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The Spoon

Daily news and analysis about the food tech revolution

grocery delivery

Kroger Partners With ClusterTruck for In-Store Ghost Kitchens

Grocery mega-retailer Kroger announced today it is launching ghost kitchens at two of its Kroger retail stores. The kitchens will be done in partnership with delivery-only restaurant service ClusterTruck and provide Kroger customers prepared meals free of delivery fees, according to a press release sent to The Spoon.

Kroger and ClusterTruck have been piloting their partnership since 2019. Through it, ClusterTruck sells its restaurant-quality meals via the Kroger Delivery Kitchen website.

To be clear, the ClusterTruck platform is not a tool for selling meals from other restaurants. Rather, ClusterTruck handles the entire meal delivery process, from conceptualizing a menu to ordering the ingredients, cooking the food, and getting meals into customers’ hands. The company also uses its own proprietary tech stack to update menus and process orders and payments. ClusterTruck, which is headquartered in Indianapolis, Ind. and has a sizable presence around the Midwest, brings this end-to-end delivery concept to the Kroger ghost kitchens. The ClusterTruck menu will be available via the Kroger Kitchen Delivery site.

According to today’s press release, the new concept repurposes roughly 1,000 square feet at each store (a typical Kroger store is about 160,000 square feet). This repurposed space will be dedicated to ClusterTruck staff, who will prepare meals for delivery and in-store pickup.

In theory, at least, that means Kroger would not have to rely on third-party delivery services like DoorDash and Postmates for any part of the delivery process for these ghost kitchens. Interestingly, this comes at a time when some of those third-party delivery services are trying to diversify their platform by offering grocery delivery.  

For Kroger’s two new in-store ghost kitchens, one will be located in Indianapolis and the other in Columbus, Ohio. These will follow an on-premises ghost kitchen already open in Fishers, Ind., and one in Dublin, Ohio, which is set to open later this year.

Today’s news is also another piece of evidence that the lines between grocery store and restaurant are overlapping. In addition to the aforementioned third-party delivery services shuttling some grocery orders to customers, Texas-based chain H-E-B recently opened a food hall that delivers restaurant meals, and grocery service Cheetah added restaurant meals to its available offerings. And though the blurring of the lines between restaurants and groceries is a direct result of the pandemic’s closing restaurants and keeping people at home, the trend is unlikely to reverse, even when restaurants can operate at full capacity once more.

One reason for the continued merging of grocery stores and restaurants is the surging popularity of ghost kitchens. Euromonitor recently predicted that the ghost kitchen market will be worth $1 trillion by 2030. That number factors in not just ghost kitchens for restaurants but also spaces for food producers and retailers. The $1 trillion figure may seem a little absurd now, but if more partnerships like the Kroger-ClusterTruck deal emerge, it may soon seem a less outlandish number and more a reality for both the restaurant and grocery industries.

Starship Robots Now Delivering Groceries for Save Mart in Modesto, CA

Save Mart announced today that it it is now using Starship’s sidewalk robots for grocery delivery in Modesto, CA. This is the first grocery partnership for Starship in the U.S.

In a press release sent to The Spoon, Starship said its robots can each carry up to 20 pounds of groceries, or roughly three shopping bags, and can travel up to four miles round trip. Save Mart customers interested in using the service will order groceries directly from the Starship app.

While this is the first U.S. grocery partnership for Starship, the company has been doing robotic grocery delivery in the U.K. for a while now. Here in the U.S., Starship is mostly known for its college campus food delivery, and has lined up a number of partnerships with higher-education institutions including George Mason University, University of Pittsburgh and the University of Wisconsin-Madison.

But the COVID-19 pandemic caused many schools to shift from in-person to online learning, reducing the need for campus food delivery. Though Starship robots are still active on campuses like the University of Houston and Bowling Green, the company has been expanding outside of schools. Starship added general restaurant delivery to cities like Tempe, AZ, Frisco, TX and Chevy Chase, VA.

While the pandemic may have dimmed Starship’s college go-to market strategy, COVID has spurred an interest in the type of contactless delivery robots brings. Robots don’t get sick, and they remove a vector of human-to-human transmission of the virus. We’ve seen accelerated activity from other players in the robot delivery space like Refraction in Ann Arbor, MI and Kiwibot in San Jose, CA and Denver, CO.

There are still a couple of details we don’t know about Save Mart’s robot delivery program. We’ve reached out to Starship to find out how many robots the store will have in service as well as any delivery fees associated with robot grocery delivery there. UPDATE: A Starship rep told us there 30 robots being used and delivery fees vary based on distance.

It’s a safe bet, however, that given how the pandemic continues its steady presence in this country, we’ll be seeing more grocery partnerships for Starship take off in the coming months.

Farmstead Launches Grocery OS to Help Other Grocers Get Those Online Dollars

Online grocer Farmstead announced today that it is making its in-house grocery delivery software, Grocery OS, available to other national and regional grocers.

Farmstead’s pitch is that Grocery OS can help traditional grocers migrate from physical stores to online, working up through dark stores and into warehouse-only formats. In doing so, Farmstead says Grocery OS will also provide more delivery capacity and get retailers more e-commerce revenue.

Grocery e-commerce has experienced record growth throughout the year as the COVID-19 pandemic pushed more people into online grocery shopping. According to a recent Mercatus study, online grocery shopping will continue to grow, hitting $250 and accounting for 21.5 percent of total grocery sales by 2025.

“COVID shows there is pent-up demand for online grocery,” Pradeep Elankumaran, Farmstead Co-Founder and CEO, told me during an interview this week. Of course, this pent-up demand translated at first into delayed grocery delivery windows, often needing to be scheduled weeks out, as well as waitlists and other breakdowns in the process.

Though things have calmed down and plateaued in grocery e-commerce, the trick now for traditional retailers is to build a system that can scale to meet continued demand. As Elankumaran said, however, running a digital-first store is a lot different from running a traditional store that people go in and shop at.

That’s where Farmstead claims its Grocery OS software stack can help. Grocery OS, which Farmstead uses for its own operation, promises to help traditional grocery retailers boost their delivery capacity, manage inventory, picking and packing orders, and handle marketing.

But as Elankumaran pointed out, transitioning to e-commerce isn’t just about grabbing a bigger piece of the pie. It’s also a defensive move for existing retailers. “You also have a whole bunch of pressure from Amazon and Walmart driving pickup and delivery,” he said.

Indeed, Amazon just opened up a delivery-only Whole Foods in Brooklyn and Walmart launched its Walmart+ subscription service that includes free grocery delivery.

According to the press announcement, Grocery OS is already being used by one of the “top 3” national grocers in the U.S. As noted, it’s also been used by Farmstead as that company has weathered its own pandemic growth spurt. While he wouldn’t provide specifics, Elankumaran said that Farmstead has experience 6x growth in revenue over the span of three or four months, grew its team size by 3x and moved into a 17,000 sq. ft. facility from its former 3,000 sq. ft. warehouse.

But Farmstead isn’t giving up its own grocery ambitions. Elankumaran’s goal is to build and scale Farmstead into a national retail brand. And he’ll be using Grocery OS to do it.

Survey: Online Grocery Falls in August, Though Majority Will Continue E-Shopping

What goes up must come down, especially, in this case, when people feel safe enough to go out. New survey data from Brick Meets Click/Mercatus shows that U.S. grocery delivery and pickup sales for August dropped to $5.7 billion, down from June’s record high of $7.2 billion.

This pullback in online grocery isn’t a huge surprise. Between March and June of this year, online grocery shopping had seen one record month after another, but that growth was artificially inflated, fueled by the pandemic.

According to Brick Meets Click, the fall in online grocery dollars correlates with increased ease about COVID-19, with 38 percent of U.S. households expressing high levels of concern about the virus in August versus the high of 47 percent in April.

“There is a common belief that the rapid and dramatic surge in sales caused by COVID-19, starting in mid-March, would recede at some point as stay-at-home orders and in-store shopping restrictions like occupancy limits, shortened hours and one-way aisles were relaxed,” David Bishop, a partner at Brick Meets Click, said in a press release announcing the August results. “While the August results reflect a retrenchment of sorts, the market appears positioned to begin a new growth cycle with a large base of committed shoppers.”

This larger base is actually good news for those investing in online grocery services. Brick Meets Click said that roughly 37.5 million, or 29 percent of all U.S. households, are monthly active users of grocery delivery and pickup. That’s an increase of 133 percent over August of 2019, when that number was just 16.1 million.

August wasn’t without its own record setting, however. Brick Meets Click found that spending per order hit a record $95 in August, up 32 over a year ago. Active shoppers placed 1.6 orders per month versus 1.0 orders during the same time last year.

Additionally, more people are developing new online grocery shopping habits. According to the survey, 75 percent of customers said they are “extremely or very likely” to online grocery shop through their retailer again within the next 30 days. This desire to continue shopping online, said Brick Meets Click, was likely because of improved online shopping experiences.

Considering that people have been living under pandemic conditions for half a year (!) now, new habits have definitely set in. One thing to look for is the change in the weather. Now that people have experienced online grocery shopping, will they return to it when the weather outside is frightful (and delivery and pickup can be so delightful)?

Food Tech News: Lettuce Glow, Plus More Expansions for Food Tech Companies

Since most of us are still relatively homebound, it’s no surprise much of the food tech news of late has been about grocery, grocery delivery, farming at home, and big food brands going the direct-to-consumer route.

Herewith, the latest developments in those areas from around the web this week:

Lettuce Grow’s Farmstand Gets a Glow

Lettuce Grow, a smart-garden company founded by Jacob Pechenik and Zooey Deschanel, announced this week a new accoutrement for all your at-home farming needs. The company is launching its Glow Rings LED indoor grow lights as an add-on to its Farmstand hydroponic vertical garden. The garden, which we covered back when it was first released, previously lacked any lighting technology and had to be kept outside. The addition of the Glow Ring means those would-be agtech enthusiasts with no outdoor space can try their hand at the indoor smart-farming concept. 

Giant Food Stores grows Mid-Atlantic footprint | Supermarket News

A Giant Partnership for Union Kitchen

Grocery chain Giant Food is expanding its partnership with Washington, D.C.-based food accelerator Union Kitchen. The chain will offer more products from Union Kitchen participants — all of whom are food and bev producers — through its grocery delivery program. For shoppers, it means access to more locally made and/or grown goods.

JUST Is Expanding to More U.S. Stores . . . Again

Eat JUST, the company behind plant-based egg product JUST, said this week via an email to The Spoon that it is in the midst of what it calls its largest expansion yet. By the end of September, the company will have its products at “more than 17,000 points of retail distribution” across the U.S., a 40 percent increase that includes stores like Walmart, Kroger, Albertsons, and Safeway. Food Lion, Giant Food, and many other local stores are also on the list.

Food E-Commerce Startup Dunzo Raises $28M

Bengaluru, India-based food delivery startup Dunzo has raised $28 million in what is the first tranche of the company’s Series E round. Entracker was first to report the news, noting that this round was led by Google and LGT Lightstone Aspada with participation from Lightbox, Bhoruka Finance Corporation, 3L Capital, Moving Capital, and Pivot Ventures.

The round follows Dunzo’s $45 million fundraise in October 2019 and brings the company’s total funding to $116.4 million.

Dunzo, which started as a WhatsApp group in 2014 to connect locals to grocery stores and restaurants, has over the years grown into a sizable e-commerce platform that delivers groceries, restaurant meals, and other supplies to customers around India’s major cities. According to Entracker, the company has about 75,000 stores on its platform.

It’s a lucrative, albeit highly competitive, time to be a food delivery startup, with the pandemic keeping more people at home and subsequently raising demand for online groceries and meal orders. Dunzo itself said in April it had seen a 3x increase in growth for food and beverage orders.

Though it’s hardly the only service in India that’s kept busy ferrying all manner of food goods to customers on lockdown. Both Swiggy and Zomato, the country’s major restaurant delivery services, have recently added grocery services. Both have also announced layoffs, too, underscoring the impact COVID-19 has had on business. The Indian food delivery market has also seen some consolidation: In March of this year, Zomato bought Uber Eats’ India business for  $206 million.

Like Swiggy and Zomato, Dunzo has been diversifying its business of late. Entracker reports that the company has recently invested in B2B services to “enable logistics for hyperlocal retailers.” It also currently runs 10 “dark stores” that help local retailers fulfill more orders.

Deliveroo and Waitrose Launch a 30-Minute Grocery Delivery Trial

Following similar recent moves from other third-party delivery services, Deliveroo is expanding its presence in the world of online grocery shopping. At the tail-end of last week, grocery chain Waitrose announced it will pilot a 12-week program with Deliveroo to get groceries to customers around the UK in as little as 30 minutes.

The news comes just as Waitrose’s longstanding deal with online grocery retailer Ocado comes to an end. From Tuesday, September 1, Ocado will instead deliver groceries from Waitrose rival Marks & Spencer. 

Deliveroo will ferry more than 500 Waitrose items to customers “in as little as 30 minutes,” according to the Waitrose press release. Customers will be able to place orders via Deliveroo from one hour after the shop opens to one hour before it closes. Waitrose says the partnership is meant to “compliment” its own two-hour grocery delivery service.

The Guardian noted over the weekend that Waitrose has seen more than 100,000 extra orders for online groceries since the UK’s pandemic-induced lockdown started. Online grocery orders across the UK have almost doubled thanks to the pandemic. It’s a similar story to what the U.S. is currently experiencing where grocery e-commerce sales hit $7.2 billion in June.

Given all that, it’s no surprise that third-party restaurant delivery services like Deliveroo are diversifying their sales channels to include grocery. Deliveroo, in particular, has struggled to keep business strong during the pandemic as restaurants shutter permanently. For example, the Competition and Markets Authority (CMA), the UK’s antitrust watchdog, finally approved Deliveroo’s long-scrutinized deal with Amazon on the grounds that Deliveroo would have had to exit the UK food delivery market without the Seattle giant’s investment.

Adding more grocery services is one way to make up for some of the lost restaurant sales. New sales channels may also give third-party delivery services a fighting chance a profitability, something that keeps getting eroded by fee caps, battles over worker classification, and other regulatory issues.

It’s a narrative we’re familiar with in the U.S., too. Uber Eats now delivers groceries, and DoorDash just announced its own grocery delivery service in addition to its partnerships with convenience stores.

The initial Deliveroo-Waitrose trial, which also starts September 1, will serve about half a million households and, if successful, will extend to more locations in the future.

DoorDash Now Does On-Demand Grocery Delivery

DoorDash continues to expand beyond its restaurant roots with the announcement today that it has partnered with a number of retailers to offer on-demand grocery delivery through the DoorDash app for the first time.

From a DoorDash blog post announcing the new service:

Customers in the Bay Area, Los Angeles, Orange County, Sacramento, San Diego and the Central Coast can order from Smart & Final. Meijer and Fresh Thyme are available to customers in Chicago, Cincinnati, Milwaukee, Detroit and Indianapolis. In the coming weeks, we will be adding selection across the country with grocers such as Hy-Vee, Gristedes / D’agostino and more — providing more than 75 million Americans access to a grocery store on DoorDash.

The service will offer more than 10,000 grocery items available for on-demand delivery in less than one hour. In addition to getting a week’s worth of groceries, customers can also get more immediate meals like heat-and-serve or ready-to-eat meals from participating grocers.

There’s a big difference between getting a single burrito delivered to your door in an hour and getting a week’s worth of groceries, though. It can take the average person more than an hour to complete a grocery trip, so how will DoorDash be able to pick out all that produce and cereal and milk and whatever and whisk it off to a customer for a speedy delivery? According to TechCrunch “‘Embedded shoppers’ hired from a staffing agency handle the shopping in each store, and the groceries are then delivered by DoorDash’s Dashers.” (Sidenote: Between DoorDash and Instacart, it feels like grocery stores will soon only be filled with human avatars doing the shopping for other people at home.)

This isn’t DoorDash’s first foray into the world of grocery delivery. Through the company’s Drive white label service, it has fulfilled grocery orders for Walmart, Hy-Vee and more.

Honestly, DoorDash has been working up to this all year. The company launched convenience store deliveries in March, partnered with Walgreens for drug store deliveries in July, and then launched its own brand of ghost convenience stores earlier this month. So adding full-on groceries stores is a logical next step.

It makes even more sense when you consider that the restaurant industry, DoorDash’s meat-and-potatoes business, is being devastated by the global pandemic. Yes, delivery could be called a lifeline for restaurants, but the high commissions that DoorDash and Uber Eats (which is also getting into the grocery game) charge restaurants can negate any assistance its delivery provides. But the bigger issue, of course, is that an alarming number of restaurants are closing down permanently, so DoorDash must find new markets.

Will DoorDash be able to migrate its massive user base into the new grocery vertical? There will need to be some education, as people currently associate DoorDash with restaurants and Instacart with groceries. But as we continue to hunker down because of this pandemic, new habits are quickly becoming the new normal, and no one will care who brings them their groceries as long as there is a delivery window available.

Walmart Brings on Instacart for Same Day Grocery Delivery

Walmart has teamed up with Instacart to provide same day grocery delivery in four markets across California and Oklahoma, reports CNBC.

Instacart users in Los Angeles, San Francisco, San Diego and Tulsa will be able to order groceries, alcohol and more from Walmart stores for delivery in as little time as one hour.

The move is of note because this is the first time that Walmart has enlisted the help of Instacart for its main stores in the U.S. (Instacart delivers for Walmart Canada as well as Walmart-owned Sam’s Club). As Grocery Dive points out, the agreement comes just a week after Walmart reportedly delayed the launch of its Amazon Prime-like service, Walmart+, which will include same-day grocery delivery.

The timing for such a partnership is certainly right. The COVID-19 pandemic has spurred record amounts of online grocery shopping, which entails either curbside pickup or delivery. As it was deluged with demand, Instacart raised another $225 million in June and ratcheted its number of gig Shoppers (who do the picking and delivery) to 750,000 to keep up.

What’s somewhat curious about this deal is why Walmart is choosing to do it. Obviously the big reason to help fend off Amazon, which saw its grocery sales triple year-over-year, from gobbling up marketshare as it starts rolling out its own real-world grocery stores. Plus every player in the grocery retail space has bulked up its delivery options. But unlike Instacart’s other grocery store partners, Walmart is a logistics machine. I’m not sure why it would want to hand over the customer relationship to a third-party.

Perhaps this is indeed more of a stopgap to help retain and gain customers while Walmart ramps up its own delivery mechanisms. Or perhaps Walmart is finding more customers use its curbside pickup offering (a service it was pushing hard at the beginning of the year).

Regardless, the pandemic has forced all kinds of acceleration and adaptation in the grocery space, and this deal from Walmart and Instacart is just one more story that will keep going throughout the year.

Weezy Raises $1M for Speedy Grocery Delivery

London-based grocery delivery startup Weezy, came out of stealth today and announced it has raised a $1 million pre-seed round of funding. TechCrunch was first to report on Weezy and its news, writing that the round was led by Heartcore Capital with participation with from former execs from grocery-related companies like Tesco, Ocado and Sainsbury’s Chop Chop.

The hook with Weezy is that it promises to deliver your groceries in 15 minutes. It does this through a combination of “strategically located fulfillment centers” in different neighborhoods along with a fleet of electric scooter and bicycle couriers, according to TechCrunch.

Customers use the Weezy app to shop for groceries, which because the fulfillment centers are tucked in neighborhoods, also features goods from local bakers and butchers. Weezy then delivers the order in less than 15 minutes between the hours of 10 a.m. and 10 p.m., charging £2.95 per delivery. Weezy currently serves the Fulham and Chelsea districts of London.

From the sounds of it, Weezy seems to be a speedier Farmstead, which also uses a more localized fulfillment center approach to grocery delivery here in the U.S. (though doesn’t promise 15 minute delivery). This distributed network of smaller fulfillment centers is also what robotics companies like Takeoff and Fabric are looking to build.

Not living in London, we haven’t had a chance to try out the service, but one question we’re curious about is how large a Weezy grocery order can be. If they are delivered via bike and scooter, that means a week’s worth of groceries for a family is probably out of the question. But then again, this type of quick service is probably geared more towards last minute items or nice-to-haves rather than replacing full-on shopping trips.

Weezy is certainly launching at an opportune time. The COVID pandemic has spurred record amounts of online grocery shopping as people limit trips to physical stores. With the pandemic’s waves, Weezy’s speedy delivery will certainly make it an attractive option for families still stuck at home.

Drone Grocery Delivery Coming to Mobile, Alabama

I should apologize. In a post published on The Spoon this morning, I asked How Are You Getting Your Groceries? Delivery, Curbside Pickup or In-Store? In doing so, I failed to include “by drone delivery” among the choices, and it looks like I should have, at least, if you live in Mobile, Alabama.

Rouses Market, which has 64 stores along the Gulf Coast, announced yesterday that it has partnered with Deuce Drone to test grocery delivery by drone in Mobile this Fall (tip of the hat to Grocery Dive, who first reported the story). According to the press release, the drones will be able to deliver groceries in under 30 minutes.

Image via Deuce Drone’s website

There are plenty of other drone delivery programs in various stages of deployment around the world, but Rouses’ is the first we know of that’s specifically for groceries. In Ireland, Manna is doing restaurant delivery. Ditto for Uber in San Diego. Google’s Wing did latte delivery in Canberra, Australia. And in India, food delivery company Zomato acquired drone company TechEagle.

The press announcement didn’t specify anything around flight range or how much cargo each drone flight could/would carry. So we don’t know if it can replace a full trip to the grocery store or not (probably not, given how heavy groceries can get). We’ve reached out to Deuce Drone for more details. UPDATE: Deuce Drone sent us the following via email:

The drone currently being used for early development has a payload capability up to 12 lbs and will be used in the planned early demonstrations and revenue tests. Longer term, we plan to use a range of drones that are or will be available on the market that give us payload efficient payload ranges in the 0 to 2.5 lb, 2.5 lb to 10 lb, 10 to 25 lb and greater than 25 lb. Range for the current drone with full payload is about 6 miles one way at a maximum speed of nearly 40 mph.

There are a lot of other complications around drone delivery. Flight paths need to be created, areas like schools need to be avoided, and drones constantly buzzing overhead can get irritating.

But even with those considerations, Rouses’ grocery drone delivery is coming at the right time. With the pandemic forcing people to stay at home, they are turning to online grocery shopping in record numbers. All of those orders need to be fulfilled whether its through delivery or curbside pickup. Adding fast drone delivery, especially for smaller basket sizes, could ease logistical congestion and make curbside and delivery fulfillment more efficient.

So if you live in Mobile, by all means, let us know if you’re going to get your groceries by drone.

How Are You Getting Your Groceries? Delivery, Curbside Pickup or In-Store?

It’s easy as a reporter to get wrapped up in your own little corner of the world. If you aren’t careful, you confuse your own experiences as a stand-in for everyone’s experience. This is obviously myopic and wrong.

I thought about my potential short-sightedness upon reading Vox’s scoop yesterday that Walmart plans to launch its Amazon Prime-like subscription service this month. Dubbed Walmart+, it comes with a bunch of benefits for subscribers including same-day grocery delivery.

Neither Walmart nor Amazon deliver groceries to my rural neighborhood, so the news doesn’t affect me personally, but even if they did, I don’t think I’d use grocery delivery. My local grocer delivers, as does Safeway, but I eschew them for curbside pickup. Mostly because curbside seems to be more flexible both in time slots available and how I spend my time (tying a bunch of out-of-house errands together). Oh, and curbside pickup is also free.

I’m also not interested in doing my grocery shopping in-store anytime soon, as this pandemic doesn’t show any signs of slowing down. I realize the risk of contracting the virus while shopping is low, but when curbside pickup is so fast, so easy and so contacless, why bother roaming the aisles and standing in line with all those other people (who may or may not be wearing a mask)? Plus, more people shopping in-store seems to put more grocery workers at risk.

But I understand why people would want delivery or to shop in-store. Delivery is great for people with limited mobility, family considerations or otherwise can’t physically make it to a store. And while I don’t want to set foot in a store, my wife masks up and has gone in on two occasions because she wanted to pick out her own fresh produce.

So I’m curious, how are you, dear Spoon reader, handling your grocery shopping during this pandemic? Are you doing delivery, curbside pickup, or shopping in-store?

The question isn’t just about fear of contracting the coronavirus, it’s also about technology and convenience. Retailers seem to have worked out the kinks that beset online grocery order fulfillment early on during the pandemic. Instacart added hundreds of thousands of gig workers to shop and deliver orders. Amazon’s first full-on grocery store in Woodland Hills, CA went dark so it could focus on fulfilling online orders. And non-traditional companies like restaurant food suppliers have gotten into the consumer grocery delivery game to fill some gaps.

But my question remains, given the choice between delivery, curbside or in-store, how are you getting your groceries? I’d honestly love to know how you handle it in your corner of the world.