Goldbelly Raises $100 Million During Pandemic-Driven Boom

on May18
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When the pandemic started last spring, Di Fara, one of New York City’s storied pizza joints, had the same question as countless restaurants nationwide: How would it make any money when customers weren’t allowed through its doors?

One answer quickly emerged: Ship frozen (and slightly smaller) versions of its classic pies across the country in partnership with the eight-year-old e-commerce platform Goldbelly.

Sales picked up so much that Di Fara converted its two-year-old second location, in a food hall, to essentially be a Goldbelly production line. Margaret Mieles, the daughter of Di Fara’s founder, who had already struck an agreement with Goldbelly in December 2019, credits the platform with helping the pizzeria avoid layoffs.

It isn’t just iconic pizzerias that have relied on Goldbelly to survive lockdown orders. More than 400 of the 850 restaurants that sell food on Goldbelly’s platform have joined since the start of the pandemic, an influx that the company says has more than quadrupled sales over the past 12 months.

On the back of that boon, Goldbelly plans to announce this week that it has raised $100 million in new funding.

The question now is whether the trends that Goldbelly and its new investors plan to capitalize on will outlast the pandemic, or whether a surge in at-home dining will abate as more people feel comfortable eating in restaurants again.

Goldbelly, which was founded in San Francisco in 2013, began by offering foods like deep-dish pizza from Lou Malnati’s in Chicago and Texas-style brisket from the Salt Lick in Austin. What it offers restaurants is largely logistics: providing the boxes and cold packs for shipping orders, and helping restaurants ship directly from their premises. In return, Goldbelly charges a fee, leading to premium prices. Shipping two Classic Neapolitan Pizzas from Di Fara, for example, costs $89.

“We’re the first platform for food e-commerce, national e-commerce for restaurants and food-makers,” Joe Ariel, Goldbelly’s co-founder and chief executive, said in an interview. “We’re basically opening up a 3,000-mile radius for restaurants.”

While prominent chefs signed up early on, others were more reluctant. Justin Kennedy, the head chef at Parkway Bakery & Tavern in New Orleans, recalled dodging calls from Goldbelly representatives pitching the platform for more than a year, before relenting in September 2019. Even then, he said in an interview, he would ship perhaps 15 boxes in any given week.

Then pandemic lockdowns devastated the restaurant industry. More than 110,000 restaurants nationwide had permanently closed by December, the National Restaurant Association estimated, and a survey it conducted found that sales in October had dropped from a year earlier for 87 percent of the full-service survivors.

Mr. Kennedy shut Parkway in March 2020. When he restarted the business several months later, he began by shipping its signature po’ boy sandwiches through Goldbelly. At the height of the pandemic, Parkway shipped around 200 orders a week, doing roughly the same business that it had done prepandemic — only now its customers included people far from New Orleans.

“We got customers from Alaska calling us, asking us what to do for leftovers,” Mr. Kennedy said. “These are customers we would never have had.”

Some restaurants seeking alternate sources of revenue during the pandemic turned to local delivery services; total orders on DoorDash’s platform in 2020, for instance, jumped roughly threefold from the previous year.

But like Mr. Kennedy, many also turned to Goldbelly to ship their pork shoulder dinners, bagel brunches and huckleberry cheesecakes to locations as far away as Hawaii. (Goldbelly doesn’t consider services like DoorDash to be rivals, since its food generally takes at least a day to arrive and requires cooking).

Mr. Ariel recalled that early in the pandemic, what was then a 40-person staff pulled 18-hour days to cope with a surge in demand. The average order size has grown roughly 20 percent over the past year, and Goldbelly’s work force has swelled to more than 130 people, including a new chief operating officer and chief financial officer.

In the meantime, Goldbelly has changed how some restaurateurs think of their businesses. Danny Meyer, the restaurateur behind Shake Shack and Union Square Cafe and an existing investor in the company, said in an interview that his Gramercy Tavern had added items like a grilled eggplant parm — something that previously would never have been served at the Michelin-starred restaurant — in part because it would do well on Goldbelly.

Spectrum Equity, the investment firm that is leading the new financing round, reached out to Goldbelly last year as it saw how the company was able to connect local restaurants with a national audience.

“The pandemic has really accelerated trends that were already happening,” said Pete Jensen, a managing director at Spectrum, adding that Goldbelly’s growth has been “extraordinary.”

Mr. Ariel said the fresh capital — raised at an undisclosed valuation — would help Goldbelly expand further, including by hiring more staff and augmenting new offerings like livestreamed cooking classes with celebrity chefs, including Marcus Samuelsson and Daniel Boulud. The company is looking to have more than 1,000 restaurants on its platform by year-end.

The goal, Mr. Ariel said, is to make Goldbelly the biggest platform on which restaurants make money outside of in-person dining, while expanding their brands nationally.

If Mr. Ariel’s pitch sounds like the precursor to eventually pursuing a public market listing, he does not deny it. “In the future, we do want to be a public company,” he said. “We think we’re just at the beginning of the food e-commerce revolution.”

The big question is whether the company has enjoyed a temporary bounce or cracked open a permanent new level of business. Even Mr. Ariel concedes that last year’s growth rate “is not going to happen forever.” But there are some promising signs that eating restaurant-prepared meals at home is not going out of style. DoorDash, for instance, tripled its revenue last quarter even as coronavirus vaccinations became widespread.

There is also the risk that Goldbelly’s success may draw other rivals. While Mr. Ariel played down the prospect of competition — his company’s name is being used as a verb, he said — some chefs did not write that off.

“We’ll cook where the customers are at,” said Mr. Samuelsson, whose restaurant Streetbird is on the Goldbelly platform.

But others, like Ms. Mieles of Di Fara, said they remained committed to the service. “I think, honestly, Goldbelly is here to stay,” she said.

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