Relay Foods growing into a virtual incubator for small businesses

Relay Foods operations associate Jason Farr loads an order into Colleen Harland's basket at the ACAC Fitness drop off spot in Midlothian.
Relay Foods operations associate Jason Farr loads an order into Colleen Harland's basket at the ACAC Fitness drop off spot in Midlothian.

Relay Foods, the Charlottesville-based grocery delivery company, is more than just a small business that takes the hassle out of shopping for food.

It’s also growing into a sort of incubator for small businesses that operate in the food industry.

“We can be an inexpensive and supportive way to get a start and reach new markets,” said Neal Halvorson-Taylor, Relay’s business development manager. “We are there for people who don’t want to go into a brick and mortar site or who can’t afford one.”

Relay was founded in 2008 and began Richmond operations in July 2010. The company works with more than 60 farms and stores. Each vendor has its own section on RelayFoods.com with photos and details of the products for sale. Customers log on, browse through the site and compile a list of products they want.

At midnight, the orders are sent to vendors, which collect them the next morning. Relay bundles each customer’s order at its warehouse in Richmond’s Scott’s Addition neighborhood. The warehouse can serve 700 customers per day at full capacity.

Customers can pick up the order at one of about 20 drop-off sites around Richmond, Henrico County and Chesterfield County. Most sites have delivery once a week, though a few busier sites have deliveries two times a week.

The service is free for customers unless they want home delivery, which costs $12 per trip, though repeat deliveries can be made at a lower rate. About 15 percent of the Richmond customers use home delivery. Relay charges the vendors a fee to participate but wouldn’t discuss the costs in detail.

Graham Evans, who runs Relay’s Richmond operations, started as a truck driver with the company. He said he’s worked virtually every job in the company, which gives him a good insight into the overseeing the company’s operations. He said the grocery delivery model is common in high-density cities like New York or London, but not in places like Richmond.

“What sets us apart is the low capital investment and the pick-up site model,” he said. “That cuts out the ‘last mile’ costs, which are manageable in a big city but not in a place like Richmond.”

Evans said the number of Richmond customers is growing at 20 percent per month, though he noted the customer base was still smaller than the Charlottesville operation. The firm has about 15 employees in Richmond, mostly in the delivery and packaging operations, and a total staff of a bit more than 40.

Halvorson-Taylor, an ordained Lutheran minister who has long been active in the community food movement, said Relay’s partnerships with about 20 local farms and nearly 40 food vendors aren’t aimed at replacing farmer’s markets or roadside produce stands. Instead, he said, the partnership creates more opportunities to get products to customers.

“Mostly I’m offering them another market and offering a huge percentage of each dollar to go back to them,” he said. “The farmer can sell food without having to staff a table at the farmer’s market or at a roadside stand, and he can get the produce into the hands of a lot more people.”

For food entrepreneurs like Pizza Tonight, which sells pizza kits that are ready for baking, Relay often serves as the company’s first retail outlet, Evans noted.

Evans wouldn’t disclose Relay’s revenue or profitability levels. But he did say the firm wants to expand into new markets during 2012. He said Relay was still doing research and deciding which market would be the best fit, but he said they hoped to enter more than one new market next year.

Wherever the company goes, both Evans and Halvorson-Taylor said that the company wants to focus on growing access to “community” and local foods.

“We see this as an enhancement to the community foods system,” Evans said. “We make it easier for framers to reach more customers and make it possible for people to access local food without having to take an extra drive.”