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The Spoon

Daily news and analysis about the food tech revolution

Automation

Whirlpool Buys Yummly In Effort To Bolster Smart Kitchen Strategy

This week Whirlpool announced their intention to acquire Yummly, one of the Internet’s biggest food and recipe sites.

The acquisition comes as part of Whirlpool’s effort to accelerate its development for the smart kitchen of the future. At CES this year, the company announced new cooking automation features for its lineup of smart appliances, including new Alexa skills, scan to cook and guided cooking. This just a year after the company showed off a number of connected kitchen efforts at CES 2016, including Amazon Dash integration.

The guided cooking feature announced in January is particularly interesting in light of the Yummly deal.  The new feature enables users of the Whirlpool Smart Kitchen Suite app to send a recipe directly to a Wi-Fi powered appliance such as an oven, which will then follow the cooking instructions. It’s easy to envision how this cooking automation capability could be coupled with Yummly’s massive database of recipes.

This Is About Smart Kitchen Self-Sufficiency

Making the deal more interesting is the fact that Whirlpool recently parted ways with Innit, a smart kitchen platform company that had started working with the company’s Jenn-Air division in 2016. As I wrote in March, the breakup was in part due to Whirlpool’s decision to start forging its own technology path as it saw the smart kitchen becoming a reality over the past year:

With 2017 rolling around and the company viewing the market for connected kitchen products as more viable, it decided to more actively develop and expand their own connected product technology.  As one source told me, “if a startup can do with a few million dollars, why can’t the world’s biggest kitchen brand do it?” 

In other words, Whirlpool had decided it wanted to determine its own technology destiny rather than relying too heavily on external partners to forge a path forward. What the Yummly deal shows is that the company will not hesitate to acquire others as part of its effort to realize smart kitchen self-sufficiency.

And this deal does just that by bringing Yummly’s smart kitchen technology platform in-house. As Brett Dibkey, Whirlpool’s vice president of Integrated Business Units, said: “Yummly brings an outstanding platform on which to begin building our digital product offering.”

A Year Of Change For Yummly

For Yummly, the acquisition by Whirlpool comes after a year of management change. In October of last year, the company’s Chief Revenue Officer Santiago Merea left to start a baby food startup, and then in November the company’s head of product, Ankit Brahmbhatt, left to become Innit’s head of product (yes, Innit, the company who parted ways with Whirlpool this year).  Yummly also saw its CEO David Feller step back and hand the reigns to Brian Witlin, who in a previous life was the cofounder of Shopwell, a company recently acquired by…you guessed it…Innit.

Both Merea and Brahmbhatt came to Yummly through Yummly’s acquisition of Orange Chef, a smart kitchen company who had built it’s own connected scale, and had started to build  smart kitchen operating system and platform for appliance companies. For whatever reason, Yummly never partnered with any appliance companies, which could in part explain the departure of Merea and Brahmbhatt last year. It looks as though the Yummly-powered connected kitchen will finally be built, only now as part of the world’s biggest appliance company.

Whirlpool Becomes A Content and Community Company With Yummly Deal

Lastly, one important aspect of this deal is that it gives Whirlpool a massive infusion of cooking content and community. As newer companies in the connected kitchen like ChefSteps have shown, having strong recipe content and an associated community can create fertile soil upon which to launch new hardware products. With Yummly, Whirlpool now has a built-in community to tap into as it expands is smart kitchen product lineup in the coming years.

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Why Amazon Needs Automation To Drive Retail Profit

Amazon is one of the biggest retailers in the world, with total value at the end of 2016 surpassing the value of other U.S. retail giants like Wal-Mart, Kohl’s, Target, Sears, Macy’s and Nordstrom’s combined. So at $355.9 billion market value, it’s a little surprising to see Amazon continue to post slim profit margins on its e-commerce sales, by far the largest portion of the company’s business. Amazon’s continued investment and exploration into things like automated grocery stores and drone delivery start to make even more sense when you dive into their 2016 numbers.

A recent peek into their annual filing by Bloomberg reveals some interesting stats around Amazon’s subscription and cloud services, big growth areas with much higher margins and less overhead than retail goods. Where retail margins are low, largely due to the high costs of shipping, subscription fees (including Prime) are growing at 40% annually. In 2016, Amazon brought in $6.4 billion from Prime and other subscription services such as e-books and movie rentals – a little less than the company spent on net shipping costs for the year.

Credit: Bloomberg

People flock to Amazon for their value on retail products but also their convenience – whether it’s fast shipping, greater availability or the ease of ordering on non-traditional platforms like Amazon’s Echo voice assistant or Dash button subscription service. But the company’s commerce volume only slightly makes up for the high cost of shipping those products around the globe.

Amazon is investing in higher margin areas of its business, like Amazon Web Services, which boasted almost 25% profit margins in Q4 of 2016, compared with retail’s 3%. But the company is also using technology and exploring areas where it can automate and upgrade its method of product delivery to grow retail without growing its shipping costs.

Future Of Grocery

Back in December, The Spoon covered Amazon’s move to create automated grocery stores using a combination of sensors, visual recognition and deep learning. The project, called Amazon Go, uses “Just Walk Out,” a system of technology that identifies shoppers via facial recognition, identifies products using sensors and RFID tags and ultimately learns what you buy and what you thought about buying so they can market to you later.

Amazon Go - Just Walk Out

Currently, Amazon offers consumers grocery items via its Amazon Pantry program, which lets customers fill a box of dry goods (food, cleaning, hygiene, etc) and ship everything for a flat $5.99. The appeal for Amazon Pantry shoppers is not just convenience but also price as Pantry goods are usually cheaper or on par with Wal-Mart and Target prices – taking direct aim at both traditional grocers and competitor retailers. But the program still drives hefty shipping expenditures – and only offers those “middle of the grocery store” items. Amazon Go could offer both fresh and dry goods using methods of automation technology that would greatly reduce overhead.

The Robots Are Coming

The other major area where Amazon is investing R&D is the use of robots, mainly drones, for delivery as opposed to the traditional UPS driver. Prime Air has been an Amazon initiative that takes airborne unmanned drones to drop packages at our doorsteps, using remote charging stations and coordinate technology to significantly reduce the cost of bringing those brown boxes to customers. The first package was delivered back in December to an Amazon customer in the UK and it looks like the company is still working on ways to make Prime Air a feasibility in the heavily regulated U.S. airspace.

Last week, the U.S. Patent Office awarded Amazon a patent for a method of air delivery that does not involve landing a drone in your front yard but rather using parachutes, magnets and sensors to hover above and drop the package from the air. The patent application explains that this method could be a safer and less intrusive way for drones to deliver customer packages. Despite the patent and other testing and work Amazon has done with Prime Air in the U.S., the method of using unmanned machines to navigate package delivery is still illegal.

Nevertheless, Amazon’s strategy to create different avenues of lower-cost delivery models when it comes to its retail business make sense, especially when you look at where they are currently profitable and where investors would like to see higher margins. The grocery store of the future and robotic delivery certainly seem futuristic and neither are mass market options for Amazon today. But it’s clear based on its financials and initiatives in the space that Amazon is looking for ways to make retail more profitable and efficient in the not too distant future.

Can Tech Completely Automate The Restaurant Front Of House?

While we’ve seen a bunch of news lately about how food robots and automation are gaining momentum in the restaurant world, much of the action has been around ‘back of house’ operations and delivery, where robots and automation can specialize in completing repetitive tasks like making burgers at a lower cost than humans.

But the reality is, front of house is just as susceptible to automation. One of the most obvious places for tech is at the dining table itself, where companies like Ziosk are working to make servers more efficient and, in many cases, help restaurants reduce overall server headcount. Ziosk’s touch screens, which allow consumers to order, ask for refills and pay, are on tables everywhere from Red Robin to Chili’s to Olive Garden. In fact, the company indicated that their kiosks touch 50 million consumers in 3,000 restaurants in the US.

Fast food is even more susceptible to automation. Companies like Panera, Wendy’s and McDonalds are rolling out self-order kiosks nationwide, making fast food one of the fastest growing categories in what some predict will be a $73 billion self-serve kiosk market in 2020.

And then there are those restaurants creating entirely new restaurant concepts which take the front-of-house beyond just the kiosk and make them entirely human-less.

One of these is Eatsa, a San Fransisco based chain that has created a restaurant concept where the entire order and serve flow are done with automation. And if you think Eatsa’s quinoa meals are prepackaged boxes made somewhere off-site, you’re wrong: humans work to fulfill orders, only consumers never get to see them behind the wall of futuristic cubbies where the custom-ordered meals magically appear.

You can see how it all works in the video from Techcrunch below:

Eatsa's High Tech Quinoa To-Go

But do consumers want humans eliminated entirely in the front of house? Are restaurants going to eventually all become Eatsa-like order and pickup joints with nary a worker in sight?

My guess is human-less front of house operations will eat up a small but growing percentage of the overall restaurant mix, particularly in fast-food and casual dining markets where consumers often want to eat fast and affordably. But the biggest impact will be on specific functions. Much like Amazon has re-thought the grocery store in a modern context to use technology to automate a task (checkout), we’ll see restaurant chains starting to focus on those front of house tasks that can be reduced or eliminated with tech (like ordering).

I expect automation to have a much smaller impact in fine dining’s front of house operations. That’s because consumers are willing – and often times expect – to pay more for the experience, and that experience is usually highly dependent on the service of humans.

The ultimate question is how far will automation go and what does it mean for both restaurants and consumers? On the restaurant side, it’s clear a balance must be struck between increased efficiency and creating a compelling user experience.  If consumers see added benefit through expedited ordering and payment through tech like Ziosk, then why not?

But if going to restaurants becomes the equivalent of going to food ATMs, there’s a chance eating out will lose some of its appeal. Unless of course you frequent one of these many robot-restaurants popping up in China.

Then you may want your meal served by a robot waiter.