4 ms·

A unicorn? I don't see a single one. I'm currently consulting in the food delivery space, and I can tell you one thing -- don't believe it. It's certainly poss

A unicorn? I don't see a single one. I'm currently consulting in the food delivery space, and I can tell you one thing -- don't believe it. It's certainly possible to create solid local businesses in the space, but not businesses at a scale that a billion dollar in valuation demands. And when you add in the lack of barriers to entry for many of those companies that are in existing sectors overrun with competitors, I think you can cull the list by 50% right off the bat. But I'm sure they are excited to see themselves on this list, as I would be, even if I knew our fundamentals that got us there were only based upon clearly unrealistic hopes and prayers for future users and revenue. And here I was honestly hoping for a real 'unicorn' list. I should have known better.

salimmadjd 11y ago
100% agree on the food delivery space. I've told a few investors not to touch it. Basically it will parallel the restaurant industry at best. Lots of players without much margins.
fhe 11y ago
I live in China, and I am a user of ele.me - the food delivery service, and have worked with 17zuoye. 17zuoye is a solid business. They have worked for years to penetrate the K-12 education market, which, being public funded move at a rather slow pace, but once you get your foot in the door, you have a natural barrier to fend off new entrants. Ele.me is a rather curious story. They get to where they are by heavily subsidizing restaurants and customers. For all I can tell, they lose money on every delivery they make. and the moment they cut back on subsidies, people stop using their service. As a customer I welcome the subsidies (it works like a wealth transfer program, where the VC's are footing lunch bills), but as a sustainable business I am not sure where it could be headed...
prawn 11y ago
What are the two biggest issues in food delivery? I imagine it's the production of food and delivery of it, right? (Funny written out, but I'm sure you get my point - labour costs.) Staff to load automated delivery vehicles and the patrons unloading at the other end will eventually solve one half. Half decent automated food production could solve the other. A lot of Indian or Chinese dishes (curries, stir-fries, etc) could surely be automated? Adding and stirring, portioning out into containers, etc? Could do many pasta dishes in the same way. With the right technology, and a limited selection of meals, could you realistically staff a restaurant delivering out to hundreds each night with 1-2 people? I could see unpack-and-go setups making this industry easy to scale. If delivered meals were decent and cheap, I'd get it a few times a week. At the moment the price puts me off - labour costs are high in Australia.
- richmarr 11y ago
  There seem to be a few different models, maybe worth iterating them (UK examples). 1) An ordering mechanism for existing delivery services (e.g. JustEat, HungryHouse). The problem here is the delivery experience is opaque, non-standard, and sometimes unreliable. If your food is late, you have to call the restaurant. 2) An ordering and delivery mechanism for existing restaurants (e.g Deliveroo). I think this is the sweet spot because it controls the entire UX, is able to offer a reasonable range of food, and is able to list higher-end restaurants so potentially expands the market for food delivery. 3) All-in-one service (e.g. Deliverance). I think the main problem here is that they're competing with restaurants, which in my opinion will mean they're only ever a niche thing. My guess is that the scalable 21st century businesses will be in Type 2, and that food delivery (which could eventually be drone-based) and resturants (some of which may eventually use automation) will remain separate. I think the delivery & restaurant businesses seem to have different incentives; restuarants need to optimise for quality & value, and delivery businesses need to optimise for cost and breadth of choice.
  - prawn 11y ago
    That's why I think #3 may win out over restaurants which are sluggish to react. They'll own the whole process and will be able to optimise exactly what needs to be optimised. Restaurants have baggage. If I just want half-decent food, I'm not going to be especially fussy. Speed and price will be huge factors. A restaurant might not feel comfortable running a curry-making robot out back whereas a food delivery service will be all about the result and whatever gets them there.
    - richmarr 11y ago
      Sure, I'd split this into two questions then... Firstly, what happens before all these automations happen. In that world there's no efficiency advantage over restaurants so a delivery service set up today has no reason to make its own food (other than to control the whole process). Secondly, once we have those robots, restaurant churn is high. A Cornell study suggested 50% of restaurants fail within 3 years. To me that suggests that the switch between hand-made and machine-made food could be as rapid as culture allows. The factors will be things like the capital required to buy those robots, the cost of paying engineers to maintain them vs the cost of paying chefs, etc. TBH, I'm somewhat wary of robots smart enough to cook food equipped with meat cleavers and rolling pins. I'm not sure the cost structure is the thing I'd worry about in that business.
shalmanese 11y ago
Given that Grubhub/Seamless is valued at 2B+ by the public markets, how can you say it's impossible to have a unicorn in this space?

salimmadjd 11y ago

100% agree on the food delivery space. I've told a few investors not to touch it. Basically it will parallel the restaurant industry at best. Lots of players without much margins.

fhe 11y ago

I live in China, and I am a user of ele.me - the food delivery service, and have worked with 17zuoye. 17zuoye is a solid business. They have worked for years to penetrate the K-12 education market, which, being public funded move at a rather slow pace, but once you get your foot in the door, you have a natural barrier to fend off new entrants. Ele.me is a rather curious story. They get to where they are by heavily subsidizing restaurants and customers. For all I can tell, they lose money on every delivery they make. and the moment they cut back on subsidies, people stop using their service. As a customer I welcome the subsidies (it works like a wealth transfer program, where the VC's are footing lunch bills), but as a sustainable business I am not sure where it could be headed...

prawn 11y ago

What are the two biggest issues in food delivery? I imagine it's the production of food and delivery of it, right? (Funny written out, but I'm sure you get my point - labour costs.) Staff to load automated delivery vehicles and the patrons unloading at the other end will eventually solve one half. Half decent automated food production could solve the other. A lot of Indian or Chinese dishes (curries, stir-fries, etc) could surely be automated? Adding and stirring, portioning out into containers, etc? Could do many pasta dishes in the same way. With the right technology, and a limited selection of meals, could you realistically staff a restaurant delivering out to hundreds each night with 1-2 people? I could see unpack-and-go setups making this industry easy to scale. If delivered meals were decent and cheap, I'd get it a few times a week. At the moment the price puts me off - labour costs are high in Australia.

richmarr 11y ago
There seem to be a few different models, maybe worth iterating them (UK examples). 1) An ordering mechanism for existing delivery services (e.g. JustEat, HungryHouse). The problem here is the delivery experience is opaque, non-standard, and sometimes unreliable. If your food is late, you have to call the restaurant. 2) An ordering and delivery mechanism for existing restaurants (e.g Deliveroo). I think this is the sweet spot because it controls the entire UX, is able to offer a reasonable range of food, and is able to list higher-end restaurants so potentially expands the market for food delivery. 3) All-in-one service (e.g. Deliverance). I think the main problem here is that they're competing with restaurants, which in my opinion will mean they're only ever a niche thing. My guess is that the scalable 21st century businesses will be in Type 2, and that food delivery (which could eventually be drone-based) and resturants (some of which may eventually use automation) will remain separate. I think the delivery & restaurant businesses seem to have different incentives; restuarants need to optimise for quality & value, and delivery businesses need to optimise for cost and breadth of choice.
- prawn 11y ago
  That's why I think #3 may win out over restaurants which are sluggish to react. They'll own the whole process and will be able to optimise exactly what needs to be optimised. Restaurants have baggage. If I just want half-decent food, I'm not going to be especially fussy. Speed and price will be huge factors. A restaurant might not feel comfortable running a curry-making robot out back whereas a food delivery service will be all about the result and whatever gets them there.
  - richmarr 11y ago
    Sure, I'd split this into two questions then... Firstly, what happens before all these automations happen. In that world there's no efficiency advantage over restaurants so a delivery service set up today has no reason to make its own food (other than to control the whole process). Secondly, once we have those robots, restaurant churn is high. A Cornell study suggested 50% of restaurants fail within 3 years. To me that suggests that the switch between hand-made and machine-made food could be as rapid as culture allows. The factors will be things like the capital required to buy those robots, the cost of paying engineers to maintain them vs the cost of paying chefs, etc. TBH, I'm somewhat wary of robots smart enough to cook food equipped with meat cleavers and rolling pins. I'm not sure the cost structure is the thing I'd worry about in that business.

shalmanese 11y ago

Given that Grubhub/Seamless is valued at 2B+ by the public markets, how can you say it's impossible to have a unicorn in this space?