[rjett]

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]

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]

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.

[walshemj]

in the UK a few restaurants are experimenting with this and years a go one of my local Indian restaurants also had a take away only kitchen.

[alaskamiller]

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.

[vkou]

> What even is a delivery-only restaurant?

90% of pizza joints. Yes, they may have seating area, but it's greasy, uncomfortable, and small. The overwhelming majority of their business is take-out, and delivery.

Every single hole-in-the-wall place. They either deliver, or they get you to pick up your own food.

Food trucks.

Having no front isn't some amazing innovation that will afford you margins that VCs and computer programmers expect.

Yes, optimizing your logistics and supply chain in the restaurant business is a huge problem. It's also a problem that successful restaurants, by necessity, are already really good at solving. You're not going to squeeze much blood out of that rock.

[ams6110]

This is the reason it will be very difficult for anything like the Sprig concept. Food delivery is insanely competitive and it's a race to the bottom to see who can stay in business on the smallest margin. That's usually the place that operates out of a low-rent storefront and employs family members at below-minimum wage, not a glitzy well-funded commissary with acres of stainless steel and new equipment.

[Finnucane]

Restaurants and other food-related businesses tend to have an extraordinarily high rate of failure. They're really hard to sustain long-term. So the fact that a food business failed is not remarkable; that's the usual, expected outcome.

[theparanoid]

And 100k/yr developers. I never understood the excitement around food delivery start-ups. There's nothing like broiling a nice steak with onions. It's like Americans have forgotten how to cook.

[lqdc13]

>what is a delivery only restaurant?

Some restaurants don't have any seating area. Think Dominos Pizza.

>When you think about ordering delivery it's because you're trying to satiate a craving.

Or you just don't feel like cooking. Also you might want anything random - something different you don't dislike. And you don't feel like walking to a restaurant and sitting there alone waiting for food + paying tips etc.

Sprig/SpoonRocket/Munchery/doordash/Grubhub/Eat24/localpizzashop.com/any local place that is walkable distance and offers takeout are effectively direct competitors for me.

[iampims]

The definition of a restaurant is "a building where people go to eat", if you can't eat there, it's not a restaurant…

[emodendroket]

Are we really going to start splitting hairs about "delivery place" vs "takeout" vs "restaurant"? It's clear what the OP is talking about; cooking food and delivering it is not a novel concept.

[emodendroket]

On the other hand, the article says they started "experimenting" with serving food to walk-in customers at their kitchen. Which would mean at some point near the end they became a restaurant by the definition you are using.

[StavrosK]

> with automated tincans on wheels

I think this was the most insightful part of your comment. When cars are self-driving, there's no reason they'll look like cars any more. There will be people-carriers, but they won't be the only vehicles on the road when they don't have to carry people any more.

Instead, what about small cargo carriers, like bike messengers without the bike? Imagine basically coolers on wheels, zipping along with cars. Why have a full-blown car or motorcycle when you can have a tin can on wheels deliver stuff?

[ams6110]

> Why have a full-blown car or motorcycle when you can have a tin can on wheels deliver stuff?

For one reason, to prevent people from stealing the goods. I used to deliver pizza. It was pretty much a given in certain areas that if I was not very careful about locking my car that I'd get pizzas stolen out of it while I was parked making a delivery.

A self-driving igloo cooler is just going to get kicked over and emptied.

[alaskamiller]

Those are here in silicon valley already.

[StavrosK]

Really? What do they look like?

[Baeocystin]

An igloo cooler on wheels, more or less. They are sized for sidewalk travel, not street.

[edit] Here's a brief video that shows what they look like.

http://www.cnbc.com/2017/04/21/robots-are-now-deliving-food-...

[StavrosK]

Huh, that looks very interesting, thanks. For some reason, I keep thinking those robots look like they're one wrong turn away from being dismantled by thieves in seconds...

[stickfigure]

it still costs $15/hr to deliver up to four $10 items that costs $3 to make

It seems like Sprig should have had a major advantage over delivery restaurants though - they didn't have to travel back and forth to the restaurant. With a fixed menu of a few non-heated items, they (presumably) loaded the truck with enough to satisfy the demands of the day and then their only problem is Traveling Salesman.

I don't understand why this isn't a killer model. Delivery restaurants make a living, right?

I'm inclined to believe that the parent comment is right, that the expectations were just too great. Even if the food delivery business was much more profitable than the average restaurant, they still had to support a very expensive VC-built technology team.

Also, I just wasn't that excited about the food. I ordered from Sprig a few times; it was just sandwiches and salads. You can get those within about 50 yards from any office downtown. I'm guessing that delivery restaurants make a living because their food is compelling enough that people are willing to wait an hour. Maybe remarkable food doesn't keep all day on a truck?

[emodendroket]

I find it hard to believe that having to occasionally return to the restaurant to pick up more orders represents such a large percentage of a restaurant's cost.

[stickfigure]

The cost of the delivery driver is amortized across the total number of deliveries the driver makes. If you can double the number of deliveries, you've halved the cost of delivery.

Having to return to a fixed point every 3rd or 4th delivery seems like it would add up.

[beokop]

You're assuming the delivery driver can be kept busy throughout the entire shift. I doubt there's many places where a driver could do a single pickup and then be kept busy for 6-8 hours straight.

[emodendroket]

Can you actually double it? I am not so sure. Even if you could, what percentage of cost does that actually represent?

[kentuktekboogen]

We do see a lot of success with alcohol and cannabis delivery services here at Onfleet. "The vices" have high enough margin to support this model. Food delivery can also work, but razor thin margins so to make the food and operate the network is tricky.

[azinman2]

Weed and alcohol don't expire in the same way, and all the work making it is already done.

[ajiang]

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.

[cwilson]

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]

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.

[LrnByTeach]

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

[sokoloff]

3 hours for the prep and cleanup for 2 meals is quite a bit longer than our experience as a family of 4. Breakfast and lunch prep/cleanup is closer to 15 minutes than 90 and dinner prep/cleanup might be 30-60 for most meals.

Breakfast and lunch also seem less amenable to delivery as they're often eaten "on a schedule" with little room for screwups or delays.

I agree that delivery has a place; I'm not so sure it's going to be from a centralized location/coordinated kitchens. That central location is unlikely to be experts at sushi, Vietnamese, pizza, subs, have the fries I love, Thai, etc.

[LrnByTeach]

People consume food predominately (70% of total meals in a month)based on ethnic lines and local customs why because that is how their Mom cooked first 15 years of their childhood and their taste buds were developed that way.

If you take a two month window,120 meals (2 meals X 60 days) , 90 meals that is 75% consists repeats from a group of 20 different food dishes .

Let us assume, you are living in typical US city where the population is 30,000 people. There may be 10 different categories of people BASED on their 'food preferences'.

When you combine this 10 different category groups with the above '20 different food dishes repeat' combine this with pre-paid Monthly plan and Centralized Kitchens, you have a quality food at close to GROCERY price bill .

Once the above AGGREGATION happens, It is not hard to have a sushi, Pizza, Thai, Chinese etc.. all under same roof Centralized Kitchen because the kitchen will be serving on a given day serving 1000 Pizza, 1000 Thai, 1000 Sushi, 1000 Subs etc.. for 30,000 population city .

[petra]

I think delivery could be solved today:

I assume we use chilled meals(which you reheat at home. can taste great), which last for 2-3 days - so let's say you need to delivery 2-3 times a week, and you delivery meals for the whole family. That's a lot of meals per delivery. Certainly helps the economics.

Now if as a requirement for delivery you would need to install a smart lock[1] on the trunk of your car(that the delivery guy can have the right access to), and a cooling box(maybe one that includes something like ice packets or similar passive temp. regulation tech), and the delivery guy will just drop the food there - this will be really helpful, because it shift delivery to the middle class from suburbs to somewhere near their work, which means much higher route density(deliveries per hour).

So i kind of think the technology part of cheap deliveries is solvable. But it all depends on the marketing part, and changing habits isn't that easy. And that previous plan requires a lot of interlocking parts together. hard.

So maybe a good way to do this is offering delivery for businesses(good delivery economics). Get people used to that. Get commercial kitchens offering great and cheap food based on that. That's what Amazon is doing.

And than, some commercial kitchen will start easy, with an offer of chilled meals for your home(for offices that already get deliveries). They will delivery to your office, you'll put in a cooling-box in office, and take it to your car at the end of the day.

And on top of that, you get a smart lock, or discounts for plans like you mention, or maybe discounts for group plans, etc.

[1]This of course would be a great help to e-commerce in general.

[emodendroket]

If you're just reheating a cold meal why am I going to pay you to do so and deliver it instead of buying one at the grocery store instead? I also own a microwave, a freezer, and an oven.

[petra]

There's a difference between chilled meals(which last 3 days), and frozen meals(which you find in the supermarket). Munchery sold chilled meals, and at least according to reviews/media, they we're quite good.

[emodendroket]

They sell chilled meals at the supermarket too.

[sudshekhar]

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 2) https://www.youtube.com/watch?v=sxW9sUnodM8

[LrnByTeach]

>Easy to say, much much harder to implement, specially accounting for personal preferences( extra tomatoes, less/more spicy etc.

200 years ago, when every family is making their own tomato Ketchup, I am sure there must be 5000 very little variations of ketchup in USA. fast forward to today there are only 57 and all this is done by one company with couple of centralized locations and People who are used to those 5000 varieties confirmed to 57 varieties .

https://en.wikipedia.org/wiki/Heinz_57

When you consolidate and aggregate EACH of the food dish we eat will be consolidate into only 5 different variations. These centralized kitchens can handle 5 different variants ( Chinese Orange Chicken for example) and prepare 200 meals of each variety ( of total 1000 meals of Orange Chicken )

I have given an detailed answer on this issue in this thread, please search with following text.

Once the above AGGREGATION happens, It is not hard to have a sushi, Pizza, Thai, Chinese etc.. all under same roof Centralized Kitchen because the kitchen will be serving on a given day serving 1000 Pizza, 1000 Thai, 1000 Sushi, 1000 Subs etc.. for 30,000 population city

[barrkel]

I commute to work along an industrial road with a number of interesting warehouse buildings along it. There are catering suppliers you've never heard of for various different ethnic foods. Behind many cheap takeaway restaurants, there's an industrial supply chain for sauces and other basic ingredients; the centralised kitchens already exist.

Of course final prep happens on a more local site, but that makes sense - hot food doesn't travel well, which is the main limit on delivery, not time or cost - the buyer could always pay more, but they'll be getting an increasingly overcooked or tepid meal.

[walshemj]

not sure many people would be happy with eating 100% microwaved tv diners - not sure its particularly healthy either

[chrischen]

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