by tomgallard on 3/15/16, 3:07 PM with 187 comments
by tptacek on 3/15/16, 3:32 PM
Am I reading this correctly, and the business metric this company managed to achieve is simply "selling food above cost", like every deli and diner in the country does? Or is the article instead suggesting that they were profitable after all logistics costs?
by nlh on 3/15/16, 6:09 PM
I know I am but a tiny sample of the overall SF food market, but I'm squarely in the target demographic (work at home, don't like to go out to eat). I used SpoonRocket a few times, but entirely gave up on them after trying a few times. I love Sprig and order from the often. Here's why:
* SpoonRocket's meals simply weren't healthy. A lot of the folks in this space (Sprig, Munchery, etc.) are really focused on healthy food. I can call the Chinese place down the block and have an unhealthy meal delivered, but there traditionally have been very few good healthy options other than cooking yourself. SpoonRocket's food was heavy, carb-y, greasy, and just not that good.
* I know they had to do this for time efficiency/cost reasons, but the requirement that you meet the driver out at the curb was too big of a psychological barrier. I live/work in one of the (relatively rare, to be fair) SF highrises, but knowing that a SpoonRocket meal meant getting up, waiting for the elevator, going downstairs, meeting the driver, then going back upstairs - meant that I just never ordered from them (especially when Sprig will bring the meal right to my door.)
This just goes to show that in an absolute sense -- these relatively small differences might not matter (i.e. of course I'd rather go downstairs to pick up food vs. walk to a restaurant for lunch), but in the highly competitive environment where easier and healthier alternatives exist, their offering was unsustainable.
by Bjorkbat on 3/15/16, 4:42 PM
Well, knowing Techcrunch they're probably overreacting, but this is a prediction I can get behind.
Maybe now VCs can invest in companies that don't rely on questionable labor tactics in order to deceive themselves and others into thinking that they're unicorns.
by Splines on 3/15/16, 4:02 PM
What's the deal? ROI for food delivery seems ridiculously low in comparison to other options. I don't want to sound like a curmudgeon but it seems quite wasteful.
by mbesto on 3/15/16, 3:52 PM
by vkou on 3/15/16, 4:22 PM
So... Like the pizza place down the street?
by S_A_P on 3/15/16, 8:34 PM
by autotune on 3/15/16, 3:36 PM
by mmanfrin on 3/15/16, 6:55 PM
by choward on 3/15/16, 10:49 PM
They only operate in Sacramento. The main things I liked are that it takes usually under 10 minutes and there was no tipping or delivery fee. The price you saw is what you paid. However, they just added tipping to their app which isn't a good sign. On top of that, it asks you to tip before you even get your food and there is no option to tip later that I know of. I haven't ordered from them since I was first prompted to tip.
Older article that discusses them: http://www.bizjournals.com/sacramento/news/2015/10/30/what-s...
by willchen on 3/15/16, 4:13 PM
A quick timeline (from what I can remember):
- Initially started out in Berkeley / Emeryville area by a couple of Berkeley alumni who had previously launched a food delivery startup focused on midnight munchies (aka, unhealthy food for college-type students). Each meal was initially only $6, tasted quite good, and delivery only took ~15 minutes.
- Expanded to Oakland area (first Downtown, then eventually other areas like Lake Merritt). Meals were still only $6, taste was usually good but sometimes wasn't as good. Delivery was still fairly fast (usually <15 minutes), but could take up to 30 minutes.
- Expanded to SF. Meals became more expensive and had variable pricing (I think it was first $8, $10, then $12, depending on which dish). A delivery fee ($2.50) was created. Food quality dropped (usually was OK, but not as good as it used to be); meals could take up to 1hr to get delivered (usually under <30 min though)
- Started their elite food delivery plans which provided free meal delivery and a bit of extra credit, by agreeing to pay upfront each month (e.g. $20).
Thoughts:
- From a business perspective, I think SpoonRocket (SR) made a lot of the right moves. While a lot of people say "disruptive innovation" loosely right now, I think SR actually did it by: 1) focusing on a low-end market that wasn't well addressed (e.g. college students), 2) used a technology to rapidly improve the experience for this low-end market (e.g. using Google Maps to efficiently route drivers to deliver on-demand meals), and 3) go upstream in the market to gain market share in higher-end consumer segments.
- So why did SR fail? I'm speculating here, but I think it's because scaling all these type of on-delivery startups is really, really hard work. Unlike Google or Facebook which could effortlessly scale up across the world with its technology-heavy solution, scaling up a company like SR requires hiring a linear amount of employees like drivers and support staff. As others have noted, it's difficult to get the economics right for an inherently low-margin business with a high labor component.
- Can other food startups succeed? I'm willing to bet most food startups probably won't survive this fundraising crunch if it extends another year. As far as I could tell, SR was ran as a very lean operation where they tried to batch deliveries, produce a small set of meals in large quantities, and focused on efficiency (e.g. calling you two minutes ahead of time to minimize delivery driver's waiting time). If SR couldn't make the economics work, I'm not sure how others could. Perhaps by going more high-end than SR, and charging a higher price (a la Munchery) or is it perhaps by selling a lot more quantity?
- Lastly, what I'm hoping for is the "Airbnb" of food, where regular people could cook meals and sell them to neighbors on a marketplace with reviews, pictures, etc. Of course the economics would be challenging like any food business, but that's the kind of service that I could see myself regularly using. There's also the regulatory side (after all Airbnb itself has followed the policy of 'asked for forgiveness, rather than permission') Who doesn't like the sound of buying a home cooked meal from a neighbor?
by jarjoura on 3/15/16, 5:49 PM
Maybe Lyft will acquire Swig if they're not already cooking something up. :-D
by nickporter on 3/15/16, 6:13 PM
by 11thEarlOfMar on 3/15/16, 6:34 PM
But we only tried it because they offered a Groupon that put the price where we thought it should be. I've heard that in fact, they are doing very well, and I hope that is the case.
by jstoiko on 3/15/16, 5:05 PM
by tommynicholas on 3/15/16, 5:29 PM
by chad_strategic on 3/15/16, 8:58 PM
Revenue -Cost of Goods (food, in this case) = Gross Profit
Gross Profit -Sales & General, Administrative = Net profit
(SG&A = office space, Webdev, logistics, etc...)
I'm sorry, but anything else is just plan BS.
by stephenitis on 3/15/16, 11:36 PM
Time to whip out my free Chipotle burrito coupons.
by smeyer on 3/15/16, 3:44 PM
by nemo44x on 3/15/16, 4:11 PM
by rco8786 on 3/15/16, 4:06 PM
by searine on 3/15/16, 4:14 PM
by free2rhyme214 on 3/15/16, 6:54 PM