Christina Klinepeter was on her way to the airport when she got the notification that Expo West, one of the world's largest natural food trade shows, was officially canceled. Scheduled to take place the first week of March, Expo West was set to bring together thousands of entrepreneurs and food industry veterans, and serve as a showcase for new product launches.
For Klinepeter, it would have been her first expo as CEO of Eat Purely, a Chicago-based healthy meal delivery startup she joined in 2019. Beyond the disappointment she felt in missing the trade show, the cancellation was her first inclination that the coronavirus was going to have a major impact on businesses in the U.S.
"That was really the first time our business realized how serious this was and how much of an impact it would have," Klinepeter said. "So many companies go there and launch their products at that event."
But as the COVID-19 crisis cripples much of the restaurant industry, meal delivery startups like Eat Purely appear uniquely positioned to thrive as families---who are juggling at-home work, childcare, home schooling and other household duties---look for easier alternatives to cooking.
Klinepeter said Eat Purely, which was founded in 2015 and delivers chef-made meals to Chicagoans on demand, has seen an "increase across the board in customer demand," and is expanding its coverage areas to the northern and western suburbs, while also expanding its menu options.
"We're meeting the demands of these parents that are working from home now," she said. "Everyone is dealing with a new normal."
That new normal has also meant an uptick in business for Chicago startup Tovala, which makes a countertop smart oven and offers an accompanying meal delivery service. CEO David Rabie said Tovala has seen a spike in customer volume and new customers purchasing ovens and meal delivery, as well as customers who paused delivery and are now returning to the service.
"We were already growing really fast, and I would say everything that's happening with shelter-in-place is just accelerating it to another degree---really across every type of customer," Rabie said. "On the new customer front, our growth has been pretty tremendous."
Tovala has hired around 15 people in the last month, which include recently laid off restaurant workers in Chicago, Rabie said. Tovala also hired an epidemiologist to come in and make recommendations for how the company can make safe working conditions for its kitchen staff, and it hired a nurse to take employees' temperatures when they arrive to work.
Chicago-based meal kit company Home Chef says it too has seen a boost in business since the start of the coronavirus outbreak.
"We've been incredibly busy," CFO Rich DeNardis said. "There was a pretty noticeable uptick right around when some of the ideas around lock downs were initially floated ... We saw a pretty big uptick in both our in-store business and online business."
DeNardis said Home Chef, which was acquired by grocery chain Kroger in 2018 for $200 million, saw an initial spike in shoppers who were buying bulk orders in store. That has since come back down to "normal levels," he said, but online orders continue to be higher than usual.
Home Chef operates somewhat differently than Eat Purely and Tovala in that customers receive all the ingredients to make their meals, but still need to do the cooking. That option still proves efficient for users who'd rather avoid the grocery store or the extra steps involved with online grocery ordering.
Demand has been so high, DeNardis said, that Home Chef has spent less on advertising to new customers so that it can meet demand from its current users
"We’ve had to throttle back a lot of our marketing investment in order to make sure we can fulfill for our existing customers first and foremost," he said.
The question for meal delivery startups will be how consumer demand continues after stay-at-home orders are lifted and restaurants are back at full capacity. And if the economy gets worse and millions more are out of work, will consumers be willing to spend extra for the convenience of meal delivery?
But for now, meal delivery startups are just riding the wave of new users and a revenue stream that hasn't come to a screeching halt as it has for many companies in the food business.
"Every company in this industry is growing super fast right now," Rabie said.
