Close Ad

The Spoon

Daily news and analysis about the food tech revolution

JOKR

The Case for 15-Minute Grocery Delivery is Questionable. So Why Did It Raise So Much Capital?

For about as long as I’ve been seriously watching the Internet industry, companies have been trying to make a business of home grocery delivery.

It started back in the late nineties when companies like Webvan and Homegrocer raised massive amounts of capital after convincing investors that food shopping would be largely done online in the future.

Webvan would raise almost $400 million in venture investing and another $375 million through an IPO. HomeGrocer raised $440 million in venture capital and almost $288 million going public.

None of it was enough. The two companies would eventually merge and went bankrupt less than a year later.

Of course, some online grocers survived, including some originating in the early days of the Internet. Ocado, conceived in the year 2000, continues to this day and is one of the biggest online grocers (and grocery automation technology companies).

But despite the occasional success story like Ocado, the reality is online grocery shopping is a tough business, one that seems to possibly work as part of a broader omnichannel market approach where grocers like Walmart, Kroger and now, yes, Amazon offer both in-person and online shopping experiences for the consumer. And even Ocado.com is essentially an omnichannel model, partnering in the early days with Waitrose.

Which brings us to the 15-minute grocery category, a model built around hyper-local delivery with distributed micro-fulfillment centers placed in dense urban markets like NYC, Philadelphia, and other locations. Startups in this space focus on convenience, offering a limited set of items, not unlike you might find in a convenience store like 7-Eleven (but usually with a little more fresh food sprinkled into the mix).

The market, which in some ways kicked off with GoPuff’s founding a decade ago, witnessed a whole bunch of new entrants enter the market over the past couple of years, including companies with similarly weird names like Gorillas, JOKR, Fridge No More, Weezy to name a few. These companies feasted on a downright frothy venture capital market, raising a breathtaking $4 billion last year alone:

However, with the worldwide economic climate facing significant uncertainty in the face of decades-high inflation, rising interest rates, and a war in eastern Europe, the easy money spigot has been shut off. As a result, some of these companies are either falling into the deadpool, getting scooped up by other competitors, or like JOKR and Gorillas, attempting to cut costs through layoffs and market pullouts to preserve capital runway as they try to survive what looks to be a long economic winter.

Of course, all of this begs the question: Why did all these startups get so much funding in the first place? As the early online grocers demonstrated, building out a network of stores and warehouses and a delivery infrastructure to get a basket of goods to consumers is an extremely expensive business.

Don’t believe me? This chart from a recent McKinsey report on online grocery shows just how tough the margins are for a standard online grocery business before we even consider the extra costs of accelerated delivery.

For a typical e-grocery business, COGS (cost of goods – i.e. groceries – sold) are the biggest expense, around 70% of a total order. The leftover 30% is eaten up by in-store and pick-and-pack labor, last-mile delivery expenses, and associated e-commerce fees. When it’s all said and done, a typical online grocery order has a negative 13% margin.

Of course, fast-grocery startups might offer slight markups in pricing and also make money through delivery fees (which range from $1.80 to $5 per order) and membership subscriptions, but what’s somewhat surprising in retrospect is that fast-grocery companies don’t have drastically different pricing or fee structures compared to that of traditional e-grocery prices.

Beyond the negative marginal profit of each order, the biggest expense driver for these companies and what likely ate the lion’s share of the billions of dollars in the collective capital runways is the buildout of their fulfillment centers and dark store networks. Being fast requires lots of points of presence to be within a 15-minute delivery window (or shorter, since fulfillment and delivery driver load-in takes at least a few minutes once the order comes through), which means lots of construction, equipment and technology costs.

Indeed, the venture community must have seen something here in a business – online grocery delivery – that has shown itself to be historically unprofitable. My guess is the rationalizations for writing these large checks fell in the following categories:

Customers will pay for convenience: We’re living busy lives and sometimes we just want what we want. If someone can get me a six-pack of beer, a steak, and a bag of chips to my house in 15 minutes, I’ll choose that option.

The pandemic changed the game and converted us into an e-grocery nation: In the early days of the pandemic and throughout 2020, we saw unprecedented conversion rates to online grocery as many consumers were forced to use it for the first time. Surely once they went e-grocery, customers wouldn’t return to the old way of doing things.

The siren song of the giant TAM: Food is a huge industry. I’m sure pitch-deck-making founders convinced investors they could convert a large enough percentage of food shopping customers to their business to take home a healthy percentage of the total available market (TAM) in the long run.

Long-term, technology & automation would drive costs down: I am sure many fast-grocery startup founders thought if they could just amass a large and loyal user-base, they could apply technology and automation to bring down the costs and increase margins as they moved past the large-scale infrastructure buildout of the early years.

These rationales for the fast-grocery business may make sense in a vacuum, and I am sure the impressive growth of early-growth pioneers like GoPuff helped convince many startup founders and eager investors there was some long-term gold to be found in those fast-grocery hills. But therein lies the problem: a closer look at these prospective businesses and anticipation of changing environmental factors – both in the form of the global macro-economic situation and the rise of competitors with built-in cost advantages – should have been enough to turn away some of the investors who jumped into this space.

Consider the e-grocery boom of 2020. While many of us thought that the rapid adoption of e-grocery would likely have some staying power even as the pandemic faded, it was never clear how just how much an average e-grocery shopping consumer would buy online once they had the opportunity to head down to their corner grocery store or load-up on staples at their warehouse store. From the looks of it, many consumers are returning to their local stores.

As for the promise of convenience, even if we assume sub-hour delivery time does offer some value to consumers, that value is reduced if there is a convenience store on the corner where one could just go pick up the goods instead.

And, say, a customer did occasionally use these services, was there any reason to assume they would continue to be that impatient? Amazon and Walmart often can usually deliver within an hour or two. Customers who want something quicker can always use a DoorDash or another food delivery app to get something to you quicker.

In reality, these adjacent competitors should have been the most significant reason investors stayed away from this space. These companies are all logistics-optimized, well-capitalized businesses that are eyeing the same TAM of the newer entrants. They also have legacy businesses with which they’ve built customer lists in the tens of millions in some cases.

We’ll see more consolidation of this market, and my guess is one or two of these startups have a chance to emerge on the other end as long-term survivors. With its early start and a warehouse network that’s largely built out, GoPuff looks like it could have enough of a customer base and capital in the bank to weather the storm. Gorillas, having just raised $1 billion late last year, may have sufficient runway if they can manage their burn rate through the downturn.

But no matter how this market shakes out, investors will be much more hesitant to sink capital in this market, particularly for companies with no discernible differentiation. Long-term, my guess is we might be talking about the fast-grocery boom of the early 20s for the next decade or more as a cautionary tale of a venture-capital fever investing, at least until the next boom cycle causes us to forget the lessons of the past once again.

Spoon Weekly: JOKR Shuts Down, Moolec Going Public, Mars & Perfect Day

Another fast-grocery startup bites the dust.

JOKR, the speedy grocery delivery company that was part of a larger wave of startups that entered the US last year, is shutting down its US operations, according to an email sent to customers today. The company said the last day of delivery in New York City and Boston will be June 19th.

From the email:

While we were able to build an amazing customer base (thank you!!) and lay the groundwork for a sustainable business in the US, the company has made the tough decision to exit the market during this period of global economic uncertainty.

To read the full story, click here.

Who Are The Leaders of the Food Tech Revolution?

We may be a little biased here at The Spoon, but we think food tech is the most exciting industry going.

Think about it: Food is what many of us – heck, most of us – spend a huge chunk of our day thinking about, craving, searching for, and consuming. Food is something everyone is passionate about.

It’s also an industry where some of the biggest advances in AI, biology, agriculture, design, chemistry, and many more fields are now manifesting themselves to create some of the most interesting and exciting changes we’ve ever seen in what, where, how, and why we feed ourselves.

And perhaps most importantly, food systems and their future will undeniably play an outsized role in determining what life on earth looks like here in 10, 20, or 100 years.

All of which is why we love covering this industry, and the biggest joy in all of it is talking to the people leading the food tech revolution. The innovation, the collective progress we make, the futuristic advances we see nearly every week, all of it is a direct result of the many inspiring voices pioneering in this space and trying to create a better world.

To read the full post, head to The Spoon.

Molecular Farming Pioneer Moolec is Going Public Via SPAC

Moolec Science, a company that develops animal-identical proteins utilizing a technique called molecular farming, announced today it is going public via a special purpose acquisition company (“SPAC”). The company is doing so via a business combination agreement with LightJump Acquisition Corp, a company formed in 2020 as a SPAC vehicle. The transaction is expected to close in the second half of 2022.

Moolec, a spinout of Bioceres Crop Solutions, is one of the first companies to utilize molecular farming to create alternative proteins. The attraction of molecular farming is that it uses crops as a protein factory, compared to traditional microbial fermentation techniques that utilize more capital-intensive fermentation infrastructure.

With molecular farming, crops are genetically modified to produce a target molecule. The Moolec team matches the target molecule with a host plant, creating different plant-molecule combinations for different applications. The company has launched two products so far, including a plant-based dairy ingredient called chymosin and nutritional oil GLA, both of which use safflower as a carrier crop. According to Moolec, both products have been cleared by regulatory authorities and the company is currently ramping up seed inventories. 

You can read the full post at The Spoon. 

Kitchen Tech

Fellow, Maker of Specialty Coffee Gear, Raises $30 Million Series B

Fellow, a maker of specialty coffee gear, announced this week they had raised $30 million via a Series B funding round led by Nextworld Evergreen.

The San Francisco-based company, which has made a name for itself with its somewhat pricey design-forward coffee-making gear, was started by founder and CEO Jake Miller in his dorm room at Stanford where he began work on a coffee steeper that raised close to $200 thousand on Kickstarter.

Since those early days, Miller and his team have launched a family of coffee and tea gear, ranging from French presses to kettles to insulated coffee mugs. The company, which has gained a following among baristas and celebrities for its sleekly designed Stagg EKG kettles (and also influenced a dozen or more knockoffs), also sells coffee beans via its website and has opened a flagship retail store in San Francisco.

You can read the full interview with Jake Miller of Fellow at The Spoon. 

The Shrooly Lets Aspiring Mushroom Farmers Grow Fungi On Their Kitchen Countertop

While I’m not a mushroom eater – they’re slimy and weird-looking pieces of mold – I’m all for growing them at home because, well, mushrooms are slimy weird-looking pieces of mold.

And, from the looks of it, I (and the mycophiles among us) may soon have another option to become a small-scale mushroom farmer with a home mushroom fruiting chamber called the Shrooly. The new gadget is currently being offered up through a new Indiegogo campaign and is scheduled to start shipping to backers in December of this year.

The appliance, which is available starting at $299 on Indiegogo, is a countertop home growing chamber with light and humidity control. The appliance has on-device control knob and a small display screen that gives updates on the mushroom’s growth, temperature data, and how long until the mushroom is ready for harvest. The Shrooly will also have an app that allows the user to control humidity and monitor the growth of the mushroom.

To read the full story, head over to The Spoon.

Here Are Four Tech-Powered Lunchboxes That Might Help You Fight Lunchflation

Everything is getting more expensive lately, and food is near the top of the list.

For those of you who work outside of the home (and don’t have free and tasty food as a work perk), you’re probably trying to figure out how to fight the suddenly very real problem of lunchflation. The easiest and most obvious way is to pack your own lunch, but often times food tossed in a brown bag or a plain old lunchbox (Evil Knievel or otherwise) doesn’t stay warm or cold enough or whatever needs to be done to optimize freshness.

Luckily for you, we live in an era of feature-packed lunchboxes. Models with everything from temperature zones to hydro flasks to stackable compartments and more give everyone from school kids to lunch-toting nine-to-fivers an abundance of options for bringing a meal along for the day.

And things are about to get even better. A new generation of tech-powered lunchboxes is on its way to help make eating homemade lunches outside the home an even better experience. In this post, I take a look at four of these new options coming to market for those looking to pack up their lunch for work or school.

To read about the four tech-powered lunchboxes, head over to The Spoon.

Future Food

SuperMeat Believes An Open Source Approach to Cultivated Meat Will Benefit All

Lab-grown or cultured meat is a sexy topic that fulfills the dream of healthy eating while saving the planet’s precious resources. Most of the headlines focus on the companies in the four corners of the world waiting for regulators to wave the checkered flag. The more interesting story—at least for those who enjoy looking under the hood—is in the processes, supply chain, and partnerships vital to this promising industry.

To understand the drill-down of what it takes to go from harvesting animal cells to creating consumer-facing products, it’s valuable to speak with visionaries such as Ido Savir, CEO of Israel’s SuperMeat. In addition to his knowledge of cultivated meat, Savir’s background in IT provides him with a panoramic view of the infrastructure needed to build a successful B2B company.

While it might not qualify as an awe-inspiring announcement, SuperMeat recently received a grant from the Israeli Innovation Authority to establish an open-source high-throughput screening system for optimizing cultivated meat feed ingredients. As an analogy, think of it as a system that ensures cows or chickens receive only the best quality feed to produce larger quantities of high-grade meat or chicken. But there is a significant difference.

Read the full post at The Spoon.

Mars Teams Up With Perfect Day to Launch Animal-Free Chocolate Bar

Today Mars announced the launch of a new animal-free chocolate under the brand CO2COA. Developed in partnership with precision fermentation specialist Perfect Day, the chocolate is available today via the product’s new website.

While Mars already offers a range of vegan chocolate bars, this is the first bar from a major candy brand that replaces animal dairy with identical proteins produced through precision fermentation. A German startup by the name of QOA announced last year they are using precision fermentation to develop new chocolate, but their focus is on replacing cocoa rather than animal inputs. The Mars deal follows an announcement made by Perfect Day and Betterland Foods in March of an animal-free chocolate bar.

Read the story at The Spoon.

Food Robots

Picnic’s Pizza-Making Robot Heading To Five College Campuses This Fall

Seattle-based Picnic Works announced today that its Pizza Station robot will be heading to college this fall as part of an expanded pilot program with college food service company Chartwells Higher Education. The pilot will include five colleges: Texas A&M, the University of Chicago, Missouri State University, Carroll University, and Indiana University – Purdue University Indianapolis.

The rollout of the pizza robot follows a successful eight-week pilot of Picnic’s Pizza Station at Texas A&M. According to Picnic, during the initial pilot, the robot at Texas A&M made over 4,500 pizzas and enabled the kitchen staff to reallocate 8 hours of kitchen worker time per day to other tasks.

The origin story of Picnic’s enrollment at Texas A&M goes back to COVID when Chartwell’s district executive chef Marc Cruz couldn’t find enough workers to staff the pizza makeline and often found himself in the kitchen making pizza by himself. After someone at food service supplier Rich’s suggested that Cruz and his team check out Picnic, it wasn’t too long before the startup installed its robot in College Station, Texas.

To read the full story, click here!

Breaking: Fast Grocery Startup JOKR Shutting Down US Operations

Another fast-grocery startup bites the dust.

JOKR, the speedy grocery delivery company that was part of a larger wave of startups that entered the US last year, is shutting down its US operations, according to an email sent to customers today. The company said the last day of delivery in New York City and Boston will be June 19th.

From the email:

While we were able to build an amazing customer base (thank you!!) and lay the groundwork for a sustainable business in the US, the company has made the tough decision to exit the market during this period of global economic uncertainty.

According to the letter, JOKR closed their shops today to give their team the day off and will reopen for deliveries through Sunday. Customers can order food items at a 50% discount and will also be able to order items for pick up next week as the company clears out its inventory.

The news of JOKR winding down their US business is just the latest in a string of bad news for fast-grocery startups, many of which just last year had raised eye-popping rounds of venture capital and expanded to new cities. In March, Fridge No More and Buyk indicated they would be shutting down, and last month saw Berlin-based Gorillas announce layoffs and GoPuff begin shutting down multiple warehouses.

Last year, we asked the question if these companies were the second coming of Kozmo, the infamous fast-delivery startup from the first dot-com boom. With the news of their struggles, it’s appearing that the answer to that question may be yes.

Is The Regulatory Tide Turning Against Ultra-Fast Grocery’s Dark Store Model?

Every week last year, it seemed a new story dropped about a tens millions of dollars funding round going to an ultra-quick store concept.

These startups, often with funny names like Gorillas, JOKR, Buyk and GoPuff, utilize networks of dark stores nestled into residential or mix-used neighborhoods to ensure deliveries can get to consumers within the promised time.

Not surprisingly, as these apps have risen in popularity, existing brick and mortar stores like NYC bodegas have not been happy. Not only are these news apps taking away business, but the addition of new delivery riders are adding traffic and sometimes leading to confrontations with locals.

The pushback by store owners and some residents has been heard by local politicians. According to the New York Post, a New York politician named Christopher Marte is introducing legislation that would ban these companies from advertising 15 minute delivery times.

Another politician, NYC councilwoman Gale A. Brewer, thinks they’re illegal. “They’re going to kill the wonderful Latino restaurants, the wonderful bodegas, the wonderful delis, every single wonderful mom-and-pop supermarket,” Brewer said at a recent press conference. “These Gopuffs and JOKRs and Gorillas gotta go!”

And it’s not New York where there’s pushback. In Amsterdam, where there are 31 dark stores, citizens have started to launch petitions against the dark store networks and to track their behavior on Instagram. A recent story in Ars Technica details how one dark store startup named Zapp disrupted life on one narrow street in a neighborhood called Fagelstraat.

Alex, who has lived on the street for seven years and requested anonymity to avoid further conflict with riders, says there are now 10 to 15 deliveries each day, and giant lorries regularly block the narrow road. “It’s a 24/7 business,” he says, “so riders are coming in and out late at night and early in the morning. At 2 am, I often have people standing in front of my window, smoking and talking really loudly while they are taking a break.” After a month of this, riders and residents started squaring off as tensions boiled over, Alex says.

The growing push for legislation and pushback by consumers had led some investors to become more skeptical of the model. Kunal Lunawat, co-founder and managing partner of Agya Ventures, points to thin margins and the commitment to medium to long-term leases signed using venture funding.

“There appeared to be no consideration given to the economics of these leases over a 1-3 year period,” Lunawat said.

In some ways, the dark store startups are using the same ‘move quickly, break things, ask for forgiveness later’ model pioneered by other disruptive startups (think Airbnb and Uber) over the past decade. And just like home share and rideshare apps eventually saw a wave of new rulemaking at the state and city level, I expect that NYC and Amsterdam are both a sign that a similar wave of legislation and potential bans around dark store models is underway and could take years to iron out.

It will be interesting to see if consumers (and investors) will continue to believe in these new companies as they come under increasing fire.

DoorDash Enters Ultra-Fast Grocery Market, Hires Couriers in Break From Gig Worker Model

Today DoorDash announced it is entering the hyper-competitive ultra-quick grocery delivery market with the launch of a new DashMart location in New York City. According to the announcement sent to The Spoon, the new location will stock up to 2000 items and complete deliveries within 10-15 minutes of a customer’s order.

The new initiative follows the launch of DashMart, DoorDash’s own branded dark grocery network, in 2020. The expansion into hyper-fast is a logical next move, especially for a company with as robust a nationwide logistics and delivery network as DoorDash.

DoorDash’s new effort also represents a significant departure from the company’s traditional gig worker model. Instead of using freelancers to deliver groceries for its new effort, DoorDash will hire its own couriers for the first time. The company plans to hire sixty workers to staff the effort, each getting paid $15/hour plus benefits and tips to start. The new couriers will work for a new DoorDash subsidiary named DashCorp.

The move to hire a courier workforce is, in part, due to pressure from states like New York, which have begun to pass legislation placing greater protection on gig workers. The move also makes sense in that the ultra-fast grocery model requires a ready stable of couriers to deliver goods to consumers as they come in.

“Millions of people across the country turn to platforms like DoorDash to earn supplemental income when, where, and how they choose, providing them with unique flexibility and choice that is so valuable,” said company president Christopher Payne. “We’re proud to be a leader in providing economic opportunities that fit the lives of so many people. And now, we’re excited about the new employment opportunity that DashCorps offers for a different type of work.”

DoorDash’s latest moves follow discussions by the delivery giant to invest in Berlin-based fast-grocery pioneer Gorillas. The talks, which would have given DoorDash a buy option on the Berlin-based company, eventually fell apart, and it’s unclear how much of DoorDash’s newly launched fast-grocery initiative was a direct result of the fizzling effort between the two companies. Whatever their intention, it’s clear now with the launch of its first fast-grocery outpost and the launch of DashCorp that DoorDash is building infrastructure for roll-your-own strategy in this nascent but fast-growing market.

For Gorillas, JOKR, Gopuff, and others in this new space, DoorDash will undoubtedly represent a potentially significant new competitor. The delivery company commands a 55% market share in the US food delivery market and a year ago had 20 million monthly active users. While JOKR, Gopuff, and others have had no problem raising eye-popping amounts of venture funding, these companies have to invest much of their venture funds into user acquisition and logistics, areas which already have been well-developed by the more mature DoorDash.

The Food Tech Show: Mystery Food Boxes, A Tiny Dishwasher and Restaurant Tech

Need something to listen to on your Monday morning commute?

Good news: The Spoon gang got together after a little summer podcast break to talk about some of the top food tech stories of the week.

The stories discussed on this weekly food tech wrapup include:

Click play to listen to the podcast or listen to it on Apple Podcasts, Spotify or wherever you get your podcasts.

JOKR and Too Good To Go Team Up to Help Eliminate Food Waste with Mystery Boxes

When it comes to fighting food waste, every little bit helps. So while the new partnership between speedy delivery grocery service JOKR and food rescue app Too Good To Go may only impact a small geographic area, it will perhaps inspire others to make a big impact.

JOKR, which launched in New York City this past May, operates a network of small, dark grocery stores that promise to deliver your food in just 15 minutes. The Too Good To Go app is an online marketplace that connects consumers with surplus food from restaurants, bakeries, cafes and grocery stores to prevent it from being thrown out.

Together, the two companies have teamed up to create “surprise JOKR bags.” These mystery bags feature food, groceries and pantry items that were about to go to waste at JOKR’s store hubs. According to press materials sent to The Spoon, the JOKR bags have a retail value of $15 but will sell for just $5. Surprise JOKR bags are available through the Too Good To Go app, and can be picked up (not delivered) at participating JOKR hubs. Since the partnership went live on July 14, JOKR and Too Good To Go have already saved more than 100 bags of food.

Though the partnership is limited right now, it’s another example of how speedy grocery delivery services are looking to differentiate themselves from one another. New York City in particular is getting packed with speedy grocery delivery as JOKR, Gorillas, Fridge No More, 1520 and soon Buyk all operate there.

If 15-minute grocery delivery becomes a commodity, these services will need to figure out a way to stand apart without just engaging in a race to the lowest prices (the overall economics of speedy delivery still need to be borne out). Some speedy grocers like Food Rocket and 1520 are adding ready-to-eat meals and ghost kitchens to their services in order to stand out. JOKR being able to tout food waste reduction with a little bit of fun (surprise!) and a cheap price could help hook its service with potential customers.

Right now the JOKR and Too Good Too Go surprise bags are only available in Williamsburg and Long Island City in New York, with plans to expand to other NYC locations soon.

No Foolin’, JOKR Raises $170M Series A for Speedy Grocery Delivery

JOKR is the latest speedy grocery delivery startup to have raised a nine-figure round of funding. The company announced today that it has raised a $170 million a Series A round led by GGV Capital, Balderton Capital and Tiger Global Management. Activant Capital, Greycrot, FJ Labs, Kaszek, Monashees and HV Capital also participated.

Like other startups in the space, JOKR operates a network of small, delivery-only grocery stores that carry a limited number of items and have a small delivery radius. With this model, JOKR can tailor inventory to a specific neighborhood, sell local products (i.e., bakery goods), and deliver within 10 to 15 minutes of the customer placing an order.

JOKR’s big fundraise comes just three months after it started operations and a month and half after it launched its grocery delivery services in New York City. According to a press announcement sent to The Spoon, JOKR said that since it started operations it has opened up a new hub roughly every day and now operates 10 hubs in New York, and 100 hubs across nine cities including São Paolo, Brazil; Mexico City, Mexico; Bogota, Colombia; Lima, Peru; Warsaw, Poland; and Vienna, Austria.

Of course, JOKR isn’t the only speedy grocery delivery service bringing in big funding. In fact, it would be odd if JOKR hadn’t raised more than $100 million. Gopuff raised $1.5 billion in March to grow its delivery service. Last month Germany’s Flink raised $240 million, and Turkey’s Getir raised $550 million (after raising $300 million in March). Germany-based Gorillas raised $290 million in March, launched its own U.S. operations in NYC at the end of May, and is already expanding to San Francisco, Los Angeles and Chicago.

Vitaly Alexandrov, CEO of the San Francisco-based Food Rocket speedy grocery service, recently told me that in order for his business to work, one hub needs to be able to service 50,000 households. That means that at some point not too far off, all of these services are going to be vying for the same markets. Alexandrov said that eventually 10-minute grocery delivery will become a commodity, which is why Food Rocket is looking to differentiate itself with ready to eat meals, ghost kitchens and will eventually open up its logistics and delivery platform to other retailers. Gopuff too, is diversifying by getting into the ghost kitchen business as well.

Despite all this funding, we don’t yet know if or how consumers will take to this new, utility-style model of grocery shopping. Many of these services don’t have order minimums or delivery fees, but will that be sustainable as they scale? Will consumers place large enough orders to keep these businesses going or will these services burn out a la Kozmo.com?

We’ll learn the answers to these questions over the coming months but one thing we know already: Most of these startups won’t fail because of a lack of funding.

JOKR Joins the Speedy Grocery Delivery Fray in NYC

We are just about halfway through the year and the emerging food tech trend so far in 2021 is definitely fast grocery delivery from dark stores. New York City, which already has Fridge No More and Gorillas, can now add JOKR, which launched today, to its roster of super fast on-demand grocery delivery service.

JOKR’s service may sound familiar to avid Spoon readers. The startup operates a number of delivery-only grocery store hubs scattered across New York City. These smaller stores don’t carry as many items as a full-on supermarket, and only have a delivery radius of about a mile. Once an order is placed, JOKR fulfills and delivers it to the customer in under 15 minutes. There is no minimum order, no delivery fee and all delivery people are employees of the company.

Unlike rivals Fridge No More and Gorillas, however, JOKR isn’t just operating in Brooklyn neighborhoods. The company’s current delivery zones include most of Manhattan below 35th street, Williamsburg, and Long Island City, and Queens. More neighborhoods will be added in the coming weeks, and Zach Dennett, Co-Founder of JOKR told me by phone last week that the company will be expanding to Boston “very soon.”

Speedy grocery delivery has exploded over the past six months around the globe. In Europe, services like Weezy, Glovo, and Getir have all raised money to expand their services. Here in the U.S., Gopuff raised $1.5 billion for its half hour delivery, 24 hours a day, and in San Francisco, Food Rocket launched its delivery in San Francisco last week.

I asked Dennett why he thought this new market category was erupting so quickly. “The pandemic has accelerated customers’ learning to shop for groceries online,” he said, “as soon as they’ve gotten to experience 15 minute delivery? That’s what they want.” Dennett also said that the pandemic caused a depression in commercial real estate, so companies are able to lease store locations much more cheaply than before.

During JOKR’s beta right now, Dennett said that a typical customers first uses JOKR because they forgot something (Think: milk, eggs, etc.). Once they use the service, however, Dennett said those customers then transition into more traditional grocery shopping, increasing their basket size.

The big challenge for JOKR, according to Dennett, is inventory management. “We have this very interesting problem,” Dennett said, “We have to achieve every customer need in the fewest SKUs possible,” because the stores themselves are not that big. Plus, the inventory for each neighborhood is different, which means JOKR has to cover a lot of bases in an efficient manner. “We have to have a pasta that you’re happy with,” Dennett said, “Are you brand loyal, are you shape loyal? Are you interested in gluten-free or kosher?”

The bigger question for JOKR and all of these services now is whether customers will change up their grocery habits and switch over to speedy delivery.