Hungryroot, a subscription-based online grocer that touts a proprietary technology that builds customized grocery shopping lists on behalf of its customers, has gathered $40 million in new financing.
New York-based Hungryroot said it intends to use the new financing to increase its assortment, grow its team, invest in technology and scale its marketing. The new financing values the company at $750 million, according to Bloomberg.
Founded as a better-for-you foods brand in 2016, Hungryroot has evolved into an AI-powered grocer that is something of a hybrid of a meal-kit company and a specialty online grocer: Its subscribers get autogenerated shopping lists and accompanying recipes on weekly delivery, but assortments are generally among better-for-you branded goods, and shoppers have options to buy snacks and sweets as part of their plans. Hungryroot said its recommendations meet shoppers' individual needs and preferences, and tailors them over time. This reduces consumers’ weekly food shopping from hours to minutes, officials say.
“The days of walking into a giant grocery store with an empty cart and browsing through tens of thousands of items will soon be a routine of the past,” founder and CEO Ben McKean said in a release. “Hungryroot does the work for customers so they don’t have to.”
“For most people, grocery shopping is a time-consuming, tedious experience. Hungryroot has created a technology platform made for modern lifestyles that delivers a personalized, AI-powered consumer experience that traditional grocers simply cannot,” added Chris Roberts, a partner with L Catterton Growth Fund, which led the financing round. “We believe Hungryroot is the first online grocer of its kind and have been impressed with its incredibly capital-efficient e-commerce model, which has already reached profitability. We’re thrilled to partner with and support Hungryroot as they continue to reinvent the grocery category and build upon the company’s strong momentum.”
Hungryroot builds its initial recommendations based on customer responses to an onboarding quiz detailing preferences, including frequency, household size, dietary preferences and more, and adjusts orders based on continual feedback through its proprietary algorithm. Its smallest plan (three meals of two servings each) starts at $59.54 weekly, plus a delivery charge. Customers receive orders on scheduled deliveries.
“No two deliveries are the same,” McKean said. “Every delivery is curated for that individual customer and their family. And while customers have the option to edit their order or change their preferences at any time, we’re finding that our predictive technology is so accurate, customers trust us to select the majority of their weekly groceries for them. The end result is that customers save time and headspace, and achieve their food goals, including losing weight, saving money or trying new foods.”
Hungryroot said it has been profitable since the beginning of 2020 and is on track to achieve $175 million of revenue this year. The company is forecasting more than $300 million of revenue in 2022. The company said its average customer spends 64% more on Hungryroot in their first five months than on other leading grocery and food delivery services.