Although grocery shopping is the world’s largest retail category — valued at nearly $12 billion — it is still in the early stages of its digital transformation. Most people still get their groceries by going to a brick-and-mortar store and browsing the aisles in person.
NYC-based Hungryroot is looking to change that, though, with its “AI-powered personalized grocery service.” The company announced Friday it closed on a $40 million Series C round led by private equity firm L Catterton. The fresh funding will be used to “help propel grocery shopping into the twenty-first century.”
“Hungryroot is pioneering an entirely new way to grocery shop,” founder and CEO Ben McKean said in a statement. “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.”
Here’s how Hungryroot works: Users fill out a questionnaire when they sign up, and then the platform uses machine learning and predictive modeling to build a digital shopping cart for them automatically. It also provides recipes, meal planning and nutritional information. Similar to a meal kit service, customers get their food delivered weekly. The items are automatically loaded into their carts, but users can edit, customize and cancel deliveries themselves.
In the end, McKean says Hungryroot makes the average grocery shopping experience go from something that takes “two to three hours a week, to just two to three minutes.”
“Hungryroot does the work for customers so they don’t have to,” McKean continued in a statement. “The end result is that customers save time and headspace, and achieve their food goals, including losing weight, saving money or trying new foods.”
Like many other similar startups, Hungryroot is benefiting from a massive shift to e-commerce that has been sped up by the pandemic. The company says it has been profitable since the beginning of 2020 and is on track to earn $175 million in revenue this year and more than $300 million in 2022.
Meanwhile, other companies like Good Eggs, Misfits Market and Instacart have all announced massive funding rounds in the last year to keep up with the surge of shoppers moving their grocery shopping online. Just last week JOKR, an on-demand delivery startup launched out of Berlin, Germany, moved their headquarters to New York City, claiming its data-driven approach is ushering in “the future of how shopping is going to happen” going forward.
As for Hungryroot, Chris Roberts, a partner at L Catterton Growth Fund, says he believes the company’s model has the potential to “reinvent” grocery shopping long term.
“Hungryroot has created a technology platform made for modern lifestyles that delivers a personalized, AI-powered consumer experience that traditional grocers simply cannot,” Roberts said in a statement. “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.”
To keep up the momentum, Hungryroot says it will use this fresh funding to “substantially” increase its grocery offerings and recipes, further invest in automation technology, ramp up its marketing efforts, and grow its team, with dozens of open tech positions available now.
