You can’t beat the convenience of ready-to-prep foodstuff delivered right to your doorstep, which is why analysts at Hexa Research predict the global meal kit delivery segment will reach $8.94 billion by 2025 (up 17.15% from 2017). Rockville, Maryland-based firm Packaged Facts reports that kit sales hit around $3.1 billion last year, and it’s anticipating double-digit sales gains until 2023. That’s not to suggest it’s entirely smooth sailing in the direct-to-consumer food kit space — Blue Apron last year cut its workforce by 4%, and Chef’d abruptly shuttered its meal kit business due to financial constraints — but fortunes remain to be made.
That’s likely why San Francisco-based Sun Basket, which advertises itself as a “healthy” cooking service highlighting organic ingredients, managed to nab $30 million in fresh venture capital. It today announced the closure of its series E round, which was led by PivotNorth Capital and which saw Sapphire Ventures, August Capital, Founders Circle, food giant Unilever’s Unilever Ventures, Baseline Ventures, Relevance Capital, Accolade Partners, and Correlation Ventures participate.
The funding brings Sun Basket’s total raised to $125 million and comes over a year after it raised $57.9 million in capital and debt, the bulk of which went toward new distribution centers (including a 190,000-square-foot New Jersey warehouse) in the Midwest and East Coast. CEO Adam Zbar says the $30 million will underwrite the rollout of new breakfast, lunch, and dinner menu items and an “AI-powered” digital user experience, adding that it’ll also enable Sun Basket to target strategic partnerships that “drive user acquisition and brand awareness.”
“We’re thrilled to have the strong support of our investors who share our vision for building the leading personalized healthy eating platform,” said Zbar. “Food is a $1 trillion market ripe for online disruption, and Sun Basket will continue to innovate, focusing on our customers’ top three needs: health, ease, and personalization.”
The popularity of Sun Basket — which was founded in 2014 by Zbar, who previously headed social analytics platform Tap11, and former Slanted Door head chef Justine Kelly — might be partially attributed to its sustainable, tailored approach to meal kit customization and delivery. It’s one of the few meal kit companies that’s certified organic by the USDA, and Sun Basket says it only uses wild-caught seafood that’s recommended as “Best Choice” or “Good Alternative” by the Monterey Bay Aquarium Seafood Watch. Moreover, in the pursuit of zero-waste packaging, the company developed a host of novel materials including recyclable insulation liners, ice packs made from GMO cotton and water, and fully compostable ingredient bags.
Sun Basket late last year partnered with the American Diabetes Association to introduce diabetes-friendly recipes, and in October, the American Heart Association awarded the company’s meal kits its Heart-Check certification, indicating that they comply with five coronary heart disease health claims in six food categories. More recently, in November, Sun Basket announced that it was working with the American Cancer Society to create meals that meet that organization’s guidelines.
As with other meal kit services, Sun Basket customers choose meals — up to 18 each week depending on their plan, with options catering to Mediterranean, paleo, gluten-free, vegetarian, and pescatarian diets — and receive pre-measured ingredients and recipes in an insulated box. Pricing starts at $71.94 for two people and three recipes a week from Sun Basket’s Classic Menu, or $87.92 for four people and two recipes per week from the Family Menu. (The Family Menu offers a slightly more limited selection of meals.) Sun Basket currently ships to “most” ZIP codes in the U.S., excluding Arkansas, Hawaii, Montana, and parts of New Hampshire.
Sun Basket might be among the foremost “healthy” meal kit delivery services, but it faces competition from rivals like Blue Apron and Green Chef, which two years ago began offering gluten-free meal kits (Green Chef has keto and vegan kits, too). That’s not to mention Albertsons-owned Plated, which launched paleo meals last year; Martha Stewart’s Marley Spoon, which features paleo, gluten-free, and vegetarian options on its menus; plant-based Purple Carrot; and Hello Fresh, Home Chef, Peach Dish, and Gobble, all of which deliver vegetarian kits.
Investors like PivotNorth Capital founder and general partner Tim Connors aren’t concerned, though. He notes that Sun Basket’s business grew over the past three years at 80% compound annual growth rate, and that the company has some of the best unit economics in the meal kit delivery space. As of January 2018, net revenue was growing 280 percent year-on-year.
“Adam has built a platform which personalizes and curates meals to optimize a healthy lifestyle for people with a wide variety of dietary preferences,” said Connors. “With the incredibly large and influential millennial population increasingly prioritizing healthy meals and snacks, we believe they have the ability to build a category-defining company that has huge growth potential and is profitable.”