Stefania Mallett, CEO and co-founder of ezCater, remembers waking up in March 2020 to find that the Covid-19 pandemic had wiped out 85% of her business. Now the online catering provider has turned its business around and is again preparing for an initial public offering.
EzCater started 2020 expecting it to be their best year ever, Mallet said. The Boston start-up, which provides an online marketplace that connects businesses with restaurants and caterers, planned to hit $1 billion in food orders that year. It was also targeting an IPO for the fall of 2021.
“We were happy, we thought the world was funny,” Mallett told Barron’s.
But the virus, which caused businesses across the U.S. to close, changed those plans. During the second week of March, ezCater’s business dropped by 15% and, and the next week, plunged by 85%, Mallett said. There were so many cancellations that ezCater’s customer service reps were in tears, she said.
“We knew it was going to be bad but not how bad. I don’t think anyone did,” Mallett said.
EzCater expected the virus to last three to four weeks. But Covid-19 didn’t go away. By June 2020, 42% of U.S. workers, were working from home full time, according to Prof. Nicholas Bloom, a senior fellow at the Stanford Institute for Economic Policy Research.
This had a huge impact on ezCater, which focuses on solving the “food for work” issue, Mallett said. EzCater had billboards on highways located at economic hubs highlighting its services to solve work problems, she said. Only many of its customers weren’t at work.
In April, ezCater slashed its spending on marketing while laying off nearly 50% of its 950-person workforce, Mallett said. EzCater realized that it had unwittingly concentrated on customers in industries that were well-suited to working from home, like high-tech and consulting, she said.
“Who are the 60%? We turned to focus on those verticals,” Mallett said. The company now counts customers in logistics, warehouses, factories, sports teams like the The San Francisco 49ers, and several hundred hospitals.
This time around, when the Omicron variant began hitting consumers after Christmas, ezCater’s business dropped a mere 9%. “That gives me huge comfort that we are much more resilient and variant proof,” said Mallett, who expects more mutations of the Covid-19 virus.
By the end of 2021, the company had achieved the same level of business volume that it had in 2019, Mallett said. EzCater isn’t profitable but is growing its bookings and revenue by 20% to 30% each year, she said.
The company in December also raised another $100 million in a funding round led by SoftBank that valued it at $1.6 billion. This brought ezCater’s total funding to $425 million.
EzCater has hired back some of the employees it laid off in 2020, with staff now numbering 570. It plans to hire another 350 people this year in areas like engineering, data, and finance, she said. “We’re operating far more economically than before,” Mallett said
The start-up has also revived its plans to go public, Mallett said. EzCater hasn’t picked an investment bank, though it does have a group of advisors, she said. Geopolitical issues such as the war in Ukraine are a factor on the timing.
“It will be in 2023,” Mallet said of the stock sale.
“If we grow at our current clip, our valuation will be way north of $1.6 billion when we go public, but we can’t be any more specific than that,” on the valuation or how much ezCater would seek to raise, she said.