First Bite—a startup led by ex-Impossible Foods executive Reed McCord—has emerged from stealth after raising a $2 million round led by Bread & Butter Ventures to expand a data platform helping food manufacturers maximize foodservice sales.
The round, supported by Leadout Capital and Pathbreaker Ventures, will help McCord and his team address a problem he identified early on at Impossible Foods: a lack of data and transparency in the foodservice channel.
“Selling into foodservice is critical for the growth of any food brand, but inefficient systems make it difficult for manufacturers to execute targeted strategies,” said McCord. “First Bite gives our customers the data foundation, automation and tools they need to drive growth in this massive channel. It’s the product I wish existed when we were building the foodservice business at Impossible Foods.”
“Reed and team really understand the pain point of food manufacturers building in the foodservice industry – it’s an amazing founder-market-fit. They are building the right products to bring relationships, efficiency and performance to an antiquated system.” Brett Brohl, managing partner, Bread & Butter Ventures
Shining a light into the foodservice black box
A software as a service (SaaS) platform, First Bite uses online menus, reviews, social media data, location data, demographic data, contact data, and other publicly available information to provide market data on every restaurant location in the country; it is now expanding coverage to retail and non-commercial segments such as schools and hospitals.
Manufacturers can use this data to enable highly targeted sales, marketing and account management in a channel that can sometimes seem like a black box, McCord told AgFunderNews.
As vendors supplying the foodservice channel typically sell to distributors, they often have very little visibility into where their products are going and how they are performing, he observed.
“As we started scaling at Impossible [which initially targeted the foodservice industry], I was exposed to some of the inefficiencies in the market. You’re selling to distributors who basically share zero data on who they sell to and how much they sell it for, as they own those relationships [with end customers].
“And from the distributor side, it’s not really surprising as they have tens of thousands of product lines so they are not going to spend time with you helping you grow individual SKUs. If you want to do that, you need to reach out and try to build direct relationships with the end customer.”
Market intelligence, forecasting, CRM
He added: “If you’re in software, you can measure things like customer acquisition costs, lifetime value, and so on, but if you’re supplying the foodservice channel, you often don’t have that visibility, because you’re not transacting directly [with the end customer].
“Distributors have a really hard job that I have no interest in competing with, which is picking up hundreds of thousands of items and dropping them off, but it does create an inefficient marketplace as there’s this information asymmetry. There’s also the costs for manufacturers trying to identify target customers, build direct relationships, and then complete repetitive tasks that we can help them with.”
Using First Bite, a paté supplier—for example—can identify foodservice outlets that include paté on their menus within a given location, or nationwide, at the click of a button, said McCord.
“Our forecasting tool can then predict the revenue opportunity should these locations buy your paté based on predicted traffic. We also provide the contact information for the culinary decision makers at those locations and we can help manufacturers track those relationships all the way through close and post flows, in the same way that a CRM (customer relationship management) system works.”
Manufacturers that already use CRM systems for managing relationships, forecasting, and prospecting, can integrate data from the First Bite platform with these existing systems, he noted. “This can save tons of time.”
As First Bite’s data is constantly being updated, manufacturers with branded products that pick up new business can also monitor the First Bite platform to see if their products actually show up on restaurant menus as a new item, and conversely they can also see if their brands drop off menus, he added.
“Thanks to First Bite, we’ve been able to efficiently identify and concentrate on ideal partners, streamlining our team’s focus and accelerating our foodservice expansion.” Kimberlie Le, cofounder and CEO, Prime Roots
The business model
So how does First Bite make money?
According to McCord: ‘We’re charging a SaaS subscription fee for access to the data and for the tools on top. We’re in the mode today where we want people to use everything that we build, but with this fundraise we will be mapping more of the market and building new relationship management and negotiation workflow tools that might end up being add ons [for an additional charge].”
He added: “There are CRM tools out there like Salesforce, which are horizontal tools [designed to work across multiple industries], whereas what we’re building is specifically designed to tackle pain points for manufacturers supplying the foodservice channel.
“We’ve talked to hundreds of food manufacturers and it’s very frequent to find a company with tens of millions of dollars in foodservice revenue, that has either implemented a horizontal CRM that they aren’t using, or they hate using. Whereas we’ve built something customized for food.
“The other benefit of First Bite for food manufacturers is that all of your potential customers are already in our system, so there’s no data entry. You don’t have to manually add the address of all the locations that might buy your paté. It feels good to use because it’s simple and it’s built for the specific workflows of food.”
The target customer
As for the sweet spot for First Bite, he said, “Our target company is anyone who wants to take a hands-on approach to driving growth in foodservice. So typically it might have at least one salesperson focused on foodservice that is trying to engage with restaurants or it has brokers that it is managing.
“We play in the general food product space, but I’d say there’s extra power when you have a branded food product where there may be opportunities for collaboration that come from having a direct relationship with a restaurant.”
While in many cases you will still be going through a distributor to get your product to the end customer, he said, “once you’ve made that direct relationship, you can maintain it.”
Funding
The startup—founded in mid-2022—“bootstrapped for the first year,” said McCord, who uses artificial intelligence and machine learning to handle the vast amounts of data the platform uses but is not trying to pitch First Bite as an AI startup. “We’ve been really scrappy and invested in building the product with a really tight feedback loop; hearing feedback from early customers and then continuing to iterate.”
He added: “We spent about four months building the platform from around late October 2022, and we signed our first paying customer in late February 2023. It wasn’t perfect but it was good enough that we could immediately deliver some value.
“At that point, we rolled up our sleeves and did everything we could to keep the first wave of customers happy while adding to the team and adding to the product. And then last fall we started adding another wave of customers and fundraising, which brings us to where we are today.”
He added: “Our largest client is a $100 million+ revenue business, but we also have some very small clients, so we have a wide range. I think our sweet spot right now is mid-market.”
As for the skillset needed to build this kind of business, he said, “You could say I have a disadvantage as a founder in that I don’t come from the software world. But I have an advantage coming from the food manufacturing world as I understand the pain points we’re trying to solve.”
Next steps
Armed with the new funding, McCord is now focused on hiring developers and engineers to map out more of the market and add workflow tools.
“We’re asking what are the things that people do 100 times a year that we can help them with or allow them to see something that they don’t currently see,” he noted, adding that he hopes to increase the size of the team from five full-time people to nine or 10 by the summer.
First Bite is also keen to collaborate with other players in the food ecosystem including distributors, “to use our data to power what other folks are doing,” he said. “We’re not anti-distributor, we just hope we can make the market more efficient.”
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