Close Ad

The Spoon

Daily news and analysis about the food tech revolution

Food Rocket

Food Rocket Comes Down To Earth As Yet Another Speedy Grocery Startup Closes Its Doors

It seems almost a lifetime ago when, in 2021, a gaggle of ultra-fast grocery store startups with interesting names like GoPuff and Gorillas raised gonzo amounts of cash.

We all know what happened since the go-go funding days of the quick grocery boom. While I wouldn’t call last year’s pullback a canary in the coal mine, it was one of the first segments in the broader food tech market to send a signal that the era of easy money ended.

And so last week, amid a simmering systemic financial crisis, we got the news that Food Rocket, a fast-grocery startup that launched service in San Francisco in 2021, has closed its doors.

Here’s the entirety of the statement sent out from the company:

Food Rocket, a rapid grocery delivery startup, ceased operations in March 2023 after exhausting its funding. In spite of overall profitability, Food Rocket ran out of capital while struggling to raise additional funding. The recent downturn in the capital market made it difficult to get a bridge from its investor retail company Alimentation Couche-Tard, and the founding team made the difficult decision to shut down its operations in the United States.  

“We believe that the rapid delivery industry has disrupted the retail market and changed consumer behaviours. Unfortunately, current economic conditions reshuffled the tech market and presented significant challenges in the venture capital market. The decision to cease operations was incredibly hard, and we put in 100% up until the very last day, trying to stay afloat for our customers and team members.,” said Vitaly Alexandrov, CEO and founder of Food Rocket. 

At this point, no one is probably surprised about the shutdown of one of the smaller players in this segment. Fast grocery’s well-publicized struggles amidst a downturn in funding and broader questioning of the segment’s business case were the writing on the wall for a company like Food Rocket. Combine that with the fact that the company closed during a week in which everyone’s attention was elsewhere, and the sound of the company’s doors closing barely made a whisper.

Ironically, Food Rocket’s shutdown comes just about the time when company founder Vitaly Alexandrov predicted fast grocery would be commonplace.

“In a year or two, it will be like a commodity,” Alexandrov told The Spoon in 2021. “Everyone will deliver in ten minutes.”

While his prediction didn’t quite come true – mainly because most things do not need to be delivered with that level of urgency and same-day delivery suffices for the bulk of our needs – I think larger players like Amazon and Walmart have made progress in building out their capabilities for fast delivery. Longer term, the rollout of new delivery and micro-manufacturing technologies will almost certainly speed up the pace at which consumers can satiate their needs nearly instantly.

Unfortunately for Food Rocket and many of its peers, they won’t be around to see the day when nearly-instant delivery becomes ubiquitous.

Food Rocket Going Beyond Speedy Grocery Through Ghost Kitchens and an Open Platform

The sudden proliferation of speedy grocery delivery startups like San Francisco’s Food Rocket has been one of the bigger food tech stories of 2021. But for Vitaly Alexandrov, Co-Founder, and CEO of Food Rocket, fast grocery delivery is just a step to a much larger play.

“In a year or two years, it will be like a commodity,” Alexandrov said of fast grocery delivery during a video chat this week, “Everyone will deliver in ten minutes.”

And he’s probably right. Throughout this year we’ve seen a number of players pop up offering on-demand, ten-minute style grocery delivery through a network of small, dark stores with a limited delivery radius. Most of the activity has been in Europe so far with companies like Getir, Glovo and Gorillas all raising big money and expanding rapidly. But we are starting to see more startups show up here in the U.S., especially in New York City. Fridge No More, JOKR and Gorillas all operate in the Big Apple, and Gorillas recently announced its jumping across the country to open up stores in Food Rocket’s hometown of San Francisco.

But Alexandrov isn’t worried about Gorillas, or any of the other competitors that will undoubtedly come to his hometown, in fact he welcomes them. “When there are many competitors, the market grows faster,” he said. The idea of ten minute grocery delivery is very new, and customers need to learn a whole new way of treating grocery shopping more like a utility. Alexandrov said that more competitors in a market vying for customers means there are more companies educating customers about this new type of service. The result is a larger pool of knowledgeable customers and that rising tide should lift all (speedy) boats.

If that does play out, and that’s a big IF as we still need to see if these speedy grocery startups can scale, how will each service differentiate themselves? For Food Rocket there are two phases to its future growth. Alexandrov said in the near term, one of the ways Food Rocket will stand out is by offering its own line of ready to eat meals. To do this, the company will add ghost kitchens to its operational network. So in addition to staples like milk and eggs, you could also get your lunch or dinner delivered, and menus can be tailored to tastes of the specific neighborhood served.

The second phase of its future involves opening up its platform to other retailers. Over the next three years, Food Rocket will continue to build out its network and fine-tune its inventory management, fulfillment and delivery routing systems. At that point, Food Rocket could allow a more traditional retailer like Albertsons or Kroger to use its platform for fast delivery, and it’s easy to see why retailers could be interested.

If Food Rocket’s type of fast delivery catches on with consumers, two-hour or even half-hour delivery of groceries could be considered too slow. Instead of building out their own speedy delivery infrastructure, retailers could just use Food Rocket’s and launch immediately wherever Food Rocket is operating. It’s similar to the way retailers partnered with Instacart to establish delivery (and it could carry the same pitfalls). Though Alexandrov says it beats existing third party services because Food Rocket delivery people are employees — not contractors. So when an order comes in, the system doesn’t have to take the time to find a driver willing to fulfill the order (of course, having employees also drives Food Rocket’s costs up).

But that vision of Food Rocket’s future is still a ways off, and a lot needs to happen before that vision can pan out. More immediately for Food Rocket, Alexandrov told me that the company’s next move is expanding to cover roughly 95 percent of San Francisco by September and then it’s on to Los Angeles, where Food Rocket has already signed leases in West Hollywood and Santa Monica. Alexandrov said that in order for the business to work, stores need to be set up in locations where its limited delivery radius can cover 50,000 homes. That means Food Rocket won’t be coming to my rural neck of the woods anytime soon, but it, along with the other speedy delivery startups, may be taking off in a city near you soon.

Food Rocket Raises $2M for 15 Minute Grocery Delivery in San Francisco

Add Food Rocket to the growing list of companies offering speedy, on-demand grocery delivery. The startup, which has launched its service in San Francisco, announced today that it has raised $2 million in funding from AltaIR Capital, Baring Vostok fund and AngelsDeck group of business angels.

Food Rocket is similar to other upstart on-demand grocery delivery services like Gorillas and Fridge No More in that it operates small, delivery-only “dark” stores in different neighborhoods. Shoppers use the Food Rocket mobile app to order groceries or ready-to-eat meals, which are delivered within 10 – 15 minutes. Right now, Food Rocket is available from 9 a.m – 9 p.m. in 20 different neighborhoods in San Francisco including SoMa, South Park, Mission Bay, Japantown, Hayes Valley and more. There is no minimum order requirement and no delivery fee.

Dark store-based, on-demand speedy grocery delivery is emerging as one of the big stories of 2021. In Europe especially, a number of such startups have raised hundreds of millions in funding including Getir, Glovo and the aforementioned Gorillas. In the U.S., Gopuff raised $1.5 billion for half hour delivery 24 hours a day, DoorDash is opening its own dark convenience stores and Fridge No More and Gorillas are both now operating in NYC. All of this activity has put time pressure on existing grocery delivery services like Instacart, which launched its own 30 minute delivery service in select cities this week.

For its part, Food Rocket is really looking to take off this year. While it’s starting off in San Francisco, the company plans to open 150 dark stores on the west coast, each capable of servicing at least 25,000 households.