CHICAGO — Smart oven and self-cooking meal company Tovala closed a $30 million Series C funding round led by Left Lane Capital. The round marks the company’s second fundraise in six months, following a $20 million Series B round last spring, bringing its total funding to more than $50 million.
Launched in 2017, the Chicago-based startup offers a rotating menu of more than 400 chef-crafted meals. Its delivery service is paired with a countertop smart oven, which scans each meal and steams, bakes or broils it in 20 minutes or less.
Consumers also can tap into the scan-to-cook technology when they’re not eating a Tovala meal. The smart oven comes with an added feature that scans barcodes on brand-name grocery items and cooks them on a pre-programmed setting.
The self-cooking meals have helped Tovala tackle customer retention, a consistent challenge for meal subscription companies. Prior to the pandemic, around 70% to 80% of meal kit customers ended their subscriptions within six months of joining a service, according to a 2018 study from Emory University.
“Once a customer has purchased a Tovala Smart Oven, they engage with the product an average of 32 times per month,” said David Rabie, chief executive officer of Tovala. “They dedicate countertop real estate to the oven and rely on our weekly meal subscription for lunch and dinner. Unlike other meal kit companies that suffer from higher attrition based on limited-time offers, Tovala users are highly loyal.”
Data from The NPD Group show a 7% increase in the share of the population using meal kits in the early months of 2020. While Tovala benefited from the surge in demand for home-meal solutions, it was growing before the pandemic hit the United States. Revenues have increased tenfold in the past 18 months, Mr. Rabie said.
“While pandemic-fueled changes to consumer eating habits accelerated Tovala’s adoption, the company was already on an upward trajectory — and we expect that trend to continue,” he said. “The demand for convenience and quality in the food realm is here to stay. Even post-pandemic, we believe consumers will value the ability to enjoy home-cooked meals without a time commitment.”
Tovala also has benefited from the quality control and quick iterations that come with self-manufacturing. It currently has two production facilities and one shipping facility.
“We own the manufacturing process for full control over the complete customer experience,” Mr. Rabie said. “The benefits far outweigh the challenges. We have a top-notch team that works diligently to ensure consistent meal quality, despite facing obstacles over this past year that ran the gamut from pandemic-spurred ingredient shortages to severe weather conditions. By self-manufacturing, we also have week-to-week flexibility and faster feedback loops between the manufacturing facility and culinary R&D team.”