Food retailers have been hot on the trail of new ways to help consumers stock their pantries and refrigerators. Using platforms similar to Amazon, many have turned to the internet to provide shoppers with a digital supermarket and fast delivery. The trend has spread across the globe, gaining substantial popularity in many European cities.
Just recently, for example, French startup La Ruche qui fit oui announced a $9B Series B round led by Union Square Ventures and Felix Capital with participation from Quadia and XAnge. Also known as The Food Assembly, the company has been busy reconceptualizing the way consumers identify, select, and purchase their food. The company offers shoppers access to the freshest local food around and helps them identify the farmers and local agribusinesses that produce it.
The way it works is quite simple. A user goes online and finds the Ruche located nearest to them. In the UK, the Ruches are referred to as Assemblies. After locating a nearby Ruche or Assembly, the user signs up to receive the weekly newsletter, which is full of information regarding the produce and other edible wares that are currently available.
Each week, the pop-up Ruche or Assembly gathers at a local venue and members visit the location to collect their orders, socialize, and catch a glimpse at what’s for sale. Some Ruches or Assemblies are held in a local park while others are held in the home of a welcoming neighbor.
This model represents one of the most cohesive and efficient online food services in the market. Essentially, La Ruche provides a digital marketplace and information exchange for consumers and producers. Serving as a digital middle-man provides many incentives for consumers and producers and provides La Ruche with an easily-managed and widely distributable platform.
Within each assembly, the producers set their own prices and receive an income that helps support their business and enrich the local economy. The farmers keep 80 percent of their total sale revenue, which is roughly four times better than what they would receive if they distributed their products through a supermarket chain. On top of that, the producers are free to set their own prices, which they can keep fairly competitive due to the large percentage of earnings that they retain.
Further streamlining things, the company doesn’t provide direct management for each local community. Instead, La Ruche managers are independent contractors who are typically food savvy and familiar with the local farming scene. La Ruche provides these folks with an entrepreneurial platform and an 8.35 percent cut on every transaction.
Best of all, the company only needs a handful of employees to manage a network of 100 to 200 ruches. Currently, the company has 70 employees with 15 working on product design and development. As co-founder and CEO Marc-David Choukroun puts it, “When you look at all the 600 ruches available in France, you can’t help but think that this model is ultra scalable.”
Finally, consumers are drawn to the service because it provides a convenient, community-oriented way to access local and fresh food while supporting the regional economy. Many participants enjoy the social aspect of the weekly ruche or assembly market-stop, using the time to catch up, network, and make new friends.
What’s in it for La Ruche? The company also takes an 8.35 percent cut on every transaction.
“The true beauty behind La Ruche is that it’s all about recurring transactions,” said Frédéric Court (Felix Capital). “In fashion, people don’t buy stuff every month. But the lifetime value of a La Ruche customer can be very high. There are a few areas like this one, transportation and food for example.”
With a slew of food-to-consumer companies popping up in recent years (Blue Apron, Delivery Hero, Postmates, Instacart), investors have their pick of the litter. “We’ve been wanting to invest in a food startup. But the specific sector of food that we’ve been interested in is farmers to families, and how do you make that work,” said Fred Wilson of Union Square Ventures. “We’ve probably met with 30 or 40 companies in this sector all over the U.S., Europe, Canada — lots of places. We always want to invest in companies that are communities first and foremost — Etsy and Kickstarter are classic examples of that.”
Choukroun plans to use the new investment to solidify La Ruche’s existing markets in the U.K., Germany, Spain, and Italy. “We need to go faster when it comes to our innovation power,” he said.
The company doesn’t have any set plans for expanding overseas, but hasn’t ruled it out of the question. “At some point, they will try the U.S., but I’m more excited in the short run about the U.K., Germany, Spain and Italy — and it’s still growing very nicely in France and Belgium but it’s quite large already,” said Wilson. “Maybe in a few years, they will see if they can make it work in the U.S. But we made this investment with our eyes wide open. We realize that this model may not work in the U.S. Do I care? Not really. On the other hand, if it works in the U.S., that’s great.”
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