Million-dollar investor reportedly likes taste of Plumgood

Email | Print By Milt Capps

04-14-2006 11:35 AM — Plumgood Food is soliciting investors for a $3 million infusion of private capital, in hope of doubling Plumgood's customer base within the next twelve months.

Eric Satz, founder and CEO of the online grocery and delivery services, yesterday told NashvillePost.com that Plumgood's third round of financing in two years "is being led by a million-dollar investor," who has committed that amount, but whom Satz declined to identify.

The major investor has joined four other Plumgood investors and one non-investor as members of Plumgood's six-person board of directors.

Cannery Row-based Plumgood raised first $800,000 and then $1 million in earlier rounds of investment, Satz said. Angel investors associated with Nashville Capital Network are known to have participated in at least one Plumgood round of financing. Satz declined to provide Plumgood's current or projected revenue or earnings figures.

Satz also disclosed yesterday that long-term strategy may include establishing convenience stores for sales of Plumgood's prepared foods, which are included in nearly 50 percent of customers' Plumgood orders. He said freestanding 2,000-square-foot buildings are the model he has in mind. "I believe in the storefront idea," he added.

Satz says the company now regularly serves 1,500 households and plans to use fresh capital, a fourth delivery truck and marketing stratagems to increase the customer base to 5,000 households during the coming 12 months. Satz said he is "designing a shipping business" to serve more communities beyond the greater Nashville area. Plumgood will soon inaugurate once-weekly deliveries to Spring Hill and Columbia, and will increase the frequency of deliveries to Hendersonville, Hermitage and Murfreesboro.

Explaining that he wants Plumgood's current customers "to know it's coming," Satz disclosed that he is "looking at" raising Plumgood's delivery price from the current $7.95 per delivery to a higher rate he did not specify, due to higher prices for fuel for Plumgood delivery operations. He acknowledged that delivery services are a loss-leader that helps promote sales.

Though Plumgood continues to attract investors, Satz makes clear the Plumgood model has evolved. For example, in response to customer feedback or resistance during the past 18 months, the lead-time required for customers' ordering food was cut from 48 hours in advance, to midnight on day of delivery. In addition, Plumgood prepared foods became so popular, the company installed a kitchen, and now eyes dramatic growth in that segment of its business. Growth recently led to a one-third expansion of leased warehouse space, to 8,000 sq. ft.

Educating potential customers remains vital for Plumgood, Satz explained. "For people who have not yet tried us, they hear we're a delivery service." He says that while listed prices on individual Plumgood items may be "15 to 20 percent" higher than some other places, he argues Plumgood customers' costs are lower, because of savings in time, reduced food waste and nutrition.

"The hardest thing for our new customers is to develop and maintain this new buying habit...because life gets in the way," he said, explaining that planning meals and eating healthier foods often fall victim to over-scheduled lives and dining out.

He said repeat customers are those who buy-into the benefits of the overall online shopping and delivery process, with benefits he says include fewer spontaneous food purchases, reduced weekly shopping time -- customers can shop for a week in five to ten minutes, he contends -- and sharply decreased food waste and spoilage.

Plumgood takes orders online and via telephone and offers centralized pickup or delivery for shoppers who want prepared foods and desserts, or raw organic fruits and vegetables, meats, chicken, fish and dairy products.

Satz is personally managing the third investment-solicitation effort, as he did the two previous rounds. He became an entrepreneur after a career as an investment banker with Credit Suisse First Boston and with Donaldson Lufkin Jenrette. The Amherst College economics graduate also once founded and managed a coffeehouse on the Upper East Side of New York City, among other ventures.

Plumgood operations began in late-October 2004, less than three months after Satz and wife Kate announced the venture. Plumgood is located at 10 Cannery Row and employs 16 full-timers. Previous NashvillePost.com story, here.

Note: Solidus Co. has an investment stake in Plumgood Food and Solidus Principal Townes Duncan is a member of the Plumgood board of directors. Solidus is majority owner of Nashville Post Co., which is the parent of NashvillePost.com.