It Turns Homes Into Restaurants (and Tests Food Laws’ Boundaries)

A good dinner party offers pleasures that the chicest restaurant can’t: the mixture of guests, conversation, food, and drink enjoyed in the home of an attentive host. “It brings people together around food,” says Guy Michlin, co-founder of a startup called EatWith. “Something magical happens.”

That’s the feeling Michlin wants people to get when they book a meal through EatWith. The site connects diners with home chefs who want to host supper-club-style meals. The company vets hosts and allows them to list menus and photos of their homes online. Then guests can reserve spots at the table—they must be approved by hosts—and pay online. EatWith holds the money and pays hosts after the meal, minus a 15 percent cut.

Founded in Tel Aviv in early 2012, EatWith is one of a handful of startups marketing a homespun alternative to dining in restaurants, the way Airbnb lets travelers skip hotels and rent spare bedrooms instead. Its competitors include Feastly and Gusta, which was started by a former Airbnb employee. EatWith, with 11 employees and $1.2 million in venture capital, was originally inspired to offer tourists authentic local meals. The company began in Israel and Spain and recently expanded in Europe and South America. This month, it landed in the U.S., starting in New York.

Like people renting spare rooms on Airbnb, EatWith hosts don’t always square with the law. “In New York City, people who offer meals to the public for money are considered food service establishments and need permits,” New York City Health Department spokeswoman Veronica Lewin said in an e-mail. “The city does not allow meals to be served to members of the public in someone’s home.” Caterers can prepare food in a permitted kitchen and bring it to a home. Lewin says the agency will order unpermitted operators to stop.

Companies such as Airbnb and car service Uber and their champions tend to blame regulators for protecting incumbent businesses more than consumers, and that’s sometimes the case. These businesses often win breathless praise on tech blogs for “disrupting” stodgy industries as part of the “sharing economy.” But when you look past such lofty talk, money’s changing hands. People are selling services or renting assets. That’s commerce, not sharing.

Michlin says the law hasn’t been a barrier in Israel or Spain. In Tel Aviv, he says, the tourism ministry has helped train hosts and promoted the service. Health inspectors have visited host kitchens in Spain. “Now that we’re opening very quickly in more geographies, we can’t hire a law firm in each and every country,” he says. “We’re studying it.”

Michlin is an attorney in Israel, and his previous startup, called Clean Scores, ranked restaurants based on health department inspection scores, so he’s certainly familiar with the legal issues in the food service industry. EatWith’s terms of service put the legal risk squarely on hosts and guests. By signing up, they agree “to comply with all applicable laws and regulations regarding your conduct on EatWith.” The company’s following the playbook of other “sharing” businesses: Test the waters and see how regulators react.

This week prices on EatWith’s New York listings were changed to “suggested donations,” a move marketing director Naami Shefi says is to gauge the site’s appeal to New Yorkers. It may help keep EatWith hosts off regulators’ radars as well. Kevin O’Donoghue, a restaurant lawyer at Helbraun Levey & O’Donoghue in New York, calls the law around supper clubs “an extremely gray area. There’s loopholes, and there’s loopholes inside of them.”

He says a client—he won’t name the chef—made his reputation in New York dining circles serving barbecue in underground supper clubs. The chef now has two restaurants. Charging the public for meals served at home is “probably illegal,” O’Donoghue says. “I don’t know that you’d get caught. It doesn’t mean you should do something illegal.” The risk hasn’t stopped cooks who want to open their homes: Michlin says EatWith got “an avalanche” of over 1,000 applications from would-be hosts from around the world.