment firm Tiger Global Management (whose chief executive, Chase Coleman, appeared on Fortune‘s 40 Under 40 list in 2012). Out of that $15 million, $13 million is from Tiger. But in a unique twist, the Series A investors also include one of Caviar’s restaurant partners — the Mixt Greens restaurant group, which has nine salad-and-sandwich shops in California — one of its individual customers, and one of its drivers.
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Caviar contracts out its delivery drivers. It has close to 300 of them in the three cities where the service is live (San Francisco, New York, and Seattle). In Washington, D.C., Caviar launched this week with 20 drivers. The delivery fleet is what differentiates Caviar from better-known food delivery services like Seamless and GrubHub (which are both owned by GrubHub Inc. (GRUB), after a merger last summer). Because Caviar has its own drivers, it is able to bring you food from restaurants that do not normally deliver.
That detail is what Caviar CEO Jason Wang, who co-founded the service with four friends, believes will make it a Seamless and GrubHub killer. “Every restaurant we work with that has worked with Seamless prefers us,” Wang says. “I think we have the best customer service in the industry. We’ve been on the quiet side for a while, growing quite fast under the radar, and now that we have teams in a bunch of new cities, we’re ready to come out and say, ‘We want to take over this space.’”
It’s a tall order. Caviar is throwing its coming-out party only weeks after GrubHub Inc. went public, in an IPO that values it at nearly $3 billion. GrubHub is operational at nearly 30,000 restaurants in the U.S.; Caviar has partnered with just 230. (And as Fortune reported this month, all of these web-based delivery services face an even more entrenched competitor: the fax machine.) And, true to its name, Caviar is a relatively upmarket option that costs the customer $9.99 per order and the restaurant a fee typically around 18%, compared to GrubHub and Seamless, which are free to the customer but charge the restaurant a percentage fee (according to reports, 13.5%) for each order.
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With that premium angle, Caviar is carving out its own niche. It caters equally to individuals (who really want food from a particular restaurant) and to businesses (who need to order group lunches). The company’s revenue, which it says has reached eight figures, is split evenly between the two uses. Eighty percent of its orders each month are from repeat customers, it says. The company is hiring a marketing director, and Wang says that urban eaters can expect to see more advertising soon. Caviar’s expansion plan mirrors the localized, boots-on-the-ground method employed by similarly local services like Yelp (YELP) and Airbnb: It hires community managers in local markets who know the city and its restaurants.
Beecher’s Handmade Cheese, which has two locations in Seattle and one in New York, is one such restaurant. Claire Brower, the hostess at New York’s Flatiron shop, says Beecher’s receives orders through Caviar “just about every day” and that “it goes super smoothly.”
“The delivery guys who come in and take the food are super nice and punctual,” she says. “It’s easy and lovely and so far, we’re loving it.”
Beecher’s is the type of place that aligns with the premium image Caviar seeks, as are other New York partners such as Baohaus, Blue Ribbon and Frankie’s Spuntino. (Most of the restaurants Caviar has partnered with don’t do delivery because they are higher-end.) Caviar’s website is high-touch, and employs GPS tracking to show you the delivery’s progress, like Uber. (There is not yet any mobile app, though Wang says it is imminent and will be available on all platforms.) Its product is high-touch, too: When a restaurant partners with Caviar, the site sends a photographer to capture every single dish — a feature Wang believes is so important to differentiating Caviar that he claims the company will never stop doing it, even when rapid growth will make the practice difficult.
“GrubHub and Seamless are the juggernaut of the space. They’re our main competitors because everyone’s heard of them,” Wang says. “But if you look at most of the restaurants in the U.S., the vast majority do not deliver. So our market is bigger, in the end, than theirs is.”