Saltalk, a virtual kitchen and e-commerce platform, has closed on $8 million in Series A funding to further develop its range of authentic cuisine made by both restaurateurs and home cooks, food supply and logistics resources.
Founder and CEO Fred Ming, a former software engineer, got the idea for Saltalk a few years after he moved out of China. He and his wife went out to dinner at a restaurant serving a meal that reminded Ming’s wife of home.
“My wife told me the meal made her feel homesick, which gave me an idea to tackle it by building a platform that would have chefs from everywhere come and cook for those away from home,” he told TechCrunch.
From that plan became Saltalk, which he started in 2017. The company’s name is a combination of “salt,” a spice important for cooking, and “modern,” which he said is “essential to our lives.”
Four years later, the company’s 8,000-square-foot virtual kitchen began making orders from Saltalk’s website, which has more than 200 dishes.
Virtual kitchens do not have dining facilities or associated costs, which usually means that they generate higher profit margins. The industry is hot right now and calls it dark kitchen, cloud kitchen or ghost kitchen, and involves having a centrally located space where chefs prepare and deliver their culinary creations.
The global virtual kitchen market was valued at just over $43 billion in 2019 and is expected to grow to $71.4 billion by 2030, according to Statista figures. This compares to a trillion dollar food industry.
As the food delivery industry has grown over the past couple of years, these types of kitchens have also gained attention because we have eaten more from home during the pandemic. Not only has it provided restaurants a way to have online ordering capabilities without changing their own kitchens, but it has also in some ways enabled them to experiment with small batch cooking for some of their most popular menu items. Additionally, when restaurants were laying off employees, they would provide an outlet for chefs to supplement their income while creating their menus.
Investors weren’t far behind, pumping about $545 million in project-backed financing into virtual kitchens in the U.S. alone in 2020, according to Food On Demand. TechCrunch has been along the way, recently reporting on The Food Lab in Egypt and Manila-based MadEats.
At Saltalk in the South Bay, 25 chefs work in the kitchen. Here’s how it works: There are two paths – one is a kitchen platform for chefs where they can start their own business for around $30,000. Saltalk charges a range of fees for space, licensing, and processing, and takes a 25% commission.
Meng says that many chefs are able to “equal” after working with Saltlic for 3 months. The company gives them everything they need to set up the business, including order management, inventory, and bulk purchasing capabilities.
“More people are spending time in work and social life, and they have no time to cook,” Meng said. “At the same time, current food service relies on traditional restaurants, which often have exorbitant prices for food. We needed new infrastructure to improve this, and Saltalk service like Shopify, where our success depends on the success of the chef.”
The flip side is the e-commerce platform where the company acts as a one-stop shop for many different types of cuisine, from Japanese to Indian to burgers and pizza. Meng said customers can order up to two weeks in advance, and delivery comes within 15 minutes.
“We have our own routing plan system so that our drivers can make four stops simultaneously, which saves logistics costs, which is why we are able to not charge delivery fees from customers,” he added.
Ming said nearly 100 businesses are using the service, which enables pre-ordering of group meals and on-time delivery through proprietary route planning technology. Customers do not pay any shipping or service fees, nor do they have to tip.
Ming said the company’s technology went through a strategic upgrade about 8 months ago, going from being just a business-to-business process to adding consumers, and since then, Saltalc has grown over fivefold.
The Series A funding, led by Foothill Ventures, comes at a time when the company is accelerating its growth. Including the new investment, the company has raised $10 million since 2017.
Saltock plans new 15,000-square-foot virtual kitchens in East Bay and Peninsular to support additional brands. Ming expects 15 of these kitchens to be distributed across Silicon Valley by the end of 2024.
In addition to the new kitchens, Meng believes the company will grow by about $2 million per month over the next year, giving Saltalc a chance to double its workforce.
“In the next two or three years, we plan to expand all over California,” Meng said.