Partnerships have been a successful formula for Territory Foods. The prepared meal company has established a network of chefs and delivery partners to grow into an established player in the direct-to-consumer market.
Based near Washington, D.C., Territory Foods has taken a decentralized approach to food preparation and delivery. Unlike many companies in direct-to-consumer food delivery, Territory has operations in several regions across the country. It has regional hubs in Southern California, Northern California, New York City and Washington, D.C., and those service around 30 different regional markets.
“We do not operate out of one kitchen,” said Dani DeCesare, marketing partnership manager at Territory Foods. “We’re not churning out the same meals in one central location. What we do is, when we operate out of a regional market, take our D.C. regional market, all of our shops operate out of that physical locality. So all of our D.C. chefs support that menu. Whereas in California, we have a completely different menu.”
Meals are shipped fresh and heated in the microwave or stovetop, depending on the particular dish. The focus is on healthy meals for active people. Customers can choose from food styles including paleo and Whole 30, for example. Historically, deliveries have been done through partnerships, often with local fitness gyms and offices. A large number of meals are delivered to the location, and customers pick them up.
Can you cook for me?
Territory Foods was started with a simple question. Founder Patrick Smith asked a friend who was a chef to cook him meals. He was a busy professional and enjoyed fitness. He did not have time to cook healthy meals.
“She’s like, ‘Find ten more people and you’ve got yourself a deal,’” DeCesare said.
Smith recruited several other friends, and the home-cooked meal request turned into a business idea. The group developed a proof of concept in 2001 and has raised several rounds of funding. The original plan was to grow through partnerships with local chefs. They started with the original chef and over time grew a network of other chefs. Many are well known in their communities and add authenticity and a sense of community to the brand.
Meals are not shipped through the mail but delivered by in-house partners that follow established routes twice a week. Most of the time, the food is dropped off at a central location. The model helped the company grow and raise venture funding but was put to the test last year during the height of the COVID-19 pandemic. Within a matter of days last year, gyms, offices and other delivery locations closed, and Territory had to adapt quickly
“It happened like overnight,” DeCesare said. “Instantly, gyms cannot open. We can’t deliver your food. So, we had to figure it out. We had to operate almost exclusively in a direct-to-consumer model.”
As the country has started to open back up, Territory is talking with its customers and trying to decide if direct-to-consumer is better or whether it should return to the more centralized delivery model. DeCesare said some customers have expressed wanting to return to the gym and picking up their meals that way, but others are not ready to return to previous routines.
“We’ve spoken to clients, especially people who might be a little hesitant to get back into the world,” DeCesare said. “They want food delivered directly to their homes, very safely, with no contact. There’s a lot more for us to figure out, so we can maintain that safety and integrity behind how we’re getting the food to our customers.”
Finding chef partners
In April, Territory announced a $22 million round of funding. U.S. Venture Partners led the round, but it also included Upfront Ventures, Lewis & Clark Ventures, DF Enterprises, S2G Ventures, Gaingels, Middleland Capital, Finistere Ventures and Rethink Food Capital. The round of funding brought Territory’s total funds raised to $44 million.
In order to expand, Territory has to find new chef partners. It works with notable restaurants like Gracias Madre in Los Angeles and Founding Farmers in the Northeast, as well as with an assortment of independent chefs. It would like to find similar collaborations in other markets.
One way it can expand the network of chefs is a pop-style, where a well-known chef does a special menu for Territory, and the customers can experience the food directly from a chef who is well-known in their community. Some of these can turn into longer-term relationships while others are for a limited time.
Another way for Territory to expand the network is approaching chefs about diversifying revenue. Restaurants, catering companies and other food businesses are looking for ways to diversify revenue, and Territory provides that opportunity. Chefs function as independent contractors so there is enough flexibility to continue to operate their primary businesses.
“This is often a second or third line of revenue for them,” DeCesare. “For lots of them, they have a restaurant or have a catering business or have some sort of culinary business on the side. So, Territory is just an additional stream of business for them.”
The chefs are involved in both menu development and production. Territory has culinary managers who oversee production, but the chef works with the in-house culinary teams to build and package the meals.
“The chefs are essentially independent contractors, but they do work very closely with our internal team,” DeCesare said.
Territory receives many benefits from working with the local chefs. Customers in one area of the country will get completely different meals than customers in other areas of the country. The chefs bring their own talents and backgrounds to the meals. It is something that makes Territory different from other meal delivery services.
DeCesare was honest about the current state of the direct-to-consumer marketplace. People’s buying patterns changed during the lockdown and pandemic, but it is unclear how many of those patterns were permanent. Luckily, Territory was deemed an essential business and was able to continue to make and ship food through 2020.
“I think there are so many unanswered questions about this and a number of different industries, but very specifically about food and dining out,” Decare said. “How are our customers and the rest of the world going to get their food? Will they do their grocery shopping, or just simply order a meal from something like DoorDash, or are they going to pick it up, or cook on their own? There are just a lot of unanswered questions about what that looks like in the future.”
DeCesare believes innovation and growing new customers are a priority. That means recruiting more chefs and expanding into new markets.
“It is a very, very crowded, competitive space,” DeCesare said. “And that, for the consumer, obviously, can be overwhelming, but it can also be exciting. They have so many different choices to choose from.