Positive Food Co., which provides freshly packaged salads, ready meals and vegan overnight oats, raised $7 million after the $34 Billion Fresh Prepared Food Market.
In 2018, co-founders Schuyler Deerman and James Chan began selling healthy meals at WeWork Los Angeles offices from giant Yeti coolers, which line the kitchens at lunchtime.
“At the time, we were at 15 locations, many where you couldn’t walk to lunch, so you had to order food on or drive off campus,” Deerman told londonbusinessblog.com. “On the days we did the ‘Positive Popups’, people loved it. We gained a sort of cult status because we ate healthy meals at an affordable price.”
The pair ended up doing more than 100 pop-ups before setting up wholesale accounts at local coffee shops where it sold meals, including the Vegan Kale Hemp Caesar; the roasted beet, chicken, and goat cheese salad; and the Vegan Peanut Butter Overnight Oats. Then the COVID pandemic hit.
At the time, Positive Food ate in 70 coffee shops in Los Angeles. Deerman had looked at other meal delivery companies, such as Munchery and Sprig, which closed years earlier and had gotten creative with the company’s business model as a result. Now he watched Positive Food’s orders plummet to zero within two days.
“It was devastating and it was like standing there helpless,” he added.
He and Chan had to make some tough decisions, including streamlining much of the business and costs, and sadly laying off staff.
However, there was a silver lining to Positive Food. In January 2020, the company was in talks with Whole Foods about launching a pilot of its meals in some stores. It was also in the midst of moving to a new, larger facility to manage that new business.
In March, Positive Food was just a few weeks shy of launching that pilot before the entire world went into lockdown. The pilot fell through, and although the company had to wait another nine months, it eventually ended up with Whole Foods.
“What saved us was talking to Whole Foods,” Deerman said. “Our business went to zero and then we moved into a massive new facility. I remember thinking this was either the smartest decision ever or one that will end us. It turned out to be the right one.”
Not having a lot of business, Deerman and Chan were able to completely revamp their business, including updating the menu and packaging and going through approvals from the U.S. Department of Agriculture. These are some of the things Deerman doesn’t think would have been possible anytime soon if their original operations were still in full force.
During all those renewals, they made the decision not to go back to the coffee shop business and instead focus on Whole Foods. It has since expanded its locations with them and is now in Bristol Farms locations, including 86 throughout California.
Today, the company announced $7 million in new funding from investors including BlueYard Capital, Western Tech, Y Combinator, Gaingels and a group of entrepreneurs including Thrive Market CEO Nick Green, Instacart co-founder Max Mullen, Fitbit CEO James Park, Docker co-founder Solomon Hykes, Faire CTO Marcelo Cortes, Season CEO Josh Hix, Exactuals CEO Mike Hurst, Foursquare co-founder Naveen Selvadurai, WordPress co-founder Matt Mullenweg, Timehop co-founder Jonathan Wegener and Behance founder Scott Belsky.
Much of the demand, lately, for freshly prepared food has come from consumers who are switching to healthier lifestyles, which has prompted even supermarkets to offer more ready-to-eat meals to cater to consumers who come by quickly to pick up food.
Positive Food’s vertical integration technology is mainly done in-house, including production and a cold chain logistics network. This allows the company to deliver products directly from its kitchens to stores, which Deerman says is different from other consumer packaged goods companies that rely on third parties for production and distribution.
The company also has its own “Monte Carlo simulation” to plug in point-of-sale data to manage inventory levels in stores and reduce food waste.
The new funding will be used to expand logistics and new channels beyond Whole Foods that Deerman was unable to disclose at this time. He said the company grew double-digit month over month, had zero churn and produced five times more food this year compared to the same period in 2021.
“We will expand into more channels and launch in new stores, get more engagement, develop more products and pursue new opportunities,” Deerman said.