6 ms·

I would guess any restaurant funded out of the gates with this amount of VC would fail. Call it a food-tech startup if you want, but Sprig and its competitors a

by rjett 9y ago

I would guess any restaurant funded out of the gates with this amount of VC would fail. Call it a food-tech startup if you want, but Sprig and its competitors are restaurants. The reality of restaurants is that their growth is linear, even if they are successful. That's because it takes time to develop trust with the consumer, and even once that is established, people either want variety or their trust can be shattered completely on one off experience. Deploying this much capital on a restaurant concept straight out of the gates would be fine if and only if they managed to execute flawlessly and if VCs were ok not making money for a few years and then churning out 0-15% returns after that. But that's not the VC game.

alaskamiller 9y ago
You look at it as a restaurant problem but it's really an ecommerce supply chain problem. By implying restaurant you're still thinking about back of the house and front of the house. That paradigm doesn't exist for the likes of SpoonRocket or Munchery or Sprig. They operate out of commercial commissary kitchens that produces products that needs to go into a distribution network to people funneled in from marketing. The bet is that function isn't linear, rather it can be scaled up, especially when prodded along by all the state of art and best practices in ecommerce marketing techniques. These guys were trying to play the Amazon game, but instead of a 2 day shipping window, it's right now or in a few hours. And instead of a shipping hub to your door steps, it's down the street to your doorsteps. And instead of elastic goods that can wait for awhile before you commit to buy it's a need to satisfy. A successful restaurant feeds your craving. A successful supply chain fulfills your need. The real challenge is just the fact at the end of the day there's a fixed cost to fulfillment no one can figure out how to shake. Despite all the twisting in the labor relationship (avoiding W2s or stealing wages), it still costs $15/hr to deliver up to four $10 items that costs $3 to make. Until that goes down (with automated tincans on wheels) then merely sale of food items won't support these bets. Except weed and alcohol. Those are the only things that have the margins and demand to support an immediate delivery network.
- bduerst 9y ago
  Being a delivery-only restaurant isn't trying to "play the Amazon game" - it's trying to be a restaurant that only delivers. OP is right here that the substitute good for Sprig was ordering delivery from a restaurant. Typically when you think about ordering delivery, you instantly start thinking about your favorites, meaning this industry is hard to scale because it requires building trust. Weed and alcohol may have monopolistic characteristics brought on by strict licensing requirements, but people typically don't consume these on a daily basis so the lower delivery quantities negate the higher margins.
  - alaskamiller 9y ago
    What even is a delivery-only restaurant? A restaurant is literally defined as a place you go to eat and pay. A fine dining experience is composed of front of house and a back of house. So Sprig is not a place you go to eat. There is no front of house experience. It's a thing that makes something to deliver to you. That's a fulfillment service. Here's something to think about, most restaurants don't offer take out or delivery services. Because it undermines their value. They want you to sit down and enjoy in their decor, talking to their staff, eating their food, and most importantly they want exacting control and consistency. That indeed is how you build up trust and repeat visit. But you're also conflating two behaviors here. When you think about ordering delivery it's because you're trying to satiate a craving. You want that one thing form that one place. Delivery is an augmented service to the restaurant. It's how DoorDash can exist. But it's also why In 'N Out Burgers sued to not have their food be delivered. And it's also why the bottom half of the DoorDash's platform are not good experiences, it's a restaurant being pulled to be something it's not. But that's not what Sprig is. They don't offer the same thing every day, they are relying on you to trust the top level branding alone and by browsing the options. It's a production facility with a delivery network. When you want to your favorite meal delivered and when you want to order from Sprig or SpoonRocket or Munchery are coming from two different places. The former is hacking a restaurant, the latter is purchasing products. Then lastly, it's not about licensing requirements for weed and alcohol. It's that they're inherently different products whereby immediate fulfillment is possible aside from transporting a human being.
cwilson 9y ago
Even an established chef, David Chang (of Momofuku fame here in NYC), tried something similar with a startup called Maple. Raised millions. Shut down a few weeks ago for similar reasons.
- ryanworl 9y ago
  He has framed himself as simply an investor in Maple as of late, but he's trying again with Ando. The food is very good and delivery is handled by Uber Rush couriers.
ajiang 9y ago
It's ok to think of Sprig as a restaurant that delivers. The most profitable restaurant chains in the world make $2-3M per store, with repeatable success in new stores (with obvious much better than 0-15% returns). You're finding the optimal solution for two problems: making food and delivering food. For making food, along with recipes and process, having great technology allows you to reduce cost and improve customer LTV by: * Reducing wasted ingredients and spoiled items by predicting demand and tracking your production line * Identify which meals get people to come back * Optimize for pricing, similar to website conversion For delivering food, having great technology allows you to improve delivery speed and reduce delivery cost. Yes, at the end of the day Sprig competes with any restaurant that delivers in the same way that Warby Parker competes with any eyeglass brand / store (obvious difference being the better margins in the eyeglass industry). However if you can get really good at using technology to optimize your production production and distribution, your advantage is your profit margin and your ability to deploy growth capital efficiently. Final point -- VCs are ok not making money for a few years. In fact, they HAVE to be ok not making money for 7-10 years. That's the whole point of venture capital.
LrnByTeach 9y ago
100 years ago, every family prepared their own Tomato Ketchup from scratch, 50 years ago every family prepared their own Cookie dough from Scratch. We are evolving to higher level abstraction in Food consumption, following is my view where we will be by 2025 . Here is my Vision (Comprehensive thought process) on the UNIT Economics of Food delivery, how this will manifest by the year 2025 . Pre-requisites: a) Massively centralized, highly Automated Kitchens : can prepare 10,000 meals/hour b) offer quality Meals at $4/meal with delivery ( with Self driving fleet starting year 2022 ) c) Monthly meals plan : a family will buy pre-paid 60 meals/month plan, USE it or LOSE it in a month. Here are the Plan details. 1. If we take avg. family size as 3 people in US, a family consumes 2 meals/day X 30 days X 3 people = 180 meals/month for family of 3 people 2. for family of 3 grocery bill is say $540/month, that give s Raw material cost as $3 per meal 3. Meal preparation + Cleaning dishes etc.. takes about 1.5 hours/meal that is 3 hours/day for two meals a day for a family 4. If massive Centralized Kitchens ( like the Amazon Robot handling warehouses) can offer meals at $4 per meal ,people hook on to on REGULAR basis. 5. For this massive centralized Kitchens in order offer at at these low $4/meal, they need 'Commitment of minimum number of meals per month' from a family. I would say 60 meals/month 6. Basically this 60 meals/month minimum for $4/meal is like pre-paid PLAN, it is USE it or LOSE it in a month. 7. With the Mobile phone app, you set your Default Delivery place, if any thing change, you change Delivery location 2 hours in advance, your meal will be delivered to that place. ( with self driving fleet that should not be a problem) 8. These Centralized Kitchens Offer all Kinds of meals: Chinese, Japanese, Thai, American fastfood etc.. 9. When you have these economy of scale where each family Order their food 1/3 of total meals in a Month, and it is offered almost same price as your Grocery Bill to prepare those meals ( with out 3 hours/day preparing meals /Cleaning dishes) , This MODEL will be successful
- sudshekhar 9y ago
  Biggest problem with food tech is (IMO) the low barrier to entry. You can offer food at 4$ rates but so will your competitors (eventually atleast). > These Centralized Kitchens Offer all Kinds of meals: Chinese, Japanese, Thai, American fastfood etc.. Easy to say, much much harder to implement, specially accounting for personal preferences( extra tomatoes, less/more spicy etc. That said, there is definitely a huge market opportunity here. A slightly easier approach, I've often thought about, is starting off with a single kitchen where the food is cooked, selling it in high density areas (subway/bus station) via kiosks and vendors. You can do quality control and build your brand. Eventually, you could go after this monthly meal option. An even bigger opportunity could lie in the logistics space (Transporting the food from cooking location to destination). This might also be interesting: 1) https://en.wikipedia.org/wiki/Dabbawala https://en.wikipedia.org/wiki/Dabbawala 2) https://www.youtube.com/watch?v=sxW9sUnodM8 https://www.youtube.com/watch?v=sxW9sUnodM8
chrischen 9y ago
How do you explain "The Melt" (a VC-funded chain of melted cheese sandwich shops)?

by rjett 9y ago

alaskamiller 9y ago

You look at it as a restaurant problem but it's really an ecommerce supply chain problem. By implying restaurant you're still thinking about back of the house and front of the house. That paradigm doesn't exist for the likes of SpoonRocket or Munchery or Sprig. They operate out of commercial commissary kitchens that produces products that needs to go into a distribution network to people funneled in from marketing. The bet is that function isn't linear, rather it can be scaled up, especially when prodded along by all the state of art and best practices in ecommerce marketing techniques. These guys were trying to play the Amazon game, but instead of a 2 day shipping window, it's right now or in a few hours. And instead of a shipping hub to your door steps, it's down the street to your doorsteps. And instead of elastic goods that can wait for awhile before you commit to buy it's a need to satisfy. A successful restaurant feeds your craving. A successful supply chain fulfills your need. The real challenge is just the fact at the end of the day there's a fixed cost to fulfillment no one can figure out how to shake. Despite all the twisting in the labor relationship (avoiding W2s or stealing wages), it still costs $15/hr to deliver up to four $10 items that costs $3 to make. Until that goes down (with automated tincans on wheels) then merely sale of food items won't support these bets. Except weed and alcohol. Those are the only things that have the margins and demand to support an immediate delivery network.

bduerst 9y ago
Being a delivery-only restaurant isn't trying to "play the Amazon game" - it's trying to be a restaurant that only delivers. OP is right here that the substitute good for Sprig was ordering delivery from a restaurant. Typically when you think about ordering delivery, you instantly start thinking about your favorites, meaning this industry is hard to scale because it requires building trust. Weed and alcohol may have monopolistic characteristics brought on by strict licensing requirements, but people typically don't consume these on a daily basis so the lower delivery quantities negate the higher margins.
- alaskamiller 9y ago
  What even is a delivery-only restaurant? A restaurant is literally defined as a place you go to eat and pay. A fine dining experience is composed of front of house and a back of house. So Sprig is not a place you go to eat. There is no front of house experience. It's a thing that makes something to deliver to you. That's a fulfillment service. Here's something to think about, most restaurants don't offer take out or delivery services. Because it undermines their value. They want you to sit down and enjoy in their decor, talking to their staff, eating their food, and most importantly they want exacting control and consistency. That indeed is how you build up trust and repeat visit. But you're also conflating two behaviors here. When you think about ordering delivery it's because you're trying to satiate a craving. You want that one thing form that one place. Delivery is an augmented service to the restaurant. It's how DoorDash can exist. But it's also why In 'N Out Burgers sued to not have their food be delivered. And it's also why the bottom half of the DoorDash's platform are not good experiences, it's a restaurant being pulled to be something it's not. But that's not what Sprig is. They don't offer the same thing every day, they are relying on you to trust the top level branding alone and by browsing the options. It's a production facility with a delivery network. When you want to your favorite meal delivered and when you want to order from Sprig or SpoonRocket or Munchery are coming from two different places. The former is hacking a restaurant, the latter is purchasing products. Then lastly, it's not about licensing requirements for weed and alcohol. It's that they're inherently different products whereby immediate fulfillment is possible aside from transporting a human being.

cwilson 9y ago

Even an established chef, David Chang (of Momofuku fame here in NYC), tried something similar with a startup called Maple. Raised millions. Shut down a few weeks ago for similar reasons.

ryanworl 9y ago
He has framed himself as simply an investor in Maple as of late, but he's trying again with Ando. The food is very good and delivery is handled by Uber Rush couriers.

ajiang 9y ago

It's ok to think of Sprig as a restaurant that delivers. The most profitable restaurant chains in the world make $2-3M per store, with repeatable success in new stores (with obvious much better than 0-15% returns). You're finding the optimal solution for two problems: making food and delivering food. For making food, along with recipes and process, having great technology allows you to reduce cost and improve customer LTV by: * Reducing wasted ingredients and spoiled items by predicting demand and tracking your production line * Identify which meals get people to come back * Optimize for pricing, similar to website conversion For delivering food, having great technology allows you to improve delivery speed and reduce delivery cost. Yes, at the end of the day Sprig competes with any restaurant that delivers in the same way that Warby Parker competes with any eyeglass brand / store (obvious difference being the better margins in the eyeglass industry). However if you can get really good at using technology to optimize your production production and distribution, your advantage is your profit margin and your ability to deploy growth capital efficiently. Final point -- VCs are ok not making money for a few years. In fact, they HAVE to be ok not making money for 7-10 years. That's the whole point of venture capital.

LrnByTeach 9y ago

100 years ago, every family prepared their own Tomato Ketchup from scratch, 50 years ago every family prepared their own Cookie dough from Scratch. We are evolving to higher level abstraction in Food consumption, following is my view where we will be by 2025 . Here is my Vision (Comprehensive thought process) on the UNIT Economics of Food delivery, how this will manifest by the year 2025 . Pre-requisites: a) Massively centralized, highly Automated Kitchens : can prepare 10,000 meals/hour b) offer quality Meals at $4/meal with delivery ( with Self driving fleet starting year 2022 ) c) Monthly meals plan : a family will buy pre-paid 60 meals/month plan, USE it or LOSE it in a month. Here are the Plan details. 1. If we take avg. family size as 3 people in US, a family consumes 2 meals/day X 30 days X 3 people = 180 meals/month for family of 3 people 2. for family of 3 grocery bill is say $540/month, that give s Raw material cost as $3 per meal 3. Meal preparation + Cleaning dishes etc.. takes about 1.5 hours/meal that is 3 hours/day for two meals a day for a family 4. If massive Centralized Kitchens ( like the Amazon Robot handling warehouses) can offer meals at $4 per meal ,people hook on to on REGULAR basis. 5. For this massive centralized Kitchens in order offer at at these low $4/meal, they need 'Commitment of minimum number of meals per month' from a family. I would say 60 meals/month 6. Basically this 60 meals/month minimum for $4/meal is like pre-paid PLAN, it is USE it or LOSE it in a month. 7. With the Mobile phone app, you set your Default Delivery place, if any thing change, you change Delivery location 2 hours in advance, your meal will be delivered to that place. ( with self driving fleet that should not be a problem) 8. These Centralized Kitchens Offer all Kinds of meals: Chinese, Japanese, Thai, American fastfood etc.. 9. When you have these economy of scale where each family Order their food 1/3 of total meals in a Month, and it is offered almost same price as your Grocery Bill to prepare those meals ( with out 3 hours/day preparing meals /Cleaning dishes) , This MODEL will be successful

sudshekhar 9y ago
Biggest problem with food tech is (IMO) the low barrier to entry. You can offer food at 4$ rates but so will your competitors (eventually atleast). > These Centralized Kitchens Offer all Kinds of meals: Chinese, Japanese, Thai, American fastfood etc.. Easy to say, much much harder to implement, specially accounting for personal preferences( extra tomatoes, less/more spicy etc. That said, there is definitely a huge market opportunity here. A slightly easier approach, I've often thought about, is starting off with a single kitchen where the food is cooked, selling it in high density areas (subway/bus station) via kiosks and vendors. You can do quality control and build your brand. Eventually, you could go after this monthly meal option. An even bigger opportunity could lie in the logistics space (Transporting the food from cooking location to destination). This might also be interesting: 1) https://en.wikipedia.org/wiki/Dabbawala https://en.wikipedia.org/wiki/Dabbawala 2) https://www.youtube.com/watch?v=sxW9sUnodM8 https://www.youtube.com/watch?v=sxW9sUnodM8

chrischen 9y ago

How do you explain "The Melt" (a VC-funded chain of melted cheese sandwich shops)?