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The Spoon

Daily news and analysis about the food tech revolution

Industry Perspectives

Former Uber CEO Lands in the Cloud Kitchen Market

Former Uber CEO Travis Kalanick is playing a new game modeled after those HGTV shows, where teams of fortune hunters turn distressed properties into quick-sell gems. In the case of the newly formed City Storage Systems, the narrative differs in that these down-and-out chunks of real estates are empty or neglected strip malls and parking lots, and the endgame is to create an assembly line of cloud kitchens.

In fact, this new company is built upon the ashes of a firm called CloudKitchen which specialized working with food entrepreneurs in the infrastructure end of the food business. CloudKitchen offered a range of services including shared-kitchen facilities, delivery services, and even marketing help. City Storage Systems aims to repurpose a nationwide inventory of non-performing real estate into kitchen facilities primarily for restaurants and other such establishments that want to focus on food and forgo the headaches associated with running a restaurant.

The company’s new website says, “We provide infrastructure and software that enables food operators to open delivery-only locations with minimal capital expenditure and time.” But clearly, it is more than that. Kalanick also has a venture fund, 10100, which will be a position to invest in those restaurants and related businesses that are successful tenants in real estate properties his company manages.

According to a story in ReCode, the former Uber CEO is investing $150 million into City Storage Systems, which is based in Los Angeles. He is joined by other Silicon Valley investors as well as former Earthlink (an original ISP) founder Sky Dayton.

While City Storage System is not necessarily a game changer, its entry into the market forces observers to closely examine the zeitgeist surrounding new models for restaurants in their various forms. To his credit, Kalanick is taking a tried-and-true real estate practice of targeted leasing and subleasing distressed properties. While most of these efforts are done seasonally—such as doing temporary rentals to costume businesses at Halloween—City Storage System is looking at a big picture which more resembles an incubator than a short-term revenue generator.

This zeitgeist leads to a crazy quilt of overlapping help-the-cook concepts aimed at providing one, or more, crucial parts of the value chain with a clear emphasis on the supply side of the food business. For example, City Storage is not alone in the cloud kitchen business (although they are shooting for massive scale) and will go toe-to-toe with the adjacent sector of shared commercial kitchens. These shared kitchens fall into many subcategories. These may include those looking for commercial space for their cottage food businesses. Or it could appeal to startups who find the shared model appealing, offering add-on services such as possible funding and assistance with marketing and legal matters.

While it is apparently a myth that most restaurants fail in their first year, the restaurant business is not for those wanting to make a financial killing. Because the cost to open a traditional restaurant is about $3,000 per seat, there is a flood of accomplished chefs, newbies, and wannabes taking the lean startup approach to feeding the public for profit. It also is one of the reasons there are about 4,000 food trucks in the U.S., with an annual growth rate of about 8%.  And, as you can infer, it also is the force behind the growth in shared, ghost and other variants of food prep ideas.

All of these options push the important element of demand to the back of the bus. And, those in the demand part of the equation—aka consumers—are faced with a dizzying array of options come meal time. Do I A) order groceries from the store and cook from a recipe I find on the web? B) Open the meal kit that arrived and assembles the ingredients for tonight’s meal? C) Fire up an app and order from a food delivery service D) Go out to eat? Or… there just aren’t enough letters in the alphabet to chronicle the choices. Anyone who professes to have his or her finger on the pulse of dining habits of consumers is fooling him or herself and/or investors. One survey says millennials eat out five times a week. Others say the opposite.

As with many sectors heavily influenced by technology, the food infrastructure business has no clear direction or bottom line. It is a time of experimentation, placing bets on the roulette wheel and ensuring your business plan has multiple pivot points. The good news for consumers is the number of mealtime options is unlikely to slow down anytime soon. If you have a hankering for Ethiopian food at midnight—it’s likely a click away.

Can Celebrities (and Celebrity Chefs) Help Us Overcome The Insect “Ick” Factor?

We all know that we should be eating insects. After all, bugs are a dietary staple for billions of people around the globe, and they have a significantly lower environmental footprint than meat. But Americans are still having a tricky time getting over the “ick” factor that comes with munching on crawling critters.

The concept is popular in theory. According to Meticulous Research, the global insects market is expected to be valued at almost $1.2 billion by 2023, growing at a CAGR of 23.8% from 2018. This increase is mainly due to a ballooning population, waning food resources, and a high demand for protein.

All logical arguments aside, a lot of people are still pretty grossed out when it comes to eating bugs. But some influencers — chefs, celebrities, and celebrity chefs — are trying to change that.

“Eating insects is intellectually popular right now, and it’s a great conversation piece,” said Meeru Dhalwala, chef at Vancouver restaurant Vij. “But more chefs need to experiment with insects.”

Some are certainly trying. Rene Redzepi of Noma fame has been known to make liberal use of ants on his menus. Alex Atala, who was on Season 2 of Netflix’s Chef’s Table, uses Amazonian insects on his menus. In the commercial sphere, Bitty Foods developed cricket flour cookies in tandem with celebrity chef (and smart kitchen enthusiast) Tyler Florence. Cricket protein bar company Exo, who just got acquired by Aspire Food Group, partnered with chef Kyle Connaughton to develop their creations.

Celebrities are pushing the insect diet, too. Salma Hayek posted a video of herself sampling crickets on Instagram, and has been eating ants and grasshoppers since she was a child. Angelina Jolie cooked up a feast of tarantulas and scorpions in Cambodia for a video on BBC News. Questlove has shared a video of himself eating a cricket-topped salad. And most recently, Nicole Kidman caused ripples across the internet by eating a four-course meal of “micro-livestock” — also known as bugs — for Vanity Fair’s Secret Talent Theatre.

Nicole Kidman Eats Bugs | Secret Talent Theatre | Vanity Fair

As she works her way through plate after plate of mealworms, hornworms, crickets, and grasshoppers, she points out that 2 billion people around the world eat bugs. “And I’m one of them,” she said.

Kidman genuinely seems to be eating the insects, and even enjoying them. She basically swoons when she opens up her serving platter to revel fried grasshoppers. “These are amazing,” she gushes. “I’d recommend them.”

I’d be curious to see if her performance — or other celebrity’s vocal support for bug consumption — translates to an uptick in ecommerce purchases of insects and insect products.

Personally, I think that insects could find their entrance into the mainstream through the health and exercise food market. Crickets, for example, are 65% protein (compared to beef’s 50%), packed with vitamins, minerals, and Omega-3 fatty acids, and are very low in fat. And when they’re roasted and milled into flour, crickets can be added to a myriad of dishes in a relatively under-the-radar way. A survey by PureGym in the U.K found that 35% of gym-goers were willing to try edible insects. I could see them being used in powdered drink supplements and expanding their presence in the energy bar sector.

As high-protein, low-carb diets grow in popularity, crickets (and other insects) may have found their time to shine. As long as people can channel their inner Nicole Kidman and get over the “ick” factor, first.

A New Tool Uses Data to Combat Forced Labor in the Fishing Industry

There’s growing consumer interest in knowing where your food comes from. In some cases, it came from a corporate farm. In others, it passed through the hands of slaves on its way to the supermarket.

The latter is most often the case with fish—so much so that the Monterey Bay Aquarium’s Seafood Watch Program has launched a new Seafood Slavery Risk Tool. The online database rates the likelihood of forced human labor, human trafficking, and other inhumane practices occurring on fishing vessels. Businesses that buy and sell fish can then identify any high-risk links in their supply change and, we hope, make a change when necessary.

To create the tool, The Seafood Watch Program teamed up with Liberty Asia, who aims to prevent human trafficking, and the Sustainable Fisheries Partnership. Using sources like investigative reports, academic publications, NGO reports, and inter-governmental publications, the database organizes evidence and explains how it factors into each fishery’s rating.

Users enter a type of fish into the database to pull up information about the fisheries catching that species: where they fish, who governs the body of water, and how high-risk that fishery is when it comes to human rights issues (see the full methodology). For example, entering “bigeye tuna” tells us that multiple organizations govern the waters where this species is caught and that this area is rated ‘Critical’ for risk of human rights abuses. It also explains why that rating applies.

Fisheries get a rating of Low Risk, Moderate Risk, High Risk, and Critical Risk. Disturbingly, Critical shows up most frequently of all the ratings, though it’s not totally surprising. Of the $34 billion of seafood products imported into the United States alone, the majority come from just a handful of countries: China, Thailand, Vietnam, Indonesia, Canada, and Ecuador. Most of these countries lack the kinds of standards and regulations that make things like sustainable fishing and worker protection possible.

The tool’s launch follows the release of a long report from Human Rights Watch about the devastating conditions for workers on Thailand fishing boats. Despite substantial media attention in recent years, beatings, trafficking, child labor, and even killings of migrant workers continue, with the report noting that “in some aspects, the situation has gotten worse.”

“Human rights abuses in the seafood industry are an endemic and ongoing problem,” noted Sustainable Fisheries Partnership CEO and founder Jim Cannon. “We’re proud to be involved with the development of what we believe will be a valuable tool for the industry to help prevent these kinds of abuses from occurring.”

Changing conditions for workers in the fishing industry will take a long time, as will the laws surrounding them. At the very least, though, this new tool makes social responsibility a little bit easier for businesses—and the issues at hand more transparent for consumers.

Peapod Hopes Its Chat-to-Cart Feature Boosts Its Bottom Line

The grocery delivery space is moving far beyond the task of bringing fresh kale and imported cheese to your doorstep. Merely offering the luxury and convenience of avoiding crowded grocery aisles is no longer enough to woo time-starved consumer, who now has myriad choices when it comes to selecting a personal supermarket shopper.

If it’s tech inspired bells and whistles you want, Peapod, a 28-year veteran of the grocery delivery wars, is attempting to boost its sagging growth by adding a new text-to-order tool. Dubbed “Chat to Cart,” consumers can create lists on their phone via text (not to mention voice-to-text or emojis) and send them over to Peapod for fulfillment. The new feature was developed by Chicago-based online shopping tools developer, StorePower.

To use the service, customers text the toll-free number, 1-833-TXT-PPOD and provide a list of products by name or by emoji symbol. The service includes an option to share the shopping list among family members who can add products to the order. After an initial order, or once the number is saved, orders can be placed via Siri or Google Assistant.

“At Peapod, we have always been committed to being the ultimate convenience for our customers,” said Cat De Merode, Peapod’s VP of product in a company release. “The Chat-to-Cart platform was designed for the busy shopper that relies on their mobile device whether at home or on the go. Now, instead of texting a family member to pick up an extra gallon of milk, you can text Peapod and let us do the work. The texting functionality complements the Peapod mobile app and desktop website for one seamless ordering process.”

While digitally based grocery shopping makes up only 3.8% of the grocery retailing market, researchers see a bright future.  Packaged Facts, based in Rockville, MD., believes online grocery sales will go grow from a CAGR of more than 27% over the next five years. By 2022, the company says online sales of grocery items may be worth as much as $42 billion annually.

Peapod’s owner, Dutch-based Ahold Delhaize would like the digital delivery service to contribute more to its overall bottom line. In its most recent quarter, Ahold’s ecommerce revenue was up 20% but Peapod grew in the single digits. Company officials claim its various supermarkets, such as Food Lion, have not successfully integrated Peapod into their services.

Putting aside specialty delivery services such as Farmstead, players in the online grocery/delivery market are running low on competitive factors. Advances such as Walmart’s partnering with Google Home to gain access to their voice-enabled assistants does precious little to create any distinction among the Peapods, Instacarts and Shipts of the world (not to mention store-branded delivery services). Blurring the lines even further is the growing overlap between grocery and restaurant delivery with such all-purpose digitally powered, food-to-home services as Postmates promising speedy grocery services in New York.

That $42 billion revenue figure for grocery delivery sounds like a hefty prize, but the question remains—how much will go to the one-two punch of Amazon/Whole Foods and how many remaining companies will be spending millions to grab minor slivers of market share.

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“WeWork” for Food Entrepreneurs Gets Financial Shot in the Arm

Budding butchers, bakers, and (edible) candlestick makers have another innovative option to provide the vital tools, training, and resources to facilitate movement from startup home food entrepreneurs to the realization of their goals of commercial success.

New York-based Pilotworks (formerly FoodWorks), billed as a “WeWork for food startups,” has received $13 million in expansion capital from Acre Venture Partners, a fund backed by Campbell’s Soup, along with TechStars, a funding and mentoring program. The money will be used for expansion to markets, such as Chicago and Dallas, along with the development of the necessary properties, culinary infrastructure, and staffing.

A company press release reveals the company was founded in 2016 and has since helped more than 250 food and beverage startups get off the ground. Pilotworks says that more than 70% of the businesses it has worked with are women or minority-owned.

“We’re very excited to add so many great strategic partners and continue our work of empowering anyone to start a food business successfully. We will be adding new units: Newark just opened, and Chicago and Dallas are slated to open in December alongside our existing kitchens in Brooklyn, Portland, and Providence, as well as furthering our presence in New York City. We are also excited to continue expanding our services and offerings across the entire food stack,” said Pilotworks CEO and co-founder Nick Devane.

The company’s website says it offers a full range of services that go beyond a mere stove and fridge. Everything from garbage and linen service, to assistance with branding and web design, is available to its members. Companies such as Aida Eats, Mac & Son, BOONBOX, Dank, and Crown Jewel Beverages are veterans of Pilotworks programs.

While the association with WeWork is fine for general identification purposes, it fails to capture the essence of what makes the boom in community commercial kitchens a hot commodity. Pilotworks enters a crowded space that spans options from highly regarded Food Corridor—a community and network of commercial kitchens that offers similar services to Pilotworks in a more federated manner—to individual shared-use kitchen incubators such as Capital Kitchens in Austin. The website Culinary Incubator offers a database and list of 725 shared-use kitchens in the United States.

What looms as a difference-maker for Pilotworks is its association with Campbell’s Soup. The New Jersey-based food and beverage giant could use this network of startup kitchens to find the next great idea to bring in house and take to the global market. That said, Tyson Foods, General Foods, and others also are operating accelerators with the same endgame in mind.

Worth noting is the startup goldrush led by Pilotworks and other similar endeavors focused on major markets that are either population centers (New York, Dallas, Chicago) or food meccas (Portland, Providence). A tour of any farmers market in smaller cities would prove there are some great food-next ideas worth nurturing outside marquee locations.

How Cannabis Farmers Helped Create the Indoor Farming Industry

By Gabe Blanchet, Co-Founder, CEO of Grove

By now, most of us have heard about how pornography helped shape the development of the Internet. While the exact percentage of how much of the web’s early traffic was made up of porn is still debated to this day, what isn’t up for debate is the outsized influence the industry had on bolstering streaming and other underlying technologies for the Internet in the 90s and 2000s.

Indoor and vertical farming had a similar driving force in its early days, only instead of pornography helping to drive the technology development and innovation of this budding industry, much of the early technology developed for today’s modern indoor farming industry owes a debt of gratitude to the world’s indoor cannabis farmers.

But it wasn’t just pot. Another important driver of innovation in indoor farming was the focus from NASA and the promise/necessity of plant cultivation both in space and on other planets. This spurred a lot of the focus on aeroponic and water-efficient technologies (due to their low weight — optimal for transport). Although astronauts could likely benefit from a bit of recreational cannabis, most of the focus was on growing nutritious, edible and oxygen-producing crops with limited resources.

And although it often gets less coverage, another key element has always been the global greenhouse growing industry. Innovations from R&D in greenhouses of all different levels of sophistication have helped pave the way for indoor commercial farming in its current incarnations.

In short: cannabis, plants in space, and greenhouses → modern indoor farming.

Innovation Drivers

While today’s indoor farming owes a whole lot to the cannabis, NASA and greenhouse research, my focus in this piece is on the formative impact pot growers had on this industry.

There were a couple specific drivers that helped cannabis have an outsized influence on small-scale indoor/vertical farming:

Driver #1: Demand
Combine the illegality of growing cannabis and specifically the 1980’s Regan-era ‘war on drugs’ which drove cannabis growth indoors and out of the limelight (and sunlight, with that) with the MASSIVE, ~$54B annual US consumer demand for cannabis (medicinal and recreational), and you can understand why cannabis farmers felt forced indoors and off the radar. Outside of the driving force of secrecy, the other large benefit to indoor cultivation of cannabis remains consistency, quality and a year-round growing season.

Driver #2: Margin
Cannabis is by a long shot among THE most profitable crops to grow. Although it’s not a perfect comparison (due to cannabis-based on cultivated flower whereas harvested collard greens entail the whole vegetative plant), cannabis represents a price to consumers (avg. legally and illegally) of ~$100-250/ounce, compared to <$.50-1/ounce of collard greens. That’s anywhere from 100-500x more revenue per ounce sold.

Combine massive demand with the huge premium, and it’s no surprise the underground cannabis industry was a major economic driver for the young controlled environment agriculture industry.

Innovating In Secret

Many indoor growing technologies — from high pressure (HPS) sodium lighting to metal halide lighting to LED grow lighting to specially formulated nutrient blends to rootzone technologies like rockwool, hydroponics, + aeroponics, even beneficial mycorrhizal fungi inoculants — were developed, improved, and marketed for cannabis growers, driving innovation in hydroponics and aeroponics, mostly in secrecy.

When we started our company, Grove, in 2013 with a mission to empower people to grow their own fresh, delicious food in their homes, year-round, it didn’t take long for my cofounder Jamie and I to realize the how much we owed to the cannabis industry. We found we were using the awareness, technology, and techniques developed by and for large and small scale indoor cannabis growers in most of our physical and ecological prototyping. Although cannabis is just one of the plants we set out to empower people to grow successfully, we realized we were scouring blogs and forums dominated by anonymous cannabis growers. We learned a lot from them; while they often departed from any form of the rigorous scientific method, there was no doubt these cannabis-growing forum-dwellers tended to have practical and tried-and-true responses and insights.

A Process Of Optimization

This early focus on cannabis resulted in a few defining characteristics of modern indoor farming: 

Optimizing for One Crop Type: Cannabis is a flowering crop, which means it requires nutrient blends (fertilizers) formulated with higher levels of potassium and phosphorus and high-intensity warm-spectrum lighting formulated to trigger and maintain the flowering cycle.

Focus on inorganic methods: There (traditionally) has been less of a focus or keen eye on how ‘organic’ your cannabis is — or where it came from at all. I can attest to this — growing up, my friends were just thrilled to get their hands on some and didn’t ask too many questions.

That means the growing methodology and especially nutrient regimes developed have focused less on organic, sustainable inputs and instead on highest yield. Similar focus to conventional farming throughout the 20th century — yield, yield, yield.

Industry-wide association with ‘weed’: Most consumers in the US equate the term “hydroponics” and indoor growing in general with weed. This is good and bad.

The good: it gets people talking. It’s controversial. It’s interesting.

The bad (for those of us focused on cultivating fresh produce or other medicinals): the industry association with cannabis turns a lot of consumers off from seeing the benefits of the technology. This leads to a lot of quick quips instead of real consideration.

2,000+ brick and mortar indoor growing retailers: The popularization of indoor cannabis cultivation resulted in a boom in brick and mortar indoor growing/hydroponics retailers. There are estimated to be about 2,000 stores in the USA and Canada. Access to these supplies has been a big boost for the indoor growing/smart gardening industry. For example, that’s where Jamie bought his first lighting system for our MIT dorm room setup (which led to us founding Grove).

So Thank You, Cannabis Farmers

With the continued growth in commercial high-tech indoor farming and the introduction and popularization of personal indoor farming appliances (my own company, Grove, will introduce a couple next year), indoor farming will continue to touch more parts of our everyday lives. Everyone touched by indoor farming owes a lot to those maverick cannabis growers who developed the awareness, technology, and techniques that continue to drive the industry today. These developments have helped result in much more expansive opportunities for indoor, controlled environment farming such as the opportunity to reshape how fresh produce ( ~$60B annual spend just in the US) and, more generally, how food is grown on our planet.

So thank you, cannabis farmers.

Gabe is Co-Founder, CEO of Grove. Gabe believes that inspiring and educating people to have fun growing their food is a powerful way to promote healthy food choices for both individuals and the planet.