Foodsby raises $6 million for its suburban restaurant delivery service

While the restaurant delivery industry has been exploding in recent years, a Minneapolis-based start-up thinks it has cornered an untapped piece of the market: big office buildings in the suburbs.

"If you look downtown, it's a crowded space," said Ben Cattoor, CEO of Foodsby. "But once you start breaking out of that high-density area, where delivery is a very difficult game, that's where our model works. … We focus on the outskirts."

Investors have bought into the concept. Foodsby recently closed on a $5.9 million round of Series A funding led by Greycroft Partners, Corazon Capital and Rally Ventures.

"Now we are looking to grow, grow, grow," said Cattoor, adding that the company is planning to ramp up its rollout to more markets.

Foodsby already is up and running in seven markets — the Twin Cities, Dallas/Fort Worth, Denver, Atlanta, Kansas City, Mo., Charlotte, N.C., and Des Moines. The company works with more than 4,000 businesses and has more than 700 restaurant partners such as Davanni's, Subway, Chili's and Leeann Chin.

Founded in 2012, Foodsby was inspired by the multiple trips Cattoor saw a restaurant delivery person make to his Inver Grove Heights office when he was an accountant at CHS Inc.

"I watched the same driver show up five times in 45 minutes," he said.

Figuring there had to be a better way to coordinate such deliveries, he created the Foodsby platform. When office buildings sign up for the service, workers can see what restaurants are scheduled to make deliveries to their office that day and place an order.

There's no minimum order required and tipping is not expected, but there is a $2 delivery fee.

The advantage for restaurants, Cattoor said, is that they can schedule all of their deliveries at once.

"The restaurants are able to dictate where they're going and more importantly when the orders come in," he said. "They are able to set up their deliveries when they're in off-peak times."

The restaurants make the deliveries on their own unlike other app-based services that use independent contractors to make deliveries. Some of those services now in the Twin Cities market include DoorDash, Postmates, UberEats and Amazon Prime Now.

Cattoor added that his competition focuses more on dense, urban areas. But he sees a bigger market opportunity with office parks in the suburbs.

"Our business model works in a lot of places where these other models don't," he said.

Foodsby has about 40 employees, about half of whom work at its office in northeast Minneapolis.

It has a website and a smartphone app that customers can use to place orders. But since most people are at work when they order lunch, the website is a more popular option.

"They're sitting at their desks and they're hungry — it's easier for them to use their computer," he said.

Kavita Kumar • 612-673-4113