Chefs — And Venture Capitalists — Hope To Make Money on Home-Cooked Food

Selling the food you cook in your own kitchen is only totally legal in one county in California: Riverside.

But that isn’t stopping venture capitalists from trying to cash in on home-cooked food elsewhere in the state, especially now, with the COVID-19 pandemic keeping many people away from restaurants.

Two years ago, California lawmakers passed Assembly Bill 626, allowing counties to legalize the sale of home-cooked foods. At the time, local food advocates feared the new rules would draw the attention of venture capitalists — the investors responsible for launching once-tiny companies like Uber and Lyft.

“We’re worried about the Uberization of home-cooked food,” Christina Oatfield, a lawyer and a local food advocate, told KQED at the time. “We’re worried that these gig economy tech companies are going to really come to dominate the home-made food sector.”

Oatfield said the success of gig economy companies like Uber and Lyft, that quickly accumulate power and then cut workers' wages, serve as a cautionary tale.

“It is the monopoly strategy that these tech startups take that is so concerning,” Oatfield said. “Because once they have that monopoly, they are so powerful they effectively control the market.”

Once it gets to that point, she added, you no longer have empowered people with their own businesses, you have gig workers working for companies that call the shots.

Safeguarding Home Kitchens

Backers of AB 626, authored by Assemblymember Eduardo Garcia, D-Coachella, tried to build in protections to prevent venture capital takeover of home-cooked food. The law requires local regulations and forbids the use of third-party delivery apps such as DoorDash and Uber Eats for food that is cooked at home. If a cook uses a commercial kitchen, they can still deliver through these services.

Matt Jorgensen, who co-founded Josephine, a now defunct startup that created an online platform for home cooks to sell their own food, had a hand in crafting the bill.

“We want cooks to be the owners of their own data (and) customer relationships — to be the face of their home restaurant, not to become low-wage gig workers subject to the whims of a new type of profit-maximizing platform,” Jorgensen said in a recent interview with KQED.

Still, two years later, a growing number of companies — including the popular Los Angeles-based startup DishDivvy — are building websites and apps to capitalize on the nascent home-cooking market. Those efforts are ongoing, even though the sale of home-cooked hot meals is still not allowed in any county except Riverside.

Other counties in the state have not agreed on rules and regulations.

Another one of those companies is Shef, a startup based in the Bay Area that was founded by a former Facebook employee and technology adviser to President Barack Obama. In August, venture capitalists pumped $8.8 million into the tiny company, which got its start two years ago, right around the time AB 626 was approved by the state Legislature.

Even $8.8 million is a lot of money for the home-cooked food business, says Caleb Zigas, the executive director of La Cocina, a nonprofit that for the last 15 years has been helping San Francisco chefs launch their own businesses.

Zigas thinks the infusion of venture capital will push these companies to try to exploit home cooks instead of working with them to create sustainable, independent businesses.

“When you get venture-backed money, where return is the goal and particularly massive return, no matter how genuinely interested you are principally, the service you are offering is going to be weakened as a result,” Zigas said.

Even though La Cocina has a long track record of helping women and people of color start businesses, Zigas says they've never received anything remotely close to the influx of cash just handed to Shef. That kind of funding, he says, would be enough to run La Cocina for 10 years.

Under the Table

Then there is the question of whether these food platforms are breaking the law.

Shef is operating in the Bay Area, and DishDivvy is operating in Los Angeles. Neither area has local regulations that allow chefs to cook and sell hot meals from their home. Cooks can only sell certain goods like jams and candies that were legalized under the California Homemade Food Act, which came into effect in 2013.

Chefs can make hot meals in commercial kitchens. On its website, DishDivvy says it performs a kitchen inspection for everyone on the platform. A spokesperson for Shef says its cooks should be using commercial kitchens, but it doesn’t require proof for them to be on the website.

Given how expensive and scarce commercial kitchens are in the Bay Area, Zigas says he is doubtful that every cook on the Shef site is actually using one. The branding of both Shef and DishDivvy suggests that the food comes from a chef's home, not from an industrial kitchen. The food is advertised as "home-cooked," not "commercial kitchen-cooked."

Critics like Oatfield see this move to operate in places without local regulations as another page taken from the venture-capital playbook, and one that was very successful for Lyft and Uber. "That's the typical Silicon Valley approach to business," she says. "You don't wait for something to become legal."

As with Uber and Lyft, there is a layer of protection when it comes to liability. And like drivers for Uber and Lyft, Shef and DishDivvy do not consider those on the site to be employees. They may be facilitating something on their websites that might be illegal, but they have a degree of separation from the chefs on its "platform." If health inspectors want to crack down, they will be going after small, independent cooks, a group that's largely women and people of color.

Cooking Clean

The founder of a third home-cooking platform, called Foodnome, says he's trying to do things differently than competitors like Shef and DishDivvy.

“We set about to do this in the right way, in the legal way,” Akshay Prabhu, the company's CEO, said. “We value putting the cooks first.”

Foodnome only operates in Riverside County, for now, where home-cooked food is legal. It also does not partner with third-party delivery apps like Doordash and Uber Eats.

The company is now trying to expand outside of Riverside without compromising its principles. It's backing home-cooked food regulations in Alameda County, San Francisco and elsewhere. And its competitors, DishDivvy and Shef, are also pushing those legalization efforts forward.

Unlike on the other websites, chefs on Foodnome, like Keion Taylor, make and sell their food at home, just like the website advertises.

Taylor, who goes by Chef KT, cooks Cajun-inspired fare in the town of Menifee. In a region where fast food dominates, he says, his customers often drive 20 or 30 minutes to pick up his po’boys and crispy buttermilk chicken strips.

“People tell me like, ‘Hey man, this is the best po’boy hands down I’ve ever had, and I’m from Louisiana,’ ” he said. “And I am like, ‘Get out of here!’ ”

Taylor decided to become a chef after working in the military for 15 years. But while attending Le Cordon Bleu College of Culinary Arts in Pasadena, his instructors warned him how little he’d make as a line cook. Knowing he wouldn't be able to support his family on $12 or $13 an hour, he decided to try and make it on his own.

Business is booming during the pandemic, Taylor says, and he hopes he can continue to sustain himself. He’s betting that Foodnome has his best interests at heart and that he never has to become a gig worker for some app.

"I haven’t worked for nobody else in over 10 years," Taylor says. "I never wanted to be stuck doing the same thing over and over again."