Byte Foods Acquires Smart Fridge Kiosk Company Pantry

Byte Foods, a service delivering meals to businesses in San Francisco, has acquired Pantry, the manufacturer of smart fridge kiosks in an all-share deal.

Pantry’s grab-and-go machines use Point of Sale (POS) technology with Radio Frequency ID (RFID) tracking and billing, and the kiosks are web-enabled, making it easy to check on sales and ensure the machines are restocked appropriately to prevent waste.

Byte, which was already a client of Pantry, focuses on supplying employees with healthy food options compared to the usual vending machine options of potato chips and candy bars.

Byte offers food from well-known brands in the Bay Area such as Mixt Greens, Blue Bottle, Urban Remedy, and Project Juice.

“Businesses want to provide good food for their employees, especially when they’re competing for talent from companies that offer free food to their employees like Google, but they can’t always afford to,” said Lee Mokri, co-founder of Byte. With Byte, employers pay a monthly fee of $500 to house the vending machines, and they can also subsidize the cost of the food in the machines; one client does so by 50%, according to Mokri.

Byte counts Chevron, Autodesk, KQED, CBS, UCSF, Sephora and SolarCity as its client, and they are getting good reviews.

“A lot of our customers call us the Whole Foods in the workplace and 90% of those surveyed said they can now making healthier eating choices during the work day.”

Because of this, some employers can claim back the cost of the vending machines through their insurance companies which often offer wellness provisions to policyholders.

Byte was founded by a husband and wife — Lee and Megan Mokri — who started by running a meal delivery service for businesses, but the challenging unit economics of the food e-commerce segment, which has been an increasing number of players in this sector shut down, soon became clear to them.

“The economics of vending machines made a lot more sense than single meal deliveries,” said Lee Mokri. “This way we can deliver 100 products at a time instead of just one, and we deliver 24 hours a day.”

As part of the acquisition, Pantry’s founders Art Tkachenko, Alex Yancher, and Tony Chen will stay with the company along with some other staff, although CEO Russ Cohn will not.

“The founders and investors in Pantry decided to take equity in Byte as they found our growth potential attractive,” said Mokri. “We also took on some debt.”

Pantry’s investors included Cowboy Ventures, Lemnos Labs, 500 Startups, Arsenal Venture Partners, Menlo Ventures, Scrum Ventures, Queensbridge Venture Partners, and a group of angel investors. It had raised $2.3 million in seed capital since launching in 2012.

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