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Daily news and analysis about the food tech revolution

third-party delivery

Yummy Corporation Raises $12M to Expand Its Ghost Kitchen Network

Indonesia-based cloud kitchen management company Yummy Corporation has raised a $12 million Series B round of funding, according to a report from TechCrunch. The round was led by SoftBank Ventures Asia and included participation from new investors AppWorks, Coca Cola Amatil X, Palm Drive Capital, Quest Ventures, and Vectr Ventures. Also participating were existing investors Intudo Ventures and Sovereign’s Capital.

Founded in 2019, Yummy operates a network of fully managed delivery-only kitchens across Jakarta. It rents space to existing food and bev brands, providing them kitchen infrastructure as well as the necessary staff to assist in fulfilling delivery and takeout orders.

The company says it will use the new funds to expand into other cities and further develop its tech platform. 

Which cities Yummy next heads to is yet to be announced, but if they’re anywhere in Southeast Asia, the company will face plenty of competition. Food delivery service GrabFood already operates over 50 ghost kitchens across countries in the region, including Indonesia. Delivery service Gojek also has ghost kitchens in Indonesia and other countries in Southeast Asia and India. 

Earlier this year, Euromonitor said the global ghost kitchen market could be worth $1 trillion by 2030. That may be an absurdly optimistic number, but there’s no denying the popularity of the ghost kitchen particularly since the pandemic forced most of the world into lockdown and turned the traditional restaurant model on its head. In the last few months alone, we’ve seen numerous sizable fundraising rounds from ghost kitchen companies all over the world as well as more networks of virtual restaurants come to market.

Yummy Corporation raised a $7.8 million Series A round in 2019. This new round brings the company’s total funding to $19.8 million.

 

Zomato: India’s Food Delivery Nearing Pre-COVID Levels

The food delivery market in India has almost bounced back to pre-COVID levels. A recent blog post by Zomato stated that gross merchandise levels are roughly 85 percent of what they were pre-pandemic, up from 75 percent in August.

According to Zomato, major cities like Delhi and Mumbai are nearing full recovery, while others “have recovered completely and have exceeded pre-COVID levels.” Affluent parts of cities are driving the recovery, which makes sense given the cost of using third-party delivery services. Zomato said more high-end restaurants have also gone online, which accounts for some of the growth as well. “Overall spends on such premium restaurants have grown by over 25% over pre-COVID levels,” the company said.

Other influential factors include more at-home delivery orders for celebrations and more group orders, since everyone’s stuck at home with their families.

Of course, the caveat here is that Zomato has quite a bit of skin in this game, it being one of India’s leading food delivery services. So while the stats from this recent blog post only include Zomato’s customer base, they’re likely a fairly accurate gauge of the entire India food delivery market. (Swiggy is the only other major delivery player in India right now.)

Zomato this year also expanded its services to include groceries and household goods (a move that other third-party delivery services like DoorDash have done in other parts of the world.) The company also raised $162 million earlier this month and said it is preparing for an IPO in 2021.

Right now, Zomato’s main competitor for all this growth is Proses-backed Swiggy, which has raised $1.6 billion in funding to-date. Everything could change, though, depending on how successful Amazon is at scaling its newly launched food delivery business across the country. Neither Zomato nor Swiggy is profitable yet. Amazon, meanwhile, already has a presence in India through its Amazon Fresh and Amazon PrimeNow platforms. 

Delivery Hero Heads to Japan via Its foodpanda Service

Slow down, Delivery Hero, I can’t keep up with all your news this week.

On the heels of multiple other announcements, the Berlin, Germany-based third-party delivery service said at the tail-end of yesterday that it is launching operations in Japan via its foodbanda subsidiary.

Through foodpanda, Delivery Hero will launch service in six cities to start: Kobe, Yokohama, Nagoya, Sapporo, Fukuoka, and Hiroshima. The company said in today’s press release that it plans to expand its Japan presence “continuously,” though an exact timeframe for other cities was not mentioned. The foodpanda service will, in addition to providing restaurant meals, also deliver groceries and household goods to users.

Including Japan, Delivery Hero now operates in well over 600 cities around the world, either under its own moniker or via subsidiary brands like foodpanda. And, as I said a minute ago, the company has been on a bit of a tear in terms of of news announcements this week. On Wednesday it said it plans to acquire fellow delivery service Glovo’s Latin America business, which will add several countries to Delivery Hero’s already existing presence in that region. Also this week, the company announced a new partnership with World Food Programme to integrate a donations feature into all of Delivery Hero’s digital properties, making it easier for users to donate meals to those in need.

Even with the expansions in Latin America and Japan, and even though it’s the world’s largest food-delivery service outside of China, Delivery Hero’s lead is far from guaranteed for the long term. The entire food delivery sector, which has been a saturated market for a long time, is undergoing consolidation right now. Takeaway.com’s recent merger with Just Eat has formed another massive food delivery company, particularly since that newly formed entity swooped up Grubhub in the U.S. Also in North America, Uber Eats agreed to buy Postmates. Back in LatAm, Colombian heavyweight Domicillios.com merged with Brazil’s iFood earlier in 2020.

Delivery Hero isn’t immune to all this competition. In fact, the company cited this saturated market and extreme competition in April when it pulled foodpanda operations out of Canada. On the flipside, though, Delivery Hero also bought Woowa Bros.’ Baedal Minjok service to give itself a larger share of the South Korean market. 

So whether it’s high-ranking spot in the food delivery world remains, the company is clearly expanding aggressively at the moment, and Japan won’t likely be the last country it lays claim to in the near future.

Delivery Hero Acquires Glovo’s Latin America Operations

Berlin, Germany-based Delivery Hero announced today it has acquired fellow third-party delivery service Glovo’s Latin American operations for €230 million (~$272M USD). The transaction is expected to close in the next few weeks, according to a press release from Delivery Hero.

The deal covers all Latin American countries in which Glovo operates: There is some overlap here, as Delivery Hero already has operations in Argentina, Panama, and the Dominican Republic. Acquiring Glovo obviously means Delivery Hero will widen its reach in Latin America considerably. 

Any delivery service aiming to enter or expand in the Latin America market will need to ensure they offer affordable options for restaurants. By some accounts, roughly 96 percent of independent restaurants in Latin America are not even online right now, and restaurant tech is far less developed than in, say, the U.S. and Europe. Even so, the Latin American market is the fastest-growing one outside the Asia-Pacific region.

Delivery Hero CEO Niklas Östberg said in today’s press release that Latin America “is a region with exceptional growth potential for online delivery.” 

The acquisition also means more consolidation for the Latin America food delivery sector. Glovo actually exited two Latin American markets earlier this year. Meanwhile, iFood and Domicillios.com merged in April and together compete with the other major player, Softbank-backed Rappi.

Delivery Hero’s last big acquisition was at the end of 2019 when the company bought its South Korean food delivery rival, Woowa Bros.’ Baedal Minjok service, for $4 billion. Prior to that, it had acquired InstaShop, an online grocery marketplace with operations in the Middle East and North Africa. Delivery Hero now operates in 44 countries worldwide.

Glovo will continue to operate its Latin America markets until March 2021, at which point, pending regulatory approval, they will become a part of Delivery Hero’s network.

Delivery Hero Partners With World Food Programme to Integrate Donations Into Its Apps

Berlin, Germany-based Delivery Hero announced today it has partnered with the United Nations’ World Food Programme (WFP) to integrate the latter’s ShareTheMeal program into its own delivery platforms.

WFP launched ShareTheMeal, also based in Berlin, in 2015. Anyone who downloads the app can use it to donate money that will go towards ShareTheMeal’s goal of getting 800 million meals to those in need over the next five years.

But since a growing number of folks nowadays already use delivery apps, ShareTheMeal and Delivery Hero decided to bake the donation functionality right into the delivery platform. Via an API, ShareTheMeal will be integrated into Delivery Hero’s apps. After placing an order, Delivery Hero customers will see a button that says “Donate a Meal.” Upon pressing it, they can choose from three different meal options based on how much they want to donate. The donation is tacked onto the total price at the checkout stage of the transaction.

The idea is to make the process of donating meals as easy and “seamless” as ordering delivery for oneself.

And it’s not the first time a third-party delivery services has tried donations. Uber Eats, for example, launched an in-app donation feature for restaurants early on in the pandemic. DoorDash, meanwhile, has partnerships with Copia, Replate, and other companies to divert food from landfills and redistribute it to those in need.

Delivery Hero is one of the world’s largest third-party delivery platforms outside of China, and a high-profile partnership with a UN subsidiary will hopefully translate to more meals donated around the world. To start, the ShareTheFood integration will be in Delivery Hero’s delivery platforms in Austria, Bulgaria, Finland, Malaysia, Norway, Romania, and Sweden. The company says more markets will follow soon.

Floating Kitchens of Burger King

Now that its apparent even contactless tech won’t bring back the glory days of the dining room, restaurant chains are on a tear to refit their existing stores to better serve to-go formats. Efforts run the gamut, from dumping the front of house altogether to geofencing the premises for faster pickup orders to building more drive-thru lanes.

Burger King just one-upped all those efforts. The decades-old burger chain has has compiled all of the above and then some into a whopper of a design prototype for future restaurants. Per a BK press release from this week, the new design — which hasn’t actually been implemented yet — is meant to serve multiple order and delivery formats and will be 60 percent smaller than a traditional BK location.

BK plans to accomplish that with the following:

  • A drive-in area where customers scan a QR code then order and pay through the app. Food is delivered to the car. 
  • Curbside delivery and pickup lockers for customers who order ahead via the BK mobile app. The only element missing from this is geofencing tech for the curbside service, which other QSRs are now using to speed up operations.
  • On-premises service. No surprise that this will be a much smaller part of the overall plan moving forward. In one design, BK swapped out the traditional dining room for a covered patio. See below for the other option.
  • Double- and triple-lane drive-thrus. There will also be a walkup window and a view of the kitchen inside.
  • Suspended kitchens and dining rooms are by far the most intriguing addition, and one we haven’t yet see from another QSR. The kitchen and dining room will hang above the drive-thru lane, cutting down on the restaurant’s overall physical footprint. For drive-thru guests, at least, orders are delivered via a conveyor belt system. This particular design also includes a dedicated drive-thru lane for delivery drivers and is, according to the press release, “a 100% touchless experience.”

The first real-life buildout of these designs will be in Miami and the Caribbean in 2021. 

And while we wouldn’t expect other QSRs to produce a carbon copy of the design, it does feel that BK has raised the bar in terms of both standards and innovation when it comes to reformatting the restaurant experience. Some of the elements, like curbside pickup, are already fully established formats across most QSRs. Others, like triple drive-thru lanes, are more an anomaly. The hanging kitchen is, to the best of my knowledge, unheard of at any other QSR. 

The design does raise some questions around what the company will expect of its franchisees. As we saw last year with McDonald’s, retrofitting stores is an expensive, sometimes frustrating endeavor for franchisees. If Burger King wants this wonder of the QSR world to set the new standard for restaurant chains, it will need to ensure new build outs and existing store updates are as pleasant an experience for franchisees as they seem poised to be for customers. 

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NPD: Drive-Thru Visits Increased 26%

If there’s one true off-premises lifeline for QSRs during the pandemic, it’s the drive-thru. (Sorry not sorry, delivery.) The NPD Group underscored that point this week when it announced that drive-thru visits increased 26 percent in April, May, and June, and that this format “will be key to the industry’s future.”

It’s common knowledge at this point that those restaurants equipped with drive-thrus are faring much better than those that have traditionally focused on dine-in service. And some QSRs and fast casuals that historically never really offered drive-thru service are now doubling down on that format, including Chipotle and Shake Shack. 

Even in July, when more restaurant dining rooms were opened, the number of drive-thru visits increased by 13 percent, according to NPD. That number represents the highest increase among all service modes in the restaurant (e.g., dine-in, takeout, delivery).

David Portalatin, a food industry advisor to NPD, said we should expect to see more chains switching to drive-thru in the future. Whether all of them come with a hanging kitchen and conveyor belt setup remains to be seen. 

Fee Caps ‘Round the Web

This week, Santa Clara, CA moved to finally cap the commission fees third-party delivery services charge restaurants at 15 percent. The ordinance is effective immediately and will last “until the end of the pandemic.”

NYC extended its own emergency fee cap of 20 percent to be in effect 90 days after restaurants are allowed to operate dining rooms at full capacity. Your guess is as good as mine when it comes to that distant day.

Back on the Left Coast, Los Angeles also extended its fee cap with the same criteria as NYC. Fees must remain at 15 percent or lower until LA restaurants can operate dining rooms at 100 percent capacity.

Food Delivery Service Zomato Raises $62M From Temasek

Indian food delivery startup Zomato has raised a $62 million financing round from Singapore’s state investment arm Temasek Holdings. According to the Economic Times, the transaction was made from Temasek unit MacRitchie Investments, which is an existing investor in the food delivery service. The round values Zomato at about $3 billion.

It also comes after several months of ups and downs for the food delivery service. In March, it bought Uber Eats’ India business for $206 million, and raised a $5 million Series J round in April. Also in April, Zomato unveiled its grocery delivery service as a way of diversifying its business model. 

However, the company also had to cut 13 percent of its workforce in May in response to the ongoing pandemic and the many restaurants across India that have had to shut down permanently because of it. (Chief rival Swiggy also made cuts to staff in response to COVID-19.)

Things appear to be looking up for the Indian food delivery market, though. Online food delivery has recovered about 80 percent of its pre-pandemic sales, according to Economic Times. A blog post from Zomato itself notes that “the number of restaurants offering food delivery are at 70% of pre-COVID levels.” The company also says that “recovery trends are strong.”

Also in India this week, Dunzo, a startup that delivers everything from restaurant meals to groceries to household supplies, announced it had raised $28 million.

This latest investment for Zomato comes as the company is struggling to receive two-thirds of its $150 million investment from China’s Ant Financial due to regulatory changes with investors in China.

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.

Uber Eats Launches a Paid Advertising Tool for Restaurants

Uber Eats launched a new paid advertising platform today that claims to be “helping restaurants reach more customers,” according to a company blog post. Thing is, it doesn’t seem like it will be all that helpful for the bulk of independent restaurants. And it may in fact be the opposite, at least for the ones who do delivery with Uber Eats.

Here are the basics: Through the new service, simply dubbed Sponsored Listings, Uber Eats restaurant clients can pay to have their business name appear at the top of the app in relevant user searches. Restaurants can set up a Sponsored campaign through their Uber Eats dashboard, designating the intended audience (e.g., “new customers”) and a weekly budget spend. Restaurants pay an amount each time a customer clicks on their ad. (It varies from one restaurant to the next.) They can also start and stop their campaigns any time. 

Uber Eats says that the program is available to both chain restaurants and independents. Which leads us back to the debate around whether or not this new service will be of any actual value to most restaurants. 

We’re at a time in the history of the restaurant biz when paying for advertising is not top priority for the majority of businesses — many of whom are struggling to even keep the lights on. With paper-thin margins made even thinner by the shutdowns and reduced capacity mandates, pay-per-click advertising, even if it’s just $50 per week, is not always possible. Independent restaurants already typically pay more than chains in commission fees on Uber Eats.

At the same time, many chain restaurants, especially major QSRs, have managed to weather the pandemic (and even thrive during it), thanks largely to their built-in to-go formats. It’s safe to argue these restaurants could swing that $50 per week for paid advertising.

Looking at those two scenarios together, it seems like Uber Eats has created a situation in which smaller, independent restaurants will get pushed further and further down in listings because they can’t pay, making it difficult for customers to discover them and translating into lower sales overall for the business. It adds color to the nightmare I frequently have of living in a world where my only restaurant options are Panda Express and Chipotle.

Uber is at least acting cognizant of this. Along with today’s announcement about the Sponsored Listings launch, the company also said it will put $25 million towards “marketing credits” to “qualified US restaurants.” It made no mention of what qualifies a restaurant for the credits or now much credit a business can reasonably expect to get.

Of course, paying for better visibility is a basic business practice, and Uber Eats is hardly the first online service to run sponsored listings. (Been to Amazon lately?) This morning’s news just might have been a little more digestible if Eats had stuck to the basic facts. Instead, it’s positioned Sponsored Listings as a way of being helpful to businesses when the service will in all likelihood further drive a wedge between the haves and have nots of the restaurant biz.

Food Tech News: The Great Vending Machine Bug-Out, Food Tech Lawsuits Galore

We may be all-in on next-gen vending machines here at The Spoon, but does that mindset apply to those currently dispensing edible tarantula in a can? Read on to decide for yourself. Also, it’s another week another lawsuit for third-party food delivery services, this time in the booming online grocery sector.

Edible Insets Arrive in Japan’s Vending Machines

Japan, a country famous for its vending machine culture, has upped the ante recently by selling bugs out of these machines. Kotaku reports that, though still not terribly common, an increasing number of vending machines around the country now sell edible insects, from crickets to grasshoppers to (for the really adventurous soul) scorpion and tarantula. 

Now DoorDash Isn’t Getting Sued for Price-Gouging

DoorDash was dropped from a recent lawsuit that alleges third-party food delivery services used the pandemic as an excuse to price-gouge homebound New Yorkers. Grubhub, Uber Eats, and Postmates are all named in the suit, too. The voluntary dismissal noted that consumers leading the suit “reserved the right to refile against DoorDash.”

Instacart Facing Lawsuit Over Service Fees

Grocery service Instacart faces a lawsuit alleging the company charged millions in “deceptive service fees” to customers and also failed to pay hundreds of thousands in sales tax. D.C. Customers were “tricked” into “believing they were tipping grocery delivery workers when, in fact, the company was charging them extra fees and pocketing the money,” said DC Attorney General Karl A. Racine, who filed the suit. Previously, Racine sued DoorDash over its former tipping policy for drivers. 

From Wiz Khalifa to Tyga, Are Celebrity Ghost Kitchens the Next Big Thing?

Throughout the latter half of 2019, a prediction that came up repeatedly here at The Spoon was celebrity chefs launching their own virtual restaurant concepts. What we didn’t anticipate was just plain ol’ celebrities getting onboard the trend, but that’s exactly what’s happening now.

An announcement this week from delivery integrator Ordermark added more momentum to the celebrity-as-virtual restauranteur trend: rapper Wiz Khalifa forthcoming Hotbox concept.

Wiz Khalifa’s Hotbox restaurant, which is slated to open October 1, will feature a “top-shelf munchie menu” curated by the rapper and powered by Ordermark. The full menu is not available yet, though a couple featured items — the “Taylor Gang Turkey Burger” and “Blazed Ends” dishes — give a pretty good idea of what to expect once the restaurant launches.

Restaurant owners wanting to cook and deliver the forthcoming Hotbox menu from their own kitchens can do so by becoming a fulfillment partner via Nextbite, the delivery-only restaurant company owned by Ordermark. In other words, your local mom-and-pop can now become a ghost kitchen for the Wiz Khalifa brand. That in turn could provide restaurants with some much-needed incremental revenue that might keep some from completely going under during this strange and challenging time for restaurants. 

Cooking someone else’s menu from your own restaurant kitchen isn’t a brand-new concept. As I said, it’s a form of a ghost kitchen that’s employed by the likes of well-known chains like Fatburger and Wow Bao. Tacking a celebrity name to the concept is an intriguing twist on this. A virtual Wiz Khalifa restaurant will generate a certain amount of interest inherently because of the rapper’s status. And if the food winds up being tasty and affordable, there’s potential for restaurants to tap into a Khalifa’s huge fanbase. 

The celebrity-turned-restauranteur thing isn’t brand-new, either, though it’s only been in the last several months we’ve seen this concept go virtual. Rapper Tyga operates a delivery-only restaurant featuring chicken bites. Steve Aoki has a virtual pizza joint called Pizzaoki. Rachel Ray, launched a limited-time virtual restaurant with Uber Eats last year.

And with off-premises orders still the main sales channel for restaurants, delivery companies looking to diversify, and ghost kitchens becoming the norm, the above examples are just the tip of the proverbial iceberg. 

Report: DoorDash May Go Public in 2020 Amid Broader Delivery Consolidation

DoorDash could file for an IPO as soon as the fourth quarter of 2020, according to “sources familiar with the matter” who spoke to Bloomberg.

The third-party delivery company is reportedly “taking steps” to go public in November or December of this year through a traditional IPO, rather than a direct listing, which the company had considered earlier this year.

The potential IPO comes at a time when the third-party food delivery sector is seeing a steady stream of mergers and acquisitions, from Just Eat Takeaway.com buying up Grubhub to the more recent deal from Uber to snap up Postmates for $2.65 billion.

DoorDash itself has largely stayed out of that M&A activity. The company acquired Caviar for $400 million about a year ago. Since then, DoorDash has been largely focused on diversifying its business. It launched its first ghost kitchen facility in October 2019. And since the start of the pandemic, DoorDash has teamed up with convenience stores like 7-Eleven, launched its own “ghost convenience store,” and, just last week, started an on-demand delivery [— LINK — ] service for groceries.

Those moves make sense in light of the fact that the restaurant industry has been one of the hardest-hit business types by the pandemic. Demand for third-party delivery may be up, but many restaurants — both independents and large chains — are closing down, which means DoorDash may need new lines of business to have a shot of being profitable (which, according to Bloomberg, it is not).

Like other restaurant third-party delivery companies, DoorDash is also navigating a substantial amount of controversy. In April, DoorDash, Grubhub, and others were the subject of a class-action lawsuit alleging third-party delivery companies used their market power to push restaurant prices higher during the pandemic. In June, the San Francisco DA sued DoorDash over worker misclassification, and if a ballot measure that would loosen restrictions over gig worker classification in California does not pass in November, DoorDash (and others) will face another threat to its chances for profitability. That’s to say nothing of commission fee caps, much-maligned tipping policies, and other gripes a growing number of the general public has against third-party delivery companies.

DoorDash was last valued at nearly $16 billion and, throughout the pandemic, has been an “essential service” more and more folks are using as the future of restaurant dining rooms remains uncertain.

Like everything else these days, the timeline for the company’s IPO could change based on, among other factors, the trajectory of the pandemic.