6 ms·

The New Fast Food

71 points by _pius 12y ago

Grue3 12y ago
How is this a new thing? There are dozens of companies like this... in Russia of all places.
kevinmchugh 12y ago
> delivery ain’t cheap — Sprig pays their SF delivery workers $16 an hour. It's odd that they have their own drivers. Why hasn't someone (uber) commoditized moving things via car within a city on no notice? I'm surprised at least that there's no app integrating various services that require drivers. If you can drive people, can't you drive a pizza?
- chockablock 12y ago
  Sprig drivers carry a supply of the evenings 3 hot meal options (in a heater?) and then are dynamically routed based on incoming orders (or at least this is what I assume is happening based on the regular sub-10 min delivery times to my neighborhood far from downtown.) This seems harder to Uber-ize than point-to-point trips: your drivers would need special equipment to keep the food hot, and would need to be available for an extended period of deliveries.
- dredmorbius 12y ago
  http://www.waitersonwheels.com/ http://www.waitersonwheels.com/
hayksaakian 12y ago
For an article focused on "new" there was little regarding the difference over the "old". They made comparisons to traditional food businesses, but not to more similar, delivery-only businesses of the past. That's what I'd like to see. ----- for reference, here's a 2006 era opinion on the business model. http://franchisepundit.com/i-wouldnt-buy-it/delivery-only-restaurants/ http://franchisepundit.com/i-wouldnt-buy-it/delivery-only-re... clearly, the difference in 2014 is Mobile devices. ----- Upon further though, these new fast-food companies are more like on-demand catering companies.
nawitus 12y ago
It's hard to see how these new startups can compete with existing restaurants. There already are restaurants in cheap-to-rent locations, and it doesn't seem like Sprig et. al. can compete with the prices. I guess my point is that I don't see Sprig doing anything that new, so I don't see what new value they'll bring. But good luck of course, the restaurant business seems to be one of the harder markets out there.
- bagels 12y ago
  I agree. The article asserted that only three locations would be needed to serve all of SF, but also states that the food is delivered 'fast'. I am not sure I understand how you move the food further away from its destination, but then it is still 'fast'. I think looking at a pizza restaraunt is a good comparison on how far away on-demand delivery can be from the delivery point. The range of a pizza place is usually only a few miles.
  - argonaut 12y ago
    Because their is not limited by their physical locations. If you've ever gotten a SpoonRocket meal you'd notice that they have a heater in the car and the heater has a whole bunch of meals in it. Combine this with multiple cars.
    - anigbrowl 12y ago
      waitersonwheels.com has been doing that for years. From what I recall consumer delivery proved not to be that economical and now they concentrate on business clients. I believe they're doing fine but I'm not sure it's an explosive growth model. On a general note, you look at industry incumbents and they're not shy about leveraging technology as things are, so I'm not convinced that software is going to eat their lunch as the article claims.
      - seanmcdirmid 12y ago
        Consumer delivery is alive and thriving where I live. We personally order from Sunshine Kitchen (as well as a few other restaurants) a few times a week for dinner. Every McDonalds in my city has a fleet of electric delivery bikes and they seem to be pretty busy. All ordering proceeds online. Oh, did you mean to just limit your comment to the states?
hyp0 12y ago
long-term strategy: get established now, ready for when legal drones/self-driving cars shrink delvery costs. but also kinda reminds me of webvan...
randallsquared 12y ago
I think one thing that's missed, here, is that (e.g.) the company that owns "MacDonald's" doesn't actually operate fast food locations: they're franchises. Instead, the company (which has the high P/E spoken of) operates gigantic commercial kitchens-slash-factories and ships patties and other materials to the franchisees. Operating MacDonald's restaurants isn't a cost they bear. In this sense, these large franchises are already even more streamlined than Sprig, et al.
- seanmcdirmid 12y ago
  This is not true. McDonalds has plenty of corporate stores in the US (I worked for one as a teenager); not all stores are franchises. In countries like China they do not franchise at all; instead every store is owned by a joint venture. And of course Starbucks will never franchise (well, Marriott, but look at how that turned out)...they aren't even very happy about joint ventures.
  - randallsquared 12y ago
    Hm. I had thought that all the large chain fast food stores were essentially franchised. Interesting; thanks.
    - seanmcdirmid 12y ago
      The franchise model got McDs started and a lot of chains still use it heavily (e.g. subway). But the "chain store" model (centrally owned and operated) is actually an alternative to the franchise model, and seems to be more popular these days with the newer ventures.
    - e1g 12y ago
      Your assumption is in line with the underlying principle - money made from collecting licensing and franchisee fees actually is more profitable than money made from selling burgers. This implies that over time large fast food operators should tend to become more and more franchised, and we see this playing out in the market place right now [1]. The reason why fast food brands aren't 100% franchised already is because they need to constantly learn about their customers/products/operating environments/fast moving trends etc. The best way to do this is to actually operate your own stores where you can experiment and learn very quickly. The younger the brand, the few outlets it has, the more it still needs to learn, so corporate ownership will be higher. As the brand matures over time that number is expected to come down to e.g. 15-20%. [1] http://online.wsj.com/news/articles/SB10001424052702304587704577333443052487330 http://online.wsj.com/news/articles/SB1000142405270230458770...
jhonovich 12y ago
Google's 2013 revenue is 20x greater than Chipotle (~$60 vs ~$3.2 billion). To insinuate that Chipotle's higher P/E ratio says something about fast food vs tech is silly. It's because Chipotle is so much smaller than Google that it's easier for Chipotle to increase revenue than Google. In 2004, Google had about the same revenue as Chipotle did in 2013 but a P/E ratio of ~100, far higher than Chipotle does today.
- adventured 12y ago
  It's like their mind being blown that Rackspace has a 60 pe ratio, or that Amazon and Twitter and LinkedIn have roughly infinite (or negative) pe ratios - and then concluding that must mean investors love the 7th place (?) cloud provider more than Google, and a profitless social network business model more than Google's ad + search monopoly. It's an intentionally bogus conclusion meant to do nothing but set up an article.
deleted 12y ago
[deleted]
hackerews 12y ago
The P/E comparison at the beginning sucks but it's an eye-catcher for the average reader. I guess the real question is whether you believe, at the same value point, delivery costs will be less than prime real estate + customer service costs. At the moment the answer is no. Delivery is expensive at the scale and speed necessary to compete with going out to grab a meal. But if you believe in a future where autonomous cars are delivering people and shipments in a highly efficient way, mixed with a future of resource abundance (ie robots taking all the boring jobs) where human time becomes incredibly valuable... then it's not unlikely that a service like Sprig would beat out the traditional fast food model. In fact, it's not unlikely that restaurants and most other brick and mortar business would just become API's on top of the delivery model. However, I personally think Sprig is way too early to the game. Given an autonomous, speedy delivery system is (more than) a few years out, they must be handing out their investors' money trying to compete in the food business in today's market while waiting for the distant future. I bet order-taking companies like GrubHub end up partnering with Uber to fill this gap in the market early on, rather than a startup trying to do food + delivery at once today. But that's just my 2 cents.
MediaSquirrel 12y ago
Article author here... The critique about comparing P/E's is fair, but my point was really that Sprig & friends are restaurant chains vs traditional tech co's--and restaurant chains actually have decent P/E ratios, which totally shocked me. I was expecting restaurant chains to have P/E's in the 1-10x range, not 30-70x! From a VC perspective, investing in a restaurant chain looks like a good idea if you can actually make the E in the P/E (ie turn a profit). I don't know about you all, but this was surprising to me. Also, to address another point that some people made: Sprig & SpoonRocket use the delivery drivers as mobile storage units carrying pre-prepped & heated meals in the trunk. They don't do point-to-point pickup & delivery, which is how they can deliver so fast, cover so much geography and leverage their smaller real estate footprint.
chrisgd 12y ago
Would love to see a business model like this that accepts EBT. Everyone should have access to these kinds of meals. Plus it would give Sean hannity something to get upset about. "How poor could they really be if they have refrigerators and good food?!?!"
mark_l_watson 12y ago
Interesting article. I usually view fast food consumers as people who are poor, working multiple jobs, and don't have time for preparing healthier and much less expensive meals themselves. (The excellent documentary "Fed Up" makes this point.) That is, for my wife and I part of being affluent is having time to enjoy preparing fine meals ourselves. This article made me realize that a lot of people who are well off financially are not well off as far as having lots of free time - thus the market for companies like Sprig, etc.

71 points by _pius 12y ago

Grue3 12y ago

How is this a new thing? There are dozens of companies like this... in Russia of all places.

> delivery ain’t cheap — Sprig pays their SF delivery workers $16 an hour. It's odd that they have their own drivers. Why hasn't someone (uber) commoditized moving things via car within a city on no notice? I'm surprised at least that there's no app integrating various services that require drivers. If you can drive people, can't you drive a pizza?

chockablock 12y ago
Sprig drivers carry a supply of the evenings 3 hot meal options (in a heater?) and then are dynamically routed based on incoming orders (or at least this is what I assume is happening based on the regular sub-10 min delivery times to my neighborhood far from downtown.) This seems harder to Uber-ize than point-to-point trips: your drivers would need special equipment to keep the food hot, and would need to be available for an extended period of deliveries.
dredmorbius 12y ago
http://www.waitersonwheels.com/ http://www.waitersonwheels.com/

hayksaakian 12y ago

For an article focused on "new" there was little regarding the difference over the "old". They made comparisons to traditional food businesses, but not to more similar, delivery-only businesses of the past. That's what I'd like to see. ----- for reference, here's a 2006 era opinion on the business model. http://franchisepundit.com/i-wouldnt-buy-it/delivery-only-restaurants/ http://franchisepundit.com/i-wouldnt-buy-it/delivery-only-re... clearly, the difference in 2014 is Mobile devices. ----- Upon further though, these new fast-food companies are more like on-demand catering companies.

nawitus 12y ago

It's hard to see how these new startups can compete with existing restaurants. There already are restaurants in cheap-to-rent locations, and it doesn't seem like Sprig et. al. can compete with the prices. I guess my point is that I don't see Sprig doing anything that new, so I don't see what new value they'll bring. But good luck of course, the restaurant business seems to be one of the harder markets out there.

bagels 12y ago
I agree. The article asserted that only three locations would be needed to serve all of SF, but also states that the food is delivered 'fast'. I am not sure I understand how you move the food further away from its destination, but then it is still 'fast'. I think looking at a pizza restaraunt is a good comparison on how far away on-demand delivery can be from the delivery point. The range of a pizza place is usually only a few miles.
- argonaut 12y ago
  Because their is not limited by their physical locations. If you've ever gotten a SpoonRocket meal you'd notice that they have a heater in the car and the heater has a whole bunch of meals in it. Combine this with multiple cars.
  - anigbrowl 12y ago
    waitersonwheels.com has been doing that for years. From what I recall consumer delivery proved not to be that economical and now they concentrate on business clients. I believe they're doing fine but I'm not sure it's an explosive growth model. On a general note, you look at industry incumbents and they're not shy about leveraging technology as things are, so I'm not convinced that software is going to eat their lunch as the article claims.
    - seanmcdirmid 12y ago
      Consumer delivery is alive and thriving where I live. We personally order from Sunshine Kitchen (as well as a few other restaurants) a few times a week for dinner. Every McDonalds in my city has a fleet of electric delivery bikes and they seem to be pretty busy. All ordering proceeds online. Oh, did you mean to just limit your comment to the states?

hyp0 12y ago

long-term strategy: get established now, ready for when legal drones/self-driving cars shrink delvery costs. but also kinda reminds me of webvan...

randallsquared 12y ago

I think one thing that's missed, here, is that (e.g.) the company that owns "MacDonald's" doesn't actually operate fast food locations: they're franchises. Instead, the company (which has the high P/E spoken of) operates gigantic commercial kitchens-slash-factories and ships patties and other materials to the franchisees. Operating MacDonald's restaurants isn't a cost they bear. In this sense, these large franchises are already even more streamlined than Sprig, et al.

seanmcdirmid 12y ago
This is not true. McDonalds has plenty of corporate stores in the US (I worked for one as a teenager); not all stores are franchises. In countries like China they do not franchise at all; instead every store is owned by a joint venture. And of course Starbucks will never franchise (well, Marriott, but look at how that turned out)...they aren't even very happy about joint ventures.
- randallsquared 12y ago
  Hm. I had thought that all the large chain fast food stores were essentially franchised. Interesting; thanks.
  - seanmcdirmid 12y ago
    The franchise model got McDs started and a lot of chains still use it heavily (e.g. subway). But the "chain store" model (centrally owned and operated) is actually an alternative to the franchise model, and seems to be more popular these days with the newer ventures.
  - e1g 12y ago
    Your assumption is in line with the underlying principle - money made from collecting licensing and franchisee fees actually is more profitable than money made from selling burgers. This implies that over time large fast food operators should tend to become more and more franchised, and we see this playing out in the market place right now [1]. The reason why fast food brands aren't 100% franchised already is because they need to constantly learn about their customers/products/operating environments/fast moving trends etc. The best way to do this is to actually operate your own stores where you can experiment and learn very quickly. The younger the brand, the few outlets it has, the more it still needs to learn, so corporate ownership will be higher. As the brand matures over time that number is expected to come down to e.g. 15-20%. [1] http://online.wsj.com/news/articles/SB10001424052702304587704577333443052487330 http://online.wsj.com/news/articles/SB1000142405270230458770...

jhonovich 12y ago

Google's 2013 revenue is 20x greater than Chipotle (~$60 vs ~$3.2 billion). To insinuate that Chipotle's higher P/E ratio says something about fast food vs tech is silly. It's because Chipotle is so much smaller than Google that it's easier for Chipotle to increase revenue than Google. In 2004, Google had about the same revenue as Chipotle did in 2013 but a P/E ratio of ~100, far higher than Chipotle does today.

adventured 12y ago
It's like their mind being blown that Rackspace has a 60 pe ratio, or that Amazon and Twitter and LinkedIn have roughly infinite (or negative) pe ratios - and then concluding that must mean investors love the 7th place (?) cloud provider more than Google, and a profitless social network business model more than Google's ad + search monopoly. It's an intentionally bogus conclusion meant to do nothing but set up an article.

deleted 12y ago

[deleted]

hackerews 12y ago

The P/E comparison at the beginning sucks but it's an eye-catcher for the average reader. I guess the real question is whether you believe, at the same value point, delivery costs will be less than prime real estate + customer service costs. At the moment the answer is no. Delivery is expensive at the scale and speed necessary to compete with going out to grab a meal. But if you believe in a future where autonomous cars are delivering people and shipments in a highly efficient way, mixed with a future of resource abundance (ie robots taking all the boring jobs) where human time becomes incredibly valuable... then it's not unlikely that a service like Sprig would beat out the traditional fast food model. In fact, it's not unlikely that restaurants and most other brick and mortar business would just become API's on top of the delivery model. However, I personally think Sprig is way too early to the game. Given an autonomous, speedy delivery system is (more than) a few years out, they must be handing out their investors' money trying to compete in the food business in today's market while waiting for the distant future. I bet order-taking companies like GrubHub end up partnering with Uber to fill this gap in the market early on, rather than a startup trying to do food + delivery at once today. But that's just my 2 cents.

MediaSquirrel 12y ago

Article author here... The critique about comparing P/E's is fair, but my point was really that Sprig & friends are restaurant chains vs traditional tech co's--and restaurant chains actually have decent P/E ratios, which totally shocked me. I was expecting restaurant chains to have P/E's in the 1-10x range, not 30-70x! From a VC perspective, investing in a restaurant chain looks like a good idea if you can actually make the E in the P/E (ie turn a profit). I don't know about you all, but this was surprising to me. Also, to address another point that some people made: Sprig & SpoonRocket use the delivery drivers as mobile storage units carrying pre-prepped & heated meals in the trunk. They don't do point-to-point pickup & delivery, which is how they can deliver so fast, cover so much geography and leverage their smaller real estate footprint.

chrisgd 12y ago

Would love to see a business model like this that accepts EBT. Everyone should have access to these kinds of meals. Plus it would give Sean hannity something to get upset about. "How poor could they really be if they have refrigerators and good food?!?!"

mark_l_watson 12y ago

Interesting article. I usually view fast food consumers as people who are poor, working multiple jobs, and don't have time for preparing healthier and much less expensive meals themselves. (The excellent documentary "Fed Up" makes this point.) That is, for my wife and I part of being affluent is having time to enjoy preparing fine meals ourselves. This article made me realize that a lot of people who are well off financially are not well off as far as having lots of free time - thus the market for companies like Sprig, etc.