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Daily news and analysis about the food tech revolution

speedy grocery

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

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

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

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

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

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

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

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

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

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

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

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

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.

Speedy Delivery Grocer 1520 Knows There’s a Lot of Competition (and Where that Competition is Headed Next)

The startup 1520 got its name from its value proposition — to deliver grocery orders to customers in 15 to 20 minutes. The company is not alone in that mission, especially in its hometown of New York City, where a number of fast grocery delivery services have launched this year. Two of those services have raised more than $100 million dollars each. But 1520 co-founders Oleg Shevlyagin and Moucheg Sahakian aren’t too worried about the competition, and have developed their own plan to stand apart from (and stay ahead of) other speedy delivery startups.

Before co-founding 1520, Shevlyagin and Sahakian both worked at Russian tech giant Yandex, where they launched the first three such speedy grocery stores for that company. The two brought that experience with them when they started 1520 in Manhattan in January of this year.

Like others in the space, 1520 operates a number of small, delivery-only grocery stores that carry a limited inventory and have a small delivery radius. The company now serves everything below 96th St. (for those New Yorkers who know what that means), and is eyeing expansion to Long Island City, Jersey City and Hoboken, New Jersey.

During a video chat with Shevlyagin and Sahakian this week, I asked them about the proliferating number of speedy delivery startups and what that means for 1520. “I don’t think that competition adds too much pressure,” Shevlyagin said, “You have 40 grocery chains in New York alone. We have four players in this ultra-fast space.”

Operationally speaking, Shevlyagin said that 1520 is different from other speedy delivery startups in a few ways. First, the company operates slightly smaller dark stores that are only 1,500 to 2,000 sq. feet, compared with the 2,500 to 3,000 sq. ft. stores other services run. Despite these smaller stores, 1520 has a slightly larger delivery radius than its competition. Most speedy services have a delivery radius between 1 and 1.5 miles. Shevlyagin said 1520’s delivery radius is between 2 and 2.5 miles.

This larger delivery radius in turn means more customers. As a comparison, fellow speedy delivery startup Food Rocket says that one of its stores serves 50,000 households, whereas one 1520 store services 90,000 households. It’s hard to say that bigger is better in this scenario. What you gain in footprint, you could lose in speed. Food Rocket delivers in 10 minutes, while 1520 is 15 to 20 minutes. That may not sound like much, but if you’re in the business of treating groceries like an on-demand utility, those extra minutes might cost you extra business.

But Shevlyagin also says 1520 is different from other speedy delivery startups in more existential ways, too. “GoPuff and DashMart are running [a] convenience store rather than full-blown grocery,” Shevlyagin said, “For them it would be more like you are running out of beer and snack. For us, it’s ‘I want to cook my dinner tonight.'”

As such, Shevlyagin said that 1520 is focused on high-quality fresh food and produce. “We do believe urban customers are more concerned about their health,” Shevlyagin said, “They want produce rather than chips and a Coke.” I’m not sure if that’s entirely true. I mean, who doesn’t love the idea of a late night pint of ice cream delivered to your door in minutes? But 1520 is certainly choosing a lane with its fresh food approach.

There are ways in which 1520 is very much like others in the rapidly evolving fast grocery delivery space. Similar to Food Rocket and DashMart, 1520 is moving into ready-to-eat meals, and will offer its own line of sandwiches, salads and microwaveable meals.

Unlike others in the space, 1520 has yet to raise a massive amount of funding. Germany-based Gorillas raised $290 million prior to its U.S. expansion, and New York City-based JOKR just raised $170 million to fuel its own growth.

Shevlyagin said that 1520 has so far raised a Seed round of funding. I asked him if his competition’s now-sizeable warchests were a big concern for him. Shevlyagin was rather matter-of-fact, saying, “As any other venture-backed startup, we will have to raise at some point, probably in the next two to six months.”

But the funding issue also matters as these companies look to expand and gain first-mover advantage in new cities, since there are only so many cities in the U.S. with dense enough populations to support speedy grocery. I asked Shevlyagin how 1520 will roll out to stay ahead of its rising competition. “The real estate world is the biggest barometer,” he said, explaining that they look at real estate listings to see where dark store type spaces are being leased, and by whom. “We know what’s happening in every city in the country.”

Even if other players get to one of 1520’s target markets first, Shevlyagin doesn’t appear too concerned. “It still takes you some time to make sure your supply chain works well,” he said. “We are deep in discussions with other cities. We still have this time.”

Will Gopuff’s (Second) Billion-Dollar Funding Round Make its Grocery Competition Go Poof?

In addition to delivering groceries fast, Gopuff is pretty speedy when it comes to raising big sums of money. Bloomberg and Axios both reported yesterday that Gopuff is raising an additional $1 billion in funding, according to sources familiar with the matter. This new money comes just months after Gopuff raised $1.5 billion in March, and will give the company a $15 billion post-money valuation.

Like others in the space, Gopuff operates a network of dark stores in the U.S. that deliver goods like groceries in 30 minutes, 24 hours a day. But unlike its competition here, Gopuff has raised a ton more money. If this latest round does indeed close next week, the company will have raised nearly $3.5 billion since 2015. By comparison, other speedy grocery services have far less funding: Gorillas has raised $335M, Fridge No More raised $16.9M, JOKR raised $170M, and Food Rocket raised $2M.

Gopuff is also a little different from its competitors in its value proposition. Those other services promise super-fast delivery of groceries in as few as 10 minutes. Because they deliver to a very limited radius, they can tailor their inventories to the particular tastes of the neighborhood they serve. But those services are also very small right now. Three are only in New York City (Gorillas, Fridge No More, JOKR), and two are in San Francisco (Food Rocket, Gorillas). Gopuff, on the other hand, has more than 300 facilities operating in 550 cities across the U.S. With another $1 billion, Gopuff can accelerate its expansion and grab market share before the competition can even get out of their hometown.

But speedy, on-demand grocery delivery will soon become commonplace in big cities, if you believe the CEO of Food Rocket. As such, we are starting to see these speedy grocery services start to differentiate. Food Rocket, for instance, is adding branded ready-to-eat meals and ghost kitchens to make even more types of delivery friendly meals. But there, too, goes Gopuff: the company has been hiring out kitchen staff and managers for its own ghost kitchen services so it can deliver its own meals.

Gopuff’s biggest competitor might actually be DoorDash at this point. DoorDash has a nationwide delivery network and infrastructure, is expanding aggressively into grocery, has a ton of money thanks to its IPO, operates its own growing line of delivery only DashMart convenience stores, and has its own ghost kitchen program. With another billion in the bank, Gopuff has the goods and the cash now to have a go at DoorDash.

I quipped on Linkedin earlier this week that it would be weird if your speedy grocery delivery service didn’t raise over $100 million. Given Gopuff’s furious fundraising pace, I might have to adjust my joke.

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.