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future of food

Are Squares the Future of Food? SquarEat Thinks So

When you hear the phrase “future food”, your mind might go to cell-based meat or meals cooked and served by robots. You may consider a more dystopian direction and remember the square-shaped wafers in the film Soylent Green (set in 2022), or the company called Soylent (which took inspiration from the movie’s title) with its meal replacement shakes intended to replace food altogether. Although we don’t know what exactly our food will look like in the next 25-50 years, we do know we need creative solutions to feed a population that is expected to reach 9.7 billion by 2050.

A Miami-based company called SquarEat has joined this “future food” category with its full meals that come in the form of multiple 50g squares. The start-up aims to simplify nutrition for those who have a busy lifestyle or struggle to consume enough calories and proper nutrients.

It operates as a meal plan service that delivers to your house on a weekly basis, but unlike other similar services, all of the food arrives pre-cooked, vacuum-sealed, and in the shape of a square. Currently, 15 different squares are listed on SquarEat’s website, ranging from chocolate pancakes, sea bass, basmati rice, vegan burger, and asparagus.

The company is gearing up for its upcoming launch and is accepting investors through its WeFunder campaign. I recently interviewed Maria Laura Vacaflores, the CMO of SquarEat, to discuss the inspiration behind the company, the sustainability of the squares, and the upcoming launch.

This transcript has been lightly edited for the sake of clarity:

Ashlen: Do you want to start by discussing the inspiration behind launching SquarEat? 

Maria: Of course. So the idea behind SquarEat comes from one of the most common issues, people who often struggle to deal with a busy lifestyle, trying to keep up with a healthy and proper diet. So we have experienced firsthand the inefficiencies of the tradition of meal plan services. And we have seen a clear possibility of disruption by bringing a complete transformation to the sector that is growing tremendously fast, introducing a brand new concept, that is 100% natural food. The only thing is the shape, the square shape, is simply the result of the cooking process needed to achieve our goals, or ensure convenience and guarantee taste. And you know those are really practical. Our goal is to make people’s lives easier without sacrificing taste. 

Ashlen: How are the ingredients cooked to form a square?

Maria: We use all-natural ingredients. For example, our chicken square is called 95% chicken breast, and then you have a little bit of rosemary, and salt and pepper. We just use normal, natural food, and the way that we cook it is low, you know, at a low temperature. We put it on the blast cooler that is thermal shocking, and that’s the way we make the form, we get the square shape. 

Ashlen: Okay, okay, that makes sense. It sounds like it’s all-natural and simple ingredients, everything you can pronounce easily. Are there any preservatives in there?

Maria: The way that we make our product last longer, is because we vacuum seal everything individually. So there’s no oxygen in the squares, like you know, completely sealed, and you can have it for up to two weeks in your own fridge. That’s also really good because you know all the foods right now, like a normal traditional meal plan, if you’re okay I’m gonna describe it. On Monday, they deliver it to you, and you have to eat it then or by Wednesday because it’s not going to be good. Sometimes they put sauces on the top or they mix it up, and it looks awfully bad. I’m telling you this because I’ve done these meal plans before. 

I know people need to eat healthily, that’s why you’re doing a meal plan, right? You can cook but you also want to be healthy and you want your food to taste good. So we came up with this idea. If you can’t eat your food by Wednesday, like I said, right so you don’t need to worry with a square. You can eat it Friday, Saturday, etc. you just, decide you don’t want the chicken, just the vegetables, and that’s okay. You have this flexibility that no other company allows you to have.

Ashlen: And so you said, it can store up to two weeks in the fridge. Can it be put in the freezer, and thawed out and eaten at another time or do you recommend that people eat the squares fresh?

Maria: Yeah, if you want you can, but you don’t need to because they’re going to be completely fresh. If you want to put food in the freezer because you want to eat it like a month later, you know, that’s up to you but I recommend always to leave the squares in the fridge. Two weeks that’s perfect timing, but it’s gonna be fresh, you’re gonna feel it. It’s gonna be fresh, like the first day you receive it. 

Ashlen: So has it been a challenge to convince people to eat food in the form of a square?

Maria: We’ve gone through some resistance. A lot of haters. However, we got a lot of love from the ones that are excited about our idea, as the squares are highly digestible and practical. For example, they are intended for people who suffer from autism who might have a sort of aversion to food. I’ve had a lot of friends, for example, they suffer because they can’t gain weight. They can’t eat the protein they need, or the calories they need, because they can’t eat that much. They’re really skinny, or they have this problem with the food. So my friend called me the next day, like, Oh, my God, this is a solution in my life. Finally, I can get my food properly, I can get my calories, I can eat healthily, I can, you know, have a healthy body. And I mean, it’s the food that you need, that your body needs, but it comes, you know, in a more digestible, practical way. And you just eat it like, like a little snack. 

Ashlen: I’ve often heard for people who are struggling to get enough calories, a nutritionist often recommends eating protein bars, but those can be kind of gross.

Maria: Yes, those are. Those are meal replacements, not ours. Yeah, for example, I can tell you that it fills my heart with joy, knowing that people with more specific needs may have found a solution that can improve their lives, you know? We are compared to the SnowPiercer and Soylent Green movies, you know, where they do the square shape of the food. The shape of the food is often associated with this dystopian future, where people are oppressed and forced to eat disgusting things. But we’re not going to force anyone to use squares. You know, we are only proposing a solution. A tasty meal for children, adults, women, men, any age, we’re seeking a healthy lifestyle. Imagine all the children who don’t want to eat their veggies. And the moms are like, Oh my god, you know, they want to do everything for the kids. You know, to eat the vegetables, they need vegetables. You need those vegetables when you’re a kid. So imagine you’re given something like the food they wouldn’t eat doesn’t look like broccoli. You know, and you’re like, my kid is now eating broccoli.

Ashlen: Yeah, that’s really interesting. Okay, yeah, I didn’t even think about using that for children. Because you’re so right. If a kid sees something that looks like food they have an aversion to they’re not going to eat it. But you know, in a different form, it might be convincing. 

Maria: That was me. Because my mom, many times, said to me, I couldn’t eat fish. I would always say it is fish, and she lied about it to me. And now you can get them to eat right, to eat healthily and all the nutrients they need.

Ashlen: So kind of going off of, I guess, the dystopian future you mentioned, do you see what SquareEat is doing kind of as the future of food? Do you see more companies doing this? I guess, processing food in the way you do and making it more convenient and simple? Or what do you see?

Maria: First of all, I strongly believe that there is an attractive and futuristic shape that communicates exactly the soul of our project, we want to revolutionize the ready-to-eat meal plan delivery service industry by giving our customers something that they never had, that they haven’t tried before. But you know, think about portion control, already seasoned and portable, long-lasting, tasty, with all the nutrients being preserved. So I think people are gonna copy these in the future, I’m telling you, and we have to re-envision a future where people don’t necessarily have to cook, where houses are built with, you know, with different comforts. And what a full kitchen may not be necessarily a future that everyone can afford. That’s what we want, not like the movies you know. We want everyone to have a better life than they can afford.

And it has to be optional but like I’m telling you, there are so many people right now who don’t like to cook and they don’t have to. So this is the present, imagine the future, how it’s gonna be. I believe that yes, it’s is gonna be like this. Yeah, I’m not, I’m not telling you that I don’t like steak sometimes. Like a nice dinner, a nice barbecue, but you know, in my everyday routine, something healthy and you know, I want something ready. That’s fine.

Ashlen: Yeah, I feel like everyone kind of has like maybe one or even two meals a day we’re just rushing around and we don’t have time to cook or we don’t want to stop and pick up food so I definitely see room for the squares in a very busy lifestyle. But I have a personal question for you actually. How often do you eat the squares yourself?

Maria: Well, well it’s gonna be a year that I’m eating the squares because the project has been developing for more than a year of trying and cooking and discovering new flavors, new things that we can add. I am the person that taste tests and I eat like every day. I will say I eat from Monday to Saturday, for lunch, breakfast I eat the squares. I can cook something maybe myself perhaps sometimes that is not the squares again. But you know what I do, I put them in the air fryer, maybe I do some chicken nuggets with my square. For the vegetable squares, cut them up like in tiny pieces. I do like tacos, I put my meat squares in them because it’s already cooked and I just need to warm it up the way I want it and give it a little flavor, extra fuel that I wanted. So if I want to eat super healthy, okay, then just the squares. I can put them just straight in the microwave. Maybe a little bit of oil. And that’s it, you know, although my mood and my daily routine, but I’ve been eating like every day for a year.

Ashlen: Very cool. Okay, thank you for answering that. So on The Spoon, we like to cover food waste as well. And I believe I read something on your website that was just a brief statement on food waste. So how are do the squares help reduce food waste?

Maria: Okay, our product, our production chain runs on minimal waste in food and energetic resources. We are eco-sustainable from the production stages to deliveries, we don’t use any gas or any other dangerous things that can be combusted into the preparation process. And thanks to our innovative techniques, we are also able to use almost 100% of the food we need to obtain this worse. That’s something unique compared to the availability of alternatives on the market. And they there’s also a significant reduction in terms of waste, both from us and the customer point of view. Because if you can see there that vacuum sealing are squares naturally extends our product shelf life, for up to two weeks. Our sealing bags are BPA-free. And it’s food-safe, and microwavable, and you can also boil them if you want safely. They are 100% recyclable. And as a food manufacturer, we are simply asking our customers to do their part when it comes to taking care of the environment as much as we do.

Ashlen: Great. Yeah, I was thinking about other like meal prep companies and such. And I was just thinking there are things like broccoli stems and peels, even that gets tossed out. So I would imagine that in a square, you could kind of combine all of that, which is also more nutritionally dense incorporating those bits and pieces. So that’s good to know. And then you could have answered this already. But to clarify, the squares, are they a direct meal replacement? And can you replace all three meals with squares?

Maria: Oh, that’s great. It’s not an alternative food. The only difference is our preparation methods and the unique shape that it has. Think of, for example, mozzarella or pasta, yogurt. They’re from soy, milk, or grains, but that doesn’t mean that they lose their natural properties during the transformation process. They are often proof. Our squares are made of 100% natural ingredients, and they are not I meal replacement like I said sorry. And I mentioned the chicken right, and chicken squares have the addition of natural spices. And our innovative production processes allow our products to have a longer shelf life, better preservation of nutrients, and consumption flexibility. So you can definitely have three meal boxes a day. And this is exactly what SquarEat is designed for.

Ashlen: One last question: When did the company launch its first products?

Maria: So hopefully, we’re gonna be ready within a few weeks. We are expecting that because we are finishing the last details for the big opening. And we were expecting that it will be like at the end of September, hopefully, if not at the first week of October, but we’re gonna keep you updated for sure.

Ashlen: Sounds great. For some reason, I thought you had already launched but that’s great that I’m talking with you before the launch. 

Maria: Yes, yes. Perfect. We’re right now running our crowdfunding campaign. When it’s closer to the end of this campaign, we’re gonna launch if that makes sense.

SquarEat’s WeFunder campaign is still active, and has so far raised a total of $165,905.

From Voicebots and Loyalty to Data and Delivery: What Are the Next Big Hits (and Misses) in Food Tech?

This is a guest post written by Brita Rosenheim, Partner at Better Food Ventures. This Food Tech Industry Landscape and state-of-the-industry analysis are intended to help operators, entrepreneurs and investors in the food system to understand the quickly evolving themes and trends currently impacting the food tech industry. You can meet Brita at Smart Kitchen Summit on Oct 7-8th.

I have been tracking the food tech ecosystem for the past decade, and along the way have seen many business models and fads come and go, from daily deals and local loyalty schemes, to meal kits and the on-demand convenience economy, to the ever elusive promise of personalization via some version of “Pandora for Food”. 

Reflecting on the profound changes and growth that have occurred within the ecosystem over that time frame, I’ve decided to make significant adjustments to the annual Food Tech & Media Landscape to reflect today’s new realities. In the most recent year we have seen previously hot sectors cool (like e-commerce meal delivery and guided cooking); new sectors take shape (like personalized nutrition and voice-driven platforms); and many B2B platforms that are leading to, among other things, new cross-sector “enabling technology” plays. 

Here’s a brief primer on the latest Food Tech & Media Landscape before I dig into my key takeaways below:

  • This is a heatmap, not a comprehensive catalog: While clearly not exhaustive, this map is meant to illustrate the layers and variety of technology solutions, early stage to mature, both consumer-facing and B2B technologies. Food tech is a tremendous global opportunity, however in order to narrow the perspective (and eyestrain!) I have only included technologies with a US customer/user-base.
  • “Food Tech” here means food distribution through end consumption: Depending on which hat you wear, and where you sit within the ecosystem, “Food Tech” can mean many things. Whereas my colleague Seana Day publishes an AgTech Landscape, which maps seed through supply chain technologies, this landscape meets her in the “Messy Middle” with traceability/sustainability platforms, and then moves further downstream to food/bev product innovation, media, marketing, and the many varied paths towards end consumption.
  • Focus is on IT-driven, primarily VC-funded technologies: While VC funding is not a requirement to scale, it is often an enabler of growth, and this Landscape primarily highlights innovative startups and higher-growth companies that are enabling the food ecosystem via technology. Which means, although still part of the Landscape’s title and framework, there is a significant decrease of media categories versus previous versions of the map, reflecting the broader shift and struggles of the media industry with few avenues for content monetization. Separately, given that food ecommerce is no longer niche and is now integral to the strategy of most brands, the ecommerce lens has been shifted to focus on technology solutions and platforms within fresh/grocery and meal delivery.
  • The new doubledecker format helps to simultaneously frame the evolution of the consumer consumption journey from in-home to out-of-home, while also highlighting enabling B2B technologies that span multiple sectors and/or categories: The top portion of the Landscape is organized left to right by a customer’s final location of engagement/consumption in an effort to categorize the variety of technology and media players shaping how consumers discover, cook, order, consume, and enjoy food experiences today. The horizontal band at the bottom breaks out a number of “Enabling Technologies”, recognizing that a growing number of B2B food tech companies are connecting multiple partners to create a more robust food system.
  • Hardware is (mostly) unplugged from this landscape:  You will note this Landscape does not carve out dedicated categories focused on robotics, automation and IoT devices, despite the recent momentum. This is intentional, as the increasingly crowded food-related hardware space warrants its own dizzying landscape analysis. For example, The Spoon recently created a thoughtful Food Robotics Market Map that addresses a number of hardware-driven sectors. I will say that, in general, many of the VC-backed hardware devices have not really scaled to success and we should expect more downround financings, consolidations and acquisitions in the near term. 

And now, onto my thoughts and analysis on the recent shifts in the food tech ecosystem:

IS CONNECTED CONTENT PANNING OUT? 

Alongside next-gen IoT cooking innovations, over the past couple of years we have seen a number of tech-savvy recipe content publishers leveraging technology platforms in order to transform content into guided and conversational cooking offerings.

However, despite the tremendous breakthroughs entrepreneurs have made to augment an in-home cooking experience that is more convenient, enjoyable, personalized or nutritious,  this “connected content” category has largely remained in the “nice to have” business model stage (versus “need to have”).  To date, neither corporations nor consumers have been willing to foot the bill for recurring revenue around additional capabilities and insights.

As of yet, the connected kitchen ecosystem that was supposed to be a bridge to new business models like product/content subscriptions, ecommerce, advertising or SaaS data plays, has simply not yet panned out the way most entrepreneurs had hoped.

While everyone believes there is value in the data from smart devices, to date not many have been willing to pay for it. That said, a recent announcement by Discovery (via The Food Network) and Amazon (via Alexa) shows that the dream is still alive, as the two companies plan to launch a live action subscription service (at $7/month) to provide cooking instructions, recipes and connected grocery services (via Amazon, Instacart and Peapod) in select markets this October.

‘PERSONALIZED NUTRITION’ SHOULDN’T REQUIRE PRECISION OUTCOMES

While “personalized nutrition” is a big buzzword these days with CPGs (including Mars, Kraft Heinz, and Nestle) using the term to boost their innovation cred, a bulk of the funding and acquisition activity in the space has actually been around nutraceutical/vitamin companies (likely due to healthy ecommerce recurring revenue models) rather than diet/food-driven technology platforms. 

One issue which has hindered many startups in this category is that there are currently few straightforward business models outside of ecommerce or subscriptions, and retention has proved to be quite challenging. The B2B SaaS market has recently begun to develop and remains promising, however to date, many of the technology platforms, whether direct to consumer or B2B, just haven’t scaled.

Beyond business model challenges, I believe a key issue within this sector is that many companies are trying to personalize with the goal of chasing a precision outcome that is just not possible. Normalized human behavior, especially when it comes to food, is simply not precise. Many companies have built technologies that require 1) an engaged user base, 2) active tracking of specific food/health behavior, and/or 3) accurate self-reporting – which, respectfully, are often fleeting, imprecise and inaccurate.

There are absolutely times that a prescriptive approach is helpful in order to keep health goals on track, or to manage chronic illnesses, but much like the many, many (many) “Pandora for food” concepts I have seen over the past 10 years – all of which promised to tell me precisely which recipe, dish, restaurant, drink or product I would undoubtedly love – I believe it is a mistake to build upon the premise that there is one (or few) right answers, when in reality, there are countless iterations of success. 

Thus, the next generation of personalized nutrition platforms should 1) be versatile, adaptable and seamless enough to only warrant passive engagement; nudging the consumer towards healthier decisions, 2) re-envision how to minimize inputs (if any) of food/health behavior (outside of on-boarding and updates), and 3) eliminate the need for self-reporting. 

On this front, in the near term, we are seeing an uptick of momentum in B2B platforms that are setting a data foundation and/or nutritional lens in order to enable various players throughout the food ecosystem to provide enhanced and personalized health experiences. For example, Diet ID has partnered with SunBasket to gather insights on customers’ dietary patterns and seamlessly help recommend meals that align with their goals. Edamam recently partnered with restaurant/catering companies like Juice Generation and ZeroCater to easily integrate nutrition and dietary info across all menus and dishes. Lighter Nutrition, has recently partnered with Mass General Hospital (among others) to provide an enterprise platform for health care providers to be able to customize meal plans and grocery shopping for their patients. 

As I mentioned during a talk at Groceryshop 2019, I think food retailers/grocers are in a particularly unique position to impact healthy choices. Wellness is a clear strategy as grocers look to differentiate in an increasingly commoditized sector, and thus while the national chains have more budget for these initiatives, it is all the more important for small/midsize grocers to compete. Regional grocer Heinen’s is ahead of the game, as they hired a chief medical officer and chief dietitian years ago, but they recently kicked it up a notch with the recent announcement highlighting their own Fx platform for personalized diet plans. For grocers without their own chief medical officer, there are startups like FoodMaestro and Spoon Guru, which partner with grocers to layer health data into the shopping experience. 

In summary, the personalized nutrition technology space shows huge potential in the long-run and while it is showing some momentum in the short-term, there are still fundamental challenges to “personalized nutrition” platforms that will likely take this sector more time to mature.   

VOICE AND BOTS OFFER A NEW AVENUE OF ENGAGEMENT

Restaurants, brands, retailers and advertisers have increasingly started to think in terms of conversations (rather than one-time transactions or ad placements) in order to maintain consumer engagement and engender lifetime value. 

In addition to McDonald’s recent acquisition of drive thru AI-voice platform, Apprente, the last couple of years have been witness to a surge of AI-driven conversational platforms for the food industry. From automated brand communication to voice-driven platforms focused on nutrition, grocery, coffee, online ordering, drive thrus, and even Back-of-House solutions focused on restaurant bar inventory, there are numerous use cases to ditch the typing (or phone, pen and paper!) and streamline via conversational technologies.

THE PRIMACY OF FIRST-PARTY DATA: DATA ANALYTICS COMPANIES ARE GETTING BOUGHT BY THEIR WOULD-BE CLIENTS

Counter to the more traditional network effect approach where clients of software companies benefit from leveraging their data by blending it with that of their competitors, an interesting recent trend has emerged where a handful of early stage AI-and data-analytics startups within the food, retail and restaurant sectors were acquired early on by a customer in order to bring data and insights in-house. 

This highlights the ever increasing primacy of first-party data as a competitive differentiator. Recent examples include McDonald’s purchases of Dynamic Yield, Walmart’s acquisition of Aspectiva and even Instacart’s acquisition of MightySignal.

THE CONVERGENCE OF “OMNI-CHANNEL MEALS” 

There has been an overall convergence of in-home food channels that one might call “omni-channel” consumer food delivery as consumers are making less of a distinction between delivery of groceries, prepared meals, meal kits, e-commerce CPG purchases and restaurant delivery.  

When Amazon acquired Whole Foods two years ago, I hypothesized that the Amazon/Whole Foods combination would be a threat to both brands and local restaurants. I believed that the competition from a more streamlined grocery category capable of delivering its own in-store prepared food, private branded products and meal kits ( a “grocerant” platform) combined with Amazon’s logistics, would be a threat to local restaurants. However, to date, it has not played out that way – which in part shows how hard it really is to execute on a successful food program.  

PRIVATE EQUITY’S GAZE SHIFTS FROM RESTAURANTS TO RESTAURANT TECH 

As private equity activity continues to sizzle in the restaurant sector, we are seeing private equity players begin to enter the restaurant tech category via rollups and mergers of incumbents. That said, while you would think some of these investors are looking for synergies or operational efficiencies among their restaurant portfolio, there is actually little overlap between the restaurant and restaurant tech private equity investors stepping into the space (save for Danny Meyer’s Enlightened Hospitality).   

Some recent private equity entrants to the space include Marlin’s merger of Fourth and HotSchedules, Vista Equity Partners and Enlightened Hospitality Investments cash infusion into Gather, and Great Hill’s $65 million investment into Paytronix last year. 

The food tech and restaurant tech sectors haven’t quite caught up to the broader financing ecosystem, however, as Pitchbook notes that PE-led acquisitions accounted for almost 40% of North American M&A volume in 1H 2019 (up from a historical average of <30%). 

RESTAURANT DELIVERY CONTINUES USING “GO BIG OR GO HOME” PLAYBOOK

We continue to see a huge wave of continued consolidation in regional restaurant delivery networks as the national players need to keep scaling in order to lower per- customer costs in the technology, marketing, infrastructure and customer support realms. Nationally, Caviar’s recent $410 million acquisition by DoorDash was notable given there were no buyers when it was being shopped three years ago (reportedly they were asking for $100 million), but fast forward to 2019 and Square was able to sell it for a significant premium. 

Softbank, a major investor in DoorDash, is famously known to be a believer in the market-grab (i.e. “go big or go home”) philosophy and likely used that as justification for paying the premium over Square’s acquisition price. It is questionable whether Caviar’s business performance alone could have justified paying that premium. Time will tell whether the combination of DoorDash and Caviar will provide enough market momentum to get both companies to stop bleeding cash.   

FOOD TECH SERVES LUNCH FOR CORPORATES

The convenience economy is no passing fad. And while we have seen many food delivery companies unable to “go big” already “go home” through shutdowns and firesales, it has also paved the way for new, and capital efficient approaches to personalized food distribution. Within this, corporate meals have been a particularly bright spot.   

The fundamental challenge of most food delivery companies has been to make the economics work to deliver one meal to one person/family across different places and times. In contrast, as the entrepreneurs behind the 40+ venture-funded corporate lunch startups have figured out, group dining can actually deliver profitable margins. As such, there have been new crops of competitors entering the fray on a regular basis; 35% of these VC-funded concepts were founded in only the past 5 years. 

But as we discussed on the “Future of Corporate Lunch” panel at SKS 2018, there are actually a plethora of tech-enabled competitors vying for the business opportunity of the lunchtime worker – ranging from quick service brands like Sweetgreen, who is using the recent cash infusion to support corporate delivery platform Outpost, to last mile delivery services from restaurants and dark kitchens, to pre-made meal solutions from retailers, grocers and D2C ecommerce players. And don’t rule out in-office smart vending, IoT, robots, or of course, the incumbent institutional dining providers.

As an aside, the same volume-driven economic motivator is also bolstering an increased focus on college towns and campuses, especially since they can deliver population density outside of major markets. Besides college food marketplace Tapingo, which was acquired by Grubhub in 2018 $150 million, you will find a number of other college-focused food platforms in the Landscape including Kiwi Campus, Snackpass, and Hooked. Even Sally the salad-making robot is heading off to college!

While the economics of corporate lunch delivery can be solid, we have not yet seen even the beginning of the national rollups in this space. As most corporate and catering startups are still regional (even if the regions are large or span multiple parts of the country), I predict this will be a compelling area of consolidation in short time.

WITH THIRD-PARTY TECH “PARTNERS” LIKE THESE DO RESTAURANTS NEED ENEMIES?  

As we initially discussed in our 2018 Restaurant Tech Ecosystem report, it’s tough to be a restaurant or hospitality operator today. We’ve increasingly seen a myriad of issues cannibalizing operators’ margins, including rising rents and labor costs, as well as the onslaught of third-party ordering/delivery services. And simultaneously, operators are being bombarded by a nonstop offering of emerging technologies which are promising front-of-house (FOH) and back-on-house (BOH) efficiencies.

Currently, one of the most talked about threats to restaurants’ income statements are from third-party ordering/delivery technology “partners” that are skimming significant margins from restaurant operators for off-premise orders (both take-out and delivery). 

These third-party marketplace partners are selling restaurants the chance to increase reach and volume through delivery and larger platforms, arguing that the additional incremental sales volume is pure margin due to significant fixed costs in the restaurant model. But that lens is too simplistic, as off-premise sales include additional indirect and hard to measure costs, and many operators are actually reporting negative margins on third-party delivery (“3PD”). For more depth on this topic you should read the medium post by the CEO of customer engagement platform Thanx, in his comprehensive takedown on the massive disruption facing restaurants today.

Beyond P&L implications, there is also a data gap with many third-party marketplaces, as many of these partners are looking to capture the customer data for their own platform’s success. When they are unwilling to share even basic data on the restaurant’s own customers, the 3PDs are showing their hand in that they view these restaurant customers as their own customer base.  

THE BIFURCATION OF RESTAURANT CUSTOMER LOYALTY: THIRD-PARTY ORDERING/DELIVERY MARKETPLACES ARE POISED TO TAKE OVER AS UNIVERSAL LOYALTY PLATFORMS

One of the early trends I tracked in local tech was the digital reinvention of the punch/stamp loyalty card – with startups promising one universal loyalty account to replace them all, by using gamification, check-ins, push notifications, digital wallets and the lure of a network of deals at a consumer’s fingertips. 

Many startups built a business plan around becoming the universal loyalty network, spending time (and capital) to build a consumer-facing brand in order to simultaneously woo local merchants with their impressive user base. In years past this was an overflowing category in the Landscape, however the logos have dramatically slimmed as most of those startups have since either been acqui-hired, pivoted out of the food/restaurant sector or simply failed. Escaping the deadpool, Fivestars is a notable exception, having continued to successfully scale via numerous merchant verticals and geographies.

That doesn’t mean loyalty schemes have disappeared, in fact, white label (i.e. merchant-branded, not tech-company-branded) solutions are thriving, and you will see that the Landscape category focused on B2B restaurant solutions for CX (Customer Experience), Marketing and CRM (Customer Relationship Management) is bursting at the seams. I predict this category will continue to grow in next year’s iteration of the Landscape.

A key reason for the struggles of the first crop of loyalty startups was that a many of the founders and technologists lacked local merchant/restaurant experience, and struggled to create compelling win-win solutions as they tried to solve for the operational complexities related to running a long-tail, two-sided marketplace. It is a hard business to scale, and ultimately, without the network effect, the value exchange was simply not compelling enough for users (or merchants) to remain engaged. 

However, there is another lesson to be learned here that can be applied to how we think about the third-party ordering/delivery scene. Many of the loyalty startups were ultimately competing against their own customers (the merchants) for branding and mind share, which by default did not create a win-win model to best serve the interests and priorities of restaurants/merchants. This tension is again showing up with third-party ordering/delivery marketplaces, but rather than just competing for mind share, the leading third-party partners seem to be increasingly setting their sights on owning the customer’s entire journey. Grubhub’s recent launch of a loyalty program supports this thesis.

In a relatively short time, due to the ease, variety and scale offered via marketplace apps, the customer’s loyalty journey has transformed, now bifurcating to either: 1) direct ordering from the restaurant (online or in-person), or 2) loyalty to one or many ordering/delivery platforms. Thus the future success of many restaurants depends on handing power back to the operators, which is why there is such a healthy market for white-label ordering & delivery, and automated customer engagement platforms.

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I’ve enjoyed watching the Food Tech sector grow over the last decade, but am certain we will see even more meaningful growth in the decade to come. At Better Food Ventures, we believe technology will prove to be the single biggest catalyst to solving critical problems across the global food ecosystem, and we are particularly encouraged by the continued growth of tech-driven innovations and frameworks across the food sector.

The Food Tech & Media Landscape will continue to change as the industry matures, and as such, we depend on the wisdom of the participants in the space. I welcome your thoughts and reactions and look forward to following this sector together in the coming years. You can download the map here.

Teleported Sushi Has Big Implications for Digital Food

When I first heard internet murmurings that a company had figured out a way to teleport sushi, I immediately thought of one of my favorite childhood films: Willy Wonka and the Chocolate Factory. (The old version, not the new one with creepy Johnny Depp.)

Near the end of the movie, Wonka gives his diminishing troupe of children a tour of the factory’s teleporting technology, which has the power to “beam” you a chocolate bar through your T.V. As a chocolate lover and a T.V. lover, I was smitten. But I assumed that this technology would probably never become a reality, at least outside of Wonka.

How happy I am to be wrong!

A Japanese company called Open Meals premiered their “sushi teleportation” technology at SXSW2018, conducting what they call “the world’s first food data transmission.” In the demonstration, sushi that was designed in Tokyo was printed, via Open Meals’ Pixel Food Printer, in Austin, TX.

Their sushi currently prints in 5-millimeter blocks, giving the results a pixellated look straight out of an 80’s video game. However, they hope to reduce the size to 1-millimeter blocks, which would give the food a more organic, realistic appearance.

This demonstration was just the beginning of Open Meals’ plan to transform the way that food is created and transported. Eventually, Open Meals hopes to be able to transmit ingredients and whole dishes, using data and something that their website calls “Social Food Network Services.” They want to usher in what they dub the “fifth food revolution,” whose hallmarks are the “digitalization, transmission, and re-generation of food.”

Open Meals’ Pixel Food Printer isn’t the only 3D food printer out there; there’s also the Foodini and Dovetailed, and scientists at Carnegie Mellon recently came up with a way to DIY a 3D bioprinter. But its approach is unique. Instead of using food paste in a canister, sugar, or liquid as its medium, their machine (patent pending) uses data to set exact specifications to mimic the nutrients, color, texture, and flavor of a specific food, which it then adds to a gel pixel. The robotic arm “prints” this customized gel into a miniature 3D cube, which it stacks to reproduce the appearance of the food its replicating.

Open Meals’ Pixel Food Printer

The sushi demonstration was certainly flashy, but in my opinion the real potential for Open Meals’ vision lies in its Food Base project.

Their digital food platform allows users to search, upload, download, and share data, such as taste, texture, nutrient composition, and color/shape, for specific ingredients or dishes. They can then send that specific food’s data profile up to their connected Pixel Food Printer, which will recreate it.

Open Meals hopes to source data from Michelin-star restaurants, home cooks, television shows, and even food-themed art to populate its database.

Obviously we have a long way to go before we reach a time when digitized, teleported food is feasible on a large scale. You would never mistake Open Meals’ “transported” sushi for the real thing, and apparently the taste was nowhere near bluefin tuna or prawn.

But the implications of what they’re doing is huge, way beyond just a cool-looking trick for SXSW. OpenMeals wants to digitize food like Apple and others digitized music, democratizing it — at least for those who can afford its Pixel Food Printer. (The machine is currently a prototype, but if mass marketed will no doubt fetch a pretty penny.)

Open Meals’ digital food database.

Extrapolating from the claims on Open Meals’ website, a future with digitized, printable food could:

  • Allow for carefully calibrated meals for people with illnesses like diabetes, or athletes with restrictive diets. This could become especially popular as demand for personalized diets is on the rise.
  • Provide on-demand, nutritious food to disaster areas or combat zones where farming infrastructure is weak. That is, assuming the printed food and its corresponding 3D bioprinters would ever be affordable enough for disaster relief organizations to purchase in bulk.
  • Preserve traditional dishes, from cultural hallmarks to mom’s beef stroganoff recipe. Because we all know how hard it is to make food exactly like mom does.
  • Replicate elaborate dishes from cooking shows, so you can eat along with the T.V. (Way better than Smell-O-Vision.)
  • Help lab-grown meat mimic the texture of bluefin tuna or ribeye steak.
  • Be beamed into space so that astronauts can enjoy a wide variety of meals without having to pack a lot of heavy food. This is especially intriguing as NASA gears up for the 2030 mission to Mars. 

Open Meals hasn’t given a timeline for their goals to digitize the future of food. Until they do, I’ll just have to keep dreaming of the taste of a teleported chocolate bar.

In 2018, Seaweed Is The New Plastic

It’s no secret that the world produces—and wastes—mass amounts of plastic. But when you actually take a look at the numbers, it’s downright shocking.

National Geographic says that of the whopping 8.3 billion metric tons of plastic the world has produced, 6.3 billion metric tons have become plastic waste. And of those 6.3 billion metric tons of plastic waste, only nine percent has been recycled. That means 79 percent of all the world’s plastic ends up in landfills and ultimately, the oceans.

Fortunately, this is one problem that some foodtech startups are tackling by searching for sustainable materials to replace plastic packaging. A major contender in the running? Seaweed.

For the past eight years, seaweed’s place as the alternative raw material of choice has grown, and there are already several startups developing a wide range of applications for seaweed, from biofuel to cosmetics and food to pharmaceuticals. An early innovator, Loliware launched its first range of cups made from agar that are safe to consume; agar is extracted from red seaweed. Since then, startups have come out with edible water bottles made from brown seaweed and one group won a prestigious design award for their use of seaweed in commercial packaging for perfume and other goods.

Wondering how seaweed can possibly become the new plastic? It’s not as outlandish as it sounds.

First, seaweed is cheap, easy to harvest and extract, and readily accessible—it is available on every coastline. And, when compared to other potential sustainable materials, seaweed is the clear winner. For example, bioplastics, which are made from starches such as polylactic acid, require fresh water and fertilizer to grow—seaweed doesn’t. In fact, seaweed can grow up to three meters per day.

Because it is so abundant, just 0.03% of the brown seaweed in the world could replace all the polyethylene terephthalate (PET) plastic bottles used every year.

Seaweed’s biggest potential lies in disposable packaging. Inspired by peelable fruits (such as bananas and oranges), the idea is to use seaweed as a biodegradable container. By replacing unsustainable plastic containers, seaweed packaging would solve the problem of the shelf-life gap—the difference between the biodegradability of the container and that of what’s in the container.

Milk is a great example of this. Pasteurized cow’s milk has a shelf life of about one week – but the plastic jugs they are sold in? Each container could take up to 500 years to decompose. Seaweed packaging can decompose in around 4-6 weeks

Replace that plastic bottle with seaweed packaging, and you have a far more comparable shelf-life ratio; seaweed packaging biodegrades in soil in only four to six weeks. Plus, unlike plastic, seaweed doesn’t break down into micro-particles that are impossible to collect.

The problem has been getting more attention lately – two years ago the Ellen McArthur Foundation, a UK-based nonprofit put out a report and launched a new initiative called the New Plastics Economy, calls on major manufacturers to adopt circular modes or production and consumption for plastics where reuse and recycling becomes the responsibility of the makers of plastic containers (instead of hoping consumers do it) as opposed to a linear one which exists now.

Statistics in the report are sobering; according to the foundation “95% of the value of plastic packaging material, worth $80-120 billion annually, is lost to the economy” and they predict by 2050 (just 32 years from now), the world’s oceans will contain more plastic than fish.

Speaking of oceans, there’s another reason seaweed trumps plastic – it actually reduces global warming. Besides being cheaper, more accessible, and more sustainable, seaweed absorbs CO2 and mitigates ocean acidity. Some startups have started to pop up around seaweed farming and maintenance – like New York’s GreenWave, who are building autonomous seaweed farms to both reduce costs and reduce global warming.

2018 might be the year of seaweed and generally more innovation around sustainable packaging and circular life cycle strategies to steer the world away from its intense reliance on plastic.

Next Gen Grocery: The Future Market Looks At The Future Of Food

Mike Lee spent time as a kid marveling at concept cars at auto shows in Detroit. “This huge auto industry institutionalized the tradition of creating a non-production model concept whose sole purpose was to show the world what that company was dreaming about for the future.” Lee grew up and went searching for that kind of tangible look at innovation in the food world – and couldn’t find it. So he founded The Future Market, a futurist food project that looks at the ways food might be produced and consumers might shop for food in the future. Through concept products, specialized events, working shops and live engagements, the Future Market aims to be at the center of conversations around what our food systems will look like many years from now.

The Future Market focuses on two core areas of work – one is helping big food companies partner with startups and embed innovation into their own companies to act more like startups. Their innovation food platform, Alpha Food Labs, is a project designed to work with large corporations and food producers to help them maneuver faster through rapid prototyping projects.

If you were in NYC this past June, you might have seen a live demonstration of Future Market’s other big area of work: a conceptual grocery store of the future. The Future Market’s grocery store of 2042 looks like this: you walk into a market, filled with foods of the future – synthetic food, nontraditional forms of protein, sustainable and local produce – and a food ID system that knows your food preferences and nutritional needs through real-time biometrics matches you with products that are perfect for your health profile and palate but also meet your budget and are sustainable.

A little intrusive? Maybe – but food is core to life and what we put in our bodies, whether healthy or unhealthy, impacts not just how we feel today but our future health and well-being. People are bombarded with what’s considered healthy and what’s not and are often confused about what choices to make. And we’re seeing more companies come to the table to try and provide personalized nutrition options based on our own DNA. The Future Market is analyzing these trends and working to show consumers how these technologies might actually make eating and shopping more straightforward.

But Lee isn’t just interested in showing consumers what the future of food looks like, he wants to enable more cooperation across industries working in the smart kitchen to drive innovation.

“There is no open-source, uniform data standard whereby every food manufacturer can record the nutritional info, ingredient lists, processing methods, and ingredient provenance information into. That may sound like a really unsexy thing, but it prevents so much innovation from happening in the smart kitchen space,” comments Lee. “Imagine the web without HTML—every site used a different, proprietary coding language to create web pages. The internet would be a mess of incompatibility. It’s the same challenge if you want to create a smart fridge that understands all the ingredients within every item inside of it. If we had a uniform data standard that all food companies shared, smart fridges would be so much smarter.”

Don’t miss Mike Lee, at the 2017 Smart Kitchen Summit. Check out the full list of speakers and to register for the Summit, use code FUTUREMARKET to get 25% off ticket prices.

The Smart Kitchen Summit is the first event to tackle the future of food, cooking and the kitchen with leaders across food, tech, commerce, design, delivery and appliances. This series will highlight panelists and partners for the 2017 event, being held on October 10-11 at Benaroya Hall in Seattle. 

Calling All Startups: Apply To Pitch & Demo At 2017 Smart Kitchen Summit

One of the best parts of attending the Smart Kitchen Summit is getting a front row seat to brand new technology and innovative products that are coming down the pipeline. The event’s startup showcase is now in its third year and invites all startups in the food tech and smart kitchen space to apply for a spot.

Details

The Startup Showcase is the perfect way to demonstrate the most innovative new ideas, products and companies reinventing food, cooking and the kitchen. If you have the next great idea that will change the way we buy, cook, store, or consume food, apply today on the SKS website. Anyone with a working product that is either a late-stage working demo or actually shipping is welcome to apply free of charge.

SKS organizers will select 15 startups as finalists and they will be invited to the event to demo their product and get on the Summit stage to talk about who they are and how they’re going to change the future of food, cooking or the kitchen.

From these 15, a winner will be chosen from a mix of judges and crowd-voting and be crowned the winner of the Startup Showcase on October 10th.

To apply, fill out the application and make your case for why you deserve to be a finalist – the more articles, photos, videos and compelling info you can provide on your product and company, the better your chances are of grabbing one of the coveted tables at the 2017 Smart Kitchen Summit.

Past Startup Showcases

The Startup Showcase in 2016 proved to one of the top highlights of the Smart Kitchen Summit – attendees poured into the showcase room to see live demonstrations of 3D food printing, home growing systems, smart precision cooktops, connected spice racks and more. For startups, the Smart Kitchen Summit audience consists of directors, executives, investors and press across the tech, food, design, housewares and appliances, commerce and retail spaces.

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The 2017 Showcase will not only offer a demo table and an eager audience but a demo space in the heart of the main Summit event at Benaroya Hall and a chance to pitch a panel of judges and the audience. No event brings together the decision makers and disrupters from across the food, cooking, appliance, retail and technology ecosystems. The Startup Showcase provides a platform for exciting startups, investors and entrepreneurs to demonstrate what they are working on and let others experience it firsthand.

The deadline for applications is August 15.

When Food Producers Borrow Techniques From Breweries

The future of food discussion is often focused on ways to make popular food products and ingredients in a sustainable and healthier way. The road to meeting the demand for more natural foods is filled with constraints; a supply chain that can’t always deliver natural ingredients and prices that consumers don’t always want to pay. That’s why some companies are turning to a well-worn technology, used commonly by brewers to make beer and cider.

Food companies like faux-meat startup Impossible Foods and cow-free milk producer Perfect Day are using fermentation-like processes along with food science to create natural ingredients in unusual ways.

A recent piece from Fortune explains,

Scientists identify the desired genes in a plant or animal and insert them into a host such as yeast. The yeast is fed sugars and nutrients to stimulate fermentation. Then the yeast and its genes are filtered off, and the desired ingredient is purified out of the remaining broth.

When we think of food technology, we often think of gadgets and instruments used to cook and order our food, but the work happening in food science to create foods that taste and look like the real thing is perhaps some of the most interesting. If we think about the food system broadly and the challenges the world faces – including shortages and harmful climate impact, this kind of food tech will lead the way in driving real solutions.

The big question, as Fortune points out, will be whether or not consumers will buy into fake meat that’s meant to look and taste like the real thing, or cow’s milk that’s made without the cow – or sugar that doesn’t come from a plant.

Electrolux Ideas Lab Picks Smart Watch With Food Data And Augmented Reality Baked In

It isn’t uncommon these days for large, legacy brands in the food and appliance space to dive into the startup game. We’ve seen companies like Campbell’s, Kellog and General Mills create investment arms to back food startups looking to disrupt the market; startups in the space have raised over $6 billion over the past several years with products designed to shape the future of food.

Appliance giants like Electrolux are on the prowl for the next big idea that might revolutionize food production and manufacturing but also cooking, eating and buying food from the consumer end. Earlier this year, Electrolux launched the Electrolux Ideas Lab, a competition designed to find the next big idea in food innovation. According to Electrolux,

The premise of the Ideas Lab Is to “inspire people around the world to enjoy tastier, healthier and more sustainable home cooking in the future.”

Opened to everyone from students to startups, the Ideas Lab is a crowdsourced play to bring fresh thinking to Electrolux’s own products and solutions in the market. After picking 50 finalists, the company opened voting to the public and last week announced the top 10 vote-getters, along with the grand prize winner.

WatchYourself, Ideas Lab’s first-ever winner, is a smart watch concept designed by an Estonian product design student. The watch itself looks more like a high-tech bracelet but has unique features that allow you to scan in grocery items while you’re at the store to see if it fits into your personal diet and health plan. This requires some programming upfront and inputs from the user about who they are, what they’re allergic to, what they’d like to eat and their personal health goals. But the watch goes beyond just food data delivery, it also projects recipes for food items into the palm of your hand.

This concept – combining food data and recipe suggestions – isn’t new, but the delivery method is unique. Fitness wearables have dominated the market for a while now, but the combination of food data, nutrition, and digital health is where the market seems to be moving. We’ve seen startups like Habit launch, complete with a DNA kit to develop a truly personalized nutrition system for your own body’s needs. The WatchYourself concept combines the wearable technology form factor with deeper personalization for health and wellness – along with a tiny projector allowing recipes to actually be shown in your palm. The winner receives a week in Stockholm, home to Electrolux headquarters and a startup scene that helped birth the likes of Spotify and Skype – not to mention 10,000 euros.

Consumers are shifting their purchases and preferences to find ways to eat and live healthier and legacy food, tech and housewares brands are looking for ways to capitalize. With over $6 billion in investment, startups in the space are just getting started.

Check out other runners up in the Electrolux competition and read more about the Ideas Lab itself.

Virtual Eating: How Virtual Reality Can Make You Think You’re Eating Pizza When You’re Not

The rise of virtual and augmented reality systems have only just begun; we’re almost positive we’ll see even more VR demos at CES this year, and the convergence of smart home technology and VR/AR has only just begun. But what about virtual eating? Virtual reality is designed to simulate sounds and sights of an environment – but could it simulate taste and smell too?

That’s the premise of a project from researchers in Japan and Singapore who have been testing out electrical and thermal probs that can stimulate muscles and trick the human brain to believe it was tasting food that wasn’t really there. In one experiment, scientists focused on the neurons that are sensitive to hot and cold temperature changes that also play a role in how we taste things. By rapidly heating or cooling a square of thermoelectric elements on the tip of someone’s tongue, the user experiences a sweet taste. The thermal experiment also produced some strange results, with some participants reporting a spicy flavor when the probs were heated up and a minty flavor when they were cooled down.

In another experiment, electrical currents were used instead of heat to enhance or create a salty, sour or bitter taste in someone’s mouth.

The last experiment used electrode’s attached to the masseter muscle, one of four muscles in the jaw used for mastication (chewing), to simulate biting through actual food. The strength of the electric impulse controlled the texture, or hardness of the simulated food and the duration of the impulse controlled the elasticity sensation of the jaw opening and closing during chewing. By varying the strength and duration, researchers were able to more realistically produce the sensation of biting into real food.

Study on Control Method of Virtual Food Texture by Electrical Muscle Stimulation

The role of heat as it relates to taste isn’t a new concept, it’s one chefs have been using to transform dishes and create unique flavors. But using solely heat or electricity to mimic a specific taste or sensation So it turns out, your taste buds, and even jaw muscles can be hacked – making it possible to have a virtual reality dining experience without having to suffer the calories.