I worked in this business for over 15 years on the tech and business sides and I can say that the traditional VC-funded startup regime is fundamentally incompatible with the basic realities of the food industry. What is sort of funny about it is that in many areas there are local companies that have been around for many years doing this fantastically. As other commenters pointed out, this is essentially the milkman model.
There are a number of extremely difficult problems that are definitionally insurmountable on the timescales that VC operates -- paramount among them being the establishment of trust and mutualistic relationships with your vendors/stores, customers, and employees.
You are right that there is such a space, it just won't happen in the context of a startup taking VC cash.
You're absolutely right on that - what eventually killed the business was an influx of VC cash and demands for massive expansion during a period when we almost had delivering in a single city nailed.
There are a number of extremely difficult problems that are definitionally insurmountable on the timescales that VC operates -- paramount among them being the establishment of trust and mutualistic relationships with your vendors/stores, customers, and employees.
You are right that there is such a space, it just won't happen in the context of a startup taking VC cash.