New York restaurateur and Shake Shack founder Danny Meyer is moving into the e-commerce business.
Enlightened Hospitality Investments LP, the $220 million private-equity fund that Mr. Meyer helped start, has invested $15 million in Goldbelly, a New York-based company that specializes in shipping favorite food items from restaurants, bakeries and other purveyors.
It is the largest initial investment that the fund has made to date, said Mr. Meyer, who is 60 years old. Other companies the fund has invested in include Resy Network, a restaurant-booking app, and the chains Joe Coffee and Salt & Straw Ice Cream.
Launched in 2013, Goldbelly (formerly called Goldbely) has offerings from more than 350 establishments across the country, including Los Angeles’s Langer’s Deli, Pittsburgh’s Primanti Bros. and Baltimore’s Faidley Seafood. Such New York institutions as Russ & Daughters and Magnolia Bakery also are part of the Goldbelly mix.
The investment from Enlightened Hospitality is part of a recently completed $20 million funding round for the e-commerce company, according to Goldbelly founder and CEO Joe Ariel. Previously, Goldbelly raised $13 million through two other rounds.
Mr. Ariel declined to provide the company’s annual sales, but said it was in the tens of millions of dollars. He said sales have at least doubled every year to date, although he indicated the company isn’t currently profitable because it is putting money into infrastructure that would enable its growth.
“There could be thousands” of restaurants and other purveyors eventually on Goldbelly, Mr. Ariel said.
Mr. Meyer said he first became aware of Goldbelly when someone sent him a gift of Ted Drewes frozen custard from his hometown of St. Louis via the company.
The online store tapped into an “an idea I always loved,” he said. “Which is, how do you give people the taste memory and emotional memory for what they discovered somewhere else and make it easy for them to have it wherever they may be?”
Mr. Meyer also said he saw a synergy between Goldbelly and Union Square Hospitality Group, his New York-based restaurant company that runs the Enlightened Hospitality fund and is one of the fund’s investors. He said Goldbelly would soon feature a selection of pies from USHG restaurants.
While there are dozens of companies that offer mail-order gourmet treats, just a handful specialize in shipping items from restaurants. Among those, Goldbelly has emerged as the clear front-runner, said USHG Chief Investment Officer Mark Leavitt, who cited it as another factor behind the investment decision. It is “really the only game in town,” he said.
Aside from the cash infusion that his fund is providing, Mr. Meyer’s name will give Goldbelly added cachet in the gourmet and e-commerce marketplace, said Stephen Zagor, an instructor and former dean at the Institute of Culinary Education who teaches at the Columbia Business School. “He has a wonderful credibility,” Mr. Zagor said.
At the same time, Mr. Zagor and others point to challenges that Goldbelly could face as it looks to grow. Chief among them: The fact that the site’s offerings aren’t cheap, largely because of the packaging and rush-shipping costs involved.
In turn, that could make Goldbelly a tough sell for some consumers. For example, six potato knishes from Yonah Schimmel’s Knish Bakery, a famed Lower East Side shop in Manhattan, run $79—or more than $12 each. At the shop, the knishes sell for $4.25 each.
Goldbelly works to lower shipping costs a variety of ways, Mr. Ariel said, adding that “as economies of scale kick in, the price can come down more.” He noted that the company’s offerings aren’t necessarily intended for the everyday customer.
“This is not commodity food. This is premium,” Mr. Ariel said.
At least one Goldbelly fan said he doesn’t mind paying the high prices.
Tony Bernheim, a San Diego, Calif., resident who works in commercial real estate, said he orders sandwiches through the site from a restaurant he frequented in New Jersey, where he once lived. Items ranging from Louisiana crawfish to Montana-made pies also are on his Goldbelly list.
Mr. Bernheim considers Goldbelly a place for foodies that is run by foodies. “That feeling comes through on their site,” he said.
Write to Charles Passy at firstname.lastname@example.org
Appeared in the October 9, 2018, print edition as ‘Danny Meyer Bets on E-Commerce Firm.’