The New Fast Food

http://techcrunch.com/2014/07/05/the-new-fast-food/

by _pius • 12 years ago

71 44 12 years ago

techcrunch.com

hayksaakian2• 12 years 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.

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for reference, here's a 2006 era opinion on the business model.

http://franchisepundit.com/i-wouldnt-buy-it/delivery-only-re...

clearly, the difference in 2014 is Mobile devices.

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Upon further though, these new fast-food companies are more like on-demand catering companies.

nawitus• 12 years 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• 12 years 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• 12 years 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.

hayksaakian2• 12 years ago

The best way (I think) they can compete is on pure speed and adopting 'obvious' innovations.

If the restaurant business were invented today, this is probably what it would look like. Their primary challenge will be finding out if enough customers like their new approach fast enough to get some staying power.

artag2• 12 years ago

I haven't tried Sprig yet, but Munchery's business model is awesome. They are not trying to be a fast / cheap food service. They hire top notch chefs who prepare high end food. The cost of meal is b/w $10-$15. The quality of the food is what you will expect in a high end restaurant. They are basically getting rid of all the real-estate of a high end restaurant and delivering awesome food directly to you (lots of economies of scale). I am spending roughly about $500 per month ordering food from them. Highest quality food, delivered to you at very reasonable prices (I'm pretty sure I'll pay at least 50+% more for the same food if I went to a high end restaurant).

altcognito• 12 years ago

This makes a lot more sense if you're right about the numbers. It's not the single meal they are targeting but 2-4 meals. That will drive down the number of meals they have to deliver to make a profit. If the meals are of superb quality this idea works. But it might be tough if they are delivering: food doesn't travel well -- your food is guaranteed to be sitting for 5-15 minutes.

mildavw• 12 years ago

This makes me think about food carts. Here in Portland, they are are filling the niche for fine food at discount prices. For weekday lunches I pay $6-9 for what would be $12-20 in a restaurant. Clearly many other customers are doing the same. The local weekly recently reported that there are now 750 carts in town.

jeffyee• 12 years ago

I haven't tried Munchery since I live outside SF, but I'm surprised the food tastes good reheated. I've never had restaurant leftovers taste very good, particularly in the proteins where the moisture loss in heat/cool/reheat is significant. And the presentation ends up looking more like a TV dinner than the plated dinner shown on the website.

Does the perception around the chef/dishes contribute more to the positive experience than the actual taste of the food?

nlh• 12 years ago

This is a limited perspective (mine), but here's how they're competing right now: All 3 are optimized on "home-quality" food, i.e. healthy, homestyle cooking. And they're cheap. Sprig dinner is $12, delivered in 15 mins, warm, tasty, and healthy. There are _very_ few $12 meals out there that meet all of those criteria (Chipotle is almost there, but they don't deliver to my door in 15 mins).

So I see them competing because they're focused on different things (and they're doing it right, at least for me -- I order dinner from Sprig 2-3 nights a week and lunch from SpoonRocket 2-3 times a week).

Traditional fast food restaurants (Chipotle excluded) optimize on price, speed and taste (similarly), but those all come at the expense of nutrition, which (disappointingly) most people don't seem to mind. I hope A) that changes as the US continues to get fatter, and B) these guys don't 'sell out' and drop their food quality because they realize that deep-fried cheap chicken is "tastier" and cheaper than grilled high-quality chicken, etc.

hyp0• 12 years 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...

randallsquared2• 12 years 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.

seanmcdirmid8• 12 years 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.

randallsquared2• 12 years ago

Hm. I had thought that all the large chain fast food stores were essentially franchised. Interesting; thanks.

ihnorton• 12 years ago

And of course Starbucks will never franchise (well, Marriott, but look at how that turned out)

Interesting - I always assumed that the "we proudly brew Starbucks" locations at bookstores/college cafeterias/airports/malls/rest stops/etc. were franchises. They look just like Starbucks except on close inspection: they often don't accept Starbucks cards or run the promotions, for example. These are at places where all of the restaurant frontends are operated by Sodexho or Aramark, and occasionally the restaurants are connected behind the counter (sometimes staff may even be observed moving back and forth as demand warrants). Are those joint ventures?

adventured3• 12 years ago

For a data point, McDonald's owns roughly 7,000 restaurant locations globally, and they have around 35,500 total restaurants (so ~28,500 owned by franchisees).

jhonovich• 12 years 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.

adventured3• 12 years 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.

kevinmchugh• 12 years 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?

chockablock3• 12 years 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• 12 years ago

http://www.waitersonwheels.com/

hackerews• 12 years 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• 12 years 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• 12 years 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• 12 years 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.

Grue3• 12 years ago

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

The New Fast Food

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