Rishi Talati

Hotplate has powered $100M+ in sales for independent food sellers

Rishi Talati's Hotplate gives home bakers and pop-up chefs an Instagram-bio storefront for preorder drops. Most of the $100M in sales came in the last two years; the company raised about $4M and has been profitable for nearly a year.

“Yeah, I'm Rishi. I'm one of the founders of Hotplate, and we powered over $100 million of sales for independent food entrepreneurs.”

Cottage food and 'food freedom' laws let people sell food from home

Cottage food laws allow home-made food sales. Texas recently expanded its rules into 'food freedom' laws covering almost anything, and looser Arizona dairy rules have sparked a wave of home cafes in places like Yuma.

“So there's this thing called cottage food laws that lets you sell food directly from your home. And what's really cool is also recently, like Texas just expanded their laws. They're called food freedom laws. So you can actually sell almost anything out of your house now. And for example, Arizona, the dairy laws have really opened up to now people are starting these like, there's actually this huge trend of like home cafes that are starting in like Yuma, Arizona, where like we have tons of like these home businesses starting in Arizona.”

Steal thisCheck your state's cottage food rules before assuming you need a commercial kitchen to sell food.

A home ice cream brand running at SaaS-like 40–50% margins

A to Z Creamery in Hopkins, Minnesota, does 6–7 figures a year at 40–50% profit margins with a team of 3–4. It skips walk-up traffic, sells weekly drops through Instagram and a Hotplate storefront, and always has more demand than supply.

“We have like businesses like A to Z Creamery. It was in Hopkins, Minnesota. who's running one of the largest like ice cream brands in Minnesota right now, doing 6 to 7 figures a year in revenue on like 40 to 50% profit margin, which like is unheard of. That's like a— that's a SaaS company, right? But like the reason he's able to do that is because it's a team of like 3 or 4 people. He does— he uses like Instagram and Hotplate as a storefront and doesn't do walk-ups, right? And is able to like streamline all that in a way where he has like way more demand than supply and is able to sell out every single week and have people come and pick it up.”

Steal thisRun a food business as preorder drops with no walk-ups so demand always exceeds supply and every batch sells out.

Charge the buyer the platform fee so the seller only pays processing

Hotplate charges the customer a small fee at checkout, so chefs pay only payment processing. Food already carries heavy fixed costs, so taking platform fees off the seller makes Hotplate more attractive than traditional platforms.

“So the way our business model is kind of cool to the chefs. So our, our mission at Hotplay is that we're a chef-first company. And so we take that to the extreme where like, as a customer, when you check out from a Hotplay vendor, we charge the customer a small fee at checkout and the chef only pays payment processing. So the beauty of that is that I as a chef can start. There's already so many fixed costs in food as it is that being able to like eliminate some of those on our side has made us really attractive to vendors outside of like a traditional platform.”

Steal thisWhen your supply side is cost-sensitive and your buyers aren't, put the platform fee on the buyer at checkout.

Food businesses that market vs. marketing businesses that sell food

Rishi Talati splits food businesses into two kinds. A marketing business that sells food has almost no price elasticity, because fans who watched a drop build up on Instagram just want to get the product before it sells out.

“I always say there are like 2 kinds of businesses. They're like food businesses that do marketing and they're marketing businesses that sell food. And if you're a marketing business that sells food, you have no price, like to your point, elasticity, right? Like you can really just, sell and people are willing to buy. Like, people don't blink at anything that you buy from Butter and Crumble. They're just trying to get it as quickly as possible.”

Steal thisBuild the audience and the hype first, and you won't have to compete on price.