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The Spoon

Daily news and analysis about the food tech revolution

Uber

Cargo and Uber Form Exclusive Partnership to Sell Snacks on the Go

Cargo and Uber announced an exclusive global partnership yesterday that will see Cargo’s snack vending boxes inside more cars in the ride hailing giant’s fleet.

Cargo allows drivers to make a little extra scratch from their driving gig by selling snacks and small sundries from their car’s center console. That includes stuff like gum, Skittles, or lip balm—small stuff you may not bring with you on your way out for the evening. Riders select and pay for items using the Cargo app, and the company says 7,000 drivers have earned more than $1 million since the company’s launch in 2017.

The partnership with Uber comes a little more than a month after Cargo expanded to LA, and is now opening up operations in San Francisco. Cargo, which was founded in June of 2016, has raised $8.7 million in funding.

Interestingly, despite the words “global” and “exclusive,” non-Uber drivers will still be able to use Cargo. For now, payments for snacks will still go through the Cargo app, but could get baked directly into the Uber app, which would throw up a (small) barrier to other ride sharing services.

This move to monetize more of a ride comes just a couple of months after a study showing that Uber drivers earn on average $11.77 an hour (after Uber takes its cut), and that the average wage (taking out additional costs such as vehicle expenses) was $9.21 an hour. Giving drivers the option of earning additional revenue for almost no extra work is a good way of incentivizing them to stick around and stay on Uber’s platform.

Yes, The Cottage Food Market Might Be Uberized, But That’s Not A Bad Thing

Most fresh food made at home (outside of canned and baked goods) is illegal to sell commercially in many states, including California.  Because of this, some in California have been working on creating momentum for a bill called the 2018 Homemade Food Operations Act (AB 626) in hopes that it will pass through the California legislature this year and become law.

The reason this is interesting to me is a) California often leads the country when it comes to forward-leaning legislation and if AB 626 passes it could open the door for nationwide legalization and give a framework for home food entrepreneurs (also known as the ‘cottage food’ industry), and b) I think home cooking is the next big micro-entrepreneur space to open up, much like home sharing and ride sharing did over the past decade.

While you’d think most would be on board, not everyone is. As can be seen from this excerpt from a guest column in the LA Times by Christina Oatfield, policy director of the Sustainable Economies Law Center in Oakland, some see a darker side to AB 626:

If AB 626 becomes law, the homemade food market would likely become dominated by big companies like Airbnb and Uber. The trajectory of these businesses is rapid growth fueled by venture capital and aimed at disrupting and then monopolizing a market. They disregard important public safety laws and worker protections by treating the workers as independent contractors. They could easily overwhelm the homemade food economy just as they have ride hailing, delivery services and vacation rentals.

Oatfield, who once operated an underground kitchen out of her apartment, seems to believe that once big platform players like Airbnb or Uber get involved in the market, they will inevitably treat home food workers as commodities and take outsized commissions from home cooks when listing their goods on their marketplaces.

While I think it’s good to be suspicious of any large platform player, I’d suggest Oatfield’s suspicion is overblown. Not only are the public safety concerns she lists specifically addressed by a compliance framework for home cooks within the proposed legislation, but I also wonder where her suspicions about the shadowy forces behind AB 626 come from. As far as I can tell, the primary advocates for AB 626 and legalization of cottage food businesses have been the C.O.O.K Alliance, a group founded by the same people who started Josephine, a now-defunct startup lauded universally for the way they treated the cooks on their platform.

And even if Uber or Airbnb did eventually swoop into the home meal sharing market with a platform and charge 15% fees, I would say this: so what? As long as legislation requires that food safety is the paramount concern, I do not doubt that an online marketplace like an “Airbnb for home cooks” would likely open up much more market opportunity than many small food entrepreneurs would otherwise have.

I’ll never forget when I met a woman named Majda, a former Josephine home cook, who told me about her dream of opening a home-based food business so she could retire from her day job at a casino. You see, Majda had trouble standing all day at her casino job and with Josephine, she had the beginnings of what seemed to be a flourishing home food business that would give her greater control over her time and allow her to stay at home. Or at least she did until Washington State forced Josephine to shut down.

While Majda probably would have liked to not pay any transaction fees to Josephine, my guess is that she probably had a much better shot at building a home food business with a platform that matched buyers of home food with home cooks like herself. Now she doesn’t have any way to reach her consumers other than through underground sales of her food.

So, does the cottage food industry need to guard against aggressive tactics by platform providers? Yes, of course. But just as with ride sharing, home sharing, and creator marketplaces, opportunities like this need platforms to match the sellers with the buyers. These platforms need to be built by companies with resources and experience building communities and marketplaces. Without them, the opportunities will never arrive and, as a result, the Madjas of the world will never have a chance to chase their dreams.

Bottom line: the home cook market will have the best chance of flourishing with the combination of a strong legal framework that ensures  both the consumer and entrepreneur’s interests are protected and a platform that brings together buyers with sellers. We’ve all seen the market building power of platforms – whether it’s those made for digital creators like Patreon, artisanal crafters like Etsy or, yes, gig economy workers like Uber – and the lesson learned is these platforms help to create markets that would otherwise stay dormant without them.

Uber Buys Jump. Will Its E-Bikes Power More Food Delivery?

Uber announced today that it has acquired Jump, which provides dockless, electric bike sharing services. While much of the talk surrounding the deal has been about adding a new mode of transport for people trying to get around town, it seems like this move could also be a vertically integrated shot in the arm for the company’s growing Uber Eats platform.

Food delivery has been wildly successful for Uber. The service was available in 200 cities around the world last year, achieving profitability in 45 of those markets. Uber is expanding to another 100 cities around the world over the next year.

Adding Jump to the Eats arsenal would make sense in densely populated cities like San Francisco (where Jump already is) and NY, where traffic can slow car-driven deliveries down. Using an e-bike would allow Uber Eats drivers to bypass congestion for faster deliveries. Since Jump’s bikes have electric assist, those making deliveries could do so without breaking (as much of) a sweat.

A direct Jump/Eats relationship would also give Uber more integration throughout its food delivery stack. Uber Eats already allows delivery drivers to use their own bicycles for delivery — why not give them the option to use the Jump bike instead (for a small fee, of course)? As noted, an e-bike could allow drivers to make more deliveries for less “work” to ideally make more money, without the up-front cost of buying what is an expensive mode of transportation.

Uber has already shown its interest in owning more of its food delivery biz. Earlier this year it acquired David Chang’s Ando, a virtual delivery-only restaurant. So it’s not hard to imaging Uber pushing consumers to order from its own virtual restaurant and have that meal delivered on an Uber e-bike.

Having its own fleet of electric bikes in big cities could also help Uber fend off competition from GrubHub and DoorDash, which recently raised $535 million for its own restaurant delivery services. And such a move is not without precedent. Meituan, a Chinese food delivery company, recently purchased the Shanghai bike-sharing startup Mobike.

But potential Jump/Uber integration would also presumably be a win for consumers and restaurants. Getting food delivered faster means less chance of a lukewarm meal arriving at your door. Obviously hotter food is more enjoyable, and it also helps protects a restaurant’s brand from a bad eating experience.

We’ll see if Uber “jumps” (ed. note: sorry) at these opportunities, but this acquisition looks like a smart play, and I wouldn’t be surprised to see others following suit.

Selling Snacks to Add Revenue for Rideshare Drivers and Airbnb Hosts

There was a strong ethos of community when startups like Lyft and Airbnb helped kickstart the “sharing economy.” Lyft had passengers sit in the front seat and fistbump their drivers, and Airbnb CEO Brian Chesky once remarked that his company was “in the business of meaningful experiences.”

But it looks like the kumbayah days of simply renting your spare room or backseat for some extra cashe are giving way to the capitalist world we are all familiar with. One where in addition to paying for your space, guests and passengers pony up for snacks, treats and other sundries.

Yesterday, Cargo, a startup that lets rideshare drivers sell snacks from the front seat of the car, announced that it had raised $5.5 million. Cargo is basically a container that straps to the center console. Inside are things like snack bars and breath mints–stuff you see at the counter of a convenience store. Passengers can use their mobile phone to order and pay for desired items.

According to TechCrunch, the company is in 2,500 cars on the road in NYC, Chicago, Boston and Minneapolis — with 20,000 drivers signing up for the service from all around the U.S.. Drivers get a commission and evidently earn on average an extra $100 or so a month. So wherever you are, you’re bound to encounter upsells in your Uber relatively soon.

Then there is Qvie, a company we looked at earlier this month. Qvie is a small vending machine that you can put in your Airbnb to offer wine or snacks to guests. The Qvie is just a single-item vending machine right now, but as Mike Wolf pointed out, it’s not hard to imagine them coming out with something closer to an unmanned store offering up a variety of items.

To be clear, both of these ideas seem like good ones. There have been a few times when I’ve wished for a breath mint while on a ride to a meeting. And if you’re going to rent your home out, it makes sense to offer up snacks or items people may have forgotten (toothpaste, band-aids, etc.), though I’m not sure of the legality of selling wine in your house.

But both Qvie and Cargo point to a whole selling ecosystem rising up inside the sharing economy to add incremental sales for owners and convenience for customers. Plus, consumer packaged goods companies will also want this sales data to better understand buying patterns of their products. These vending systems will get better and smarter and more prevalent.

I mean, it’s not that ridiculous to think that Domino’s will get into this game and somehow combine its pizza oven car with an Uber for a piping hot pizza pie available to grab as you arrive home after a night out. Which, when you think about it, is totally worth a fistbump.

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Josephine Looks To Change Cottage Food Laws In Effort To Expand Home Cooking Marketplace

Today’s a big day for Josephine, the startup behind the ‘cottage food’ sharing platform and marketplace that enable home cooks to sell food to their neighbors.

That’s because today is the day a bill is being considered by the Health Committee of the California state legislature called the 2017 CA Homemade Food Operations Act (edit: the bills name was changed to “AB 626—The 2017 Homemade Food Act” in the form it went before the committee). The bill, which Josephine management helped craft and introduce, would expand California’s current cottage food law to allow aspiring home-based food entrepreneurs to sell home cooked meals to neighbors.

(Ed Update: The bill passed out of assembly on April 25th. You can read our story here). 

That’s naturally of interest to Josephine, which has built a platform which can more or less be described as an “Uber for cottage food” (although it should be noted the company resists the negative connotations associated with platforms like Uber). The problem for Josephine, which is based in Oakland, is that the sale of home cooked meals to neighbors is not allowed under current California law. As a result, about a year ago home cooks using Josephine received cease and desist letters, which eventually led the company to shutting down operations in the east Bay area.

The company, which has investments of about $2 million from Kapor Capital and angel investors, believes home cooks with the proper licensing should be able to sell food to their neighbors. And why not? Just as how Uber, Airbnb and other sharing economy platforms gave entrepreneurial folks a marketplace to rent their underutilized assets – whether that be a car, apartment or a person’s own time and labor – it’s logical that there’d also be demand to do so with home cooked food. In fact, it would be hard to argue there isn’t a large potential market of people on both sides of the equation – those who can cook and need to make some extra money, and those who like to eat – to make a marketplace like Josephine successful in the long run.

I caught up with Josephine cofounder Matt Jorgensen to ask him about Josephine’s efforts to change California’s cottage food law and also get a little backstory about Josephine.
You can keep up with the status of Josephine’s efforts and the California Homemade Food Operations Act at their blog.

When was Josephine forced to halt operations?

Jorgensen: In April of 2016, several of our cooks were served Cease and Desist warnings from local health regulators, which lead us to halt operations in the East Bay. This ultimately led to our good faith collaborations with State health regulatory coalitions in CA

With the Homemade Food Operations Act (Editor Note: Bill name was changed to “The 2017 Homemade Food Act:), when is a vote expected on this bill?

First the Bill must pass through Health Committee next Tuesday April 25th, and we expect the legislature to vote at some point in the early summer.

How does California compare to other states in terms of legality around cottage food as a business?

Jorgensen: California is essentially on par with the 30+ states that have passed Cottage Food laws.

Like many states, certain California cooks with the access and means can apply for cottage food permits as hobbyists, but the law doesn’t allow for the sale of most financially viable/ culturally relevant products… instead it’s focused on certain shelf-stable foods (jams, granolas etc). So we haven’t seen CA yet push beyond others in terms of the available food types. Several states go further, with Wyoming’s “Food Freedom” law being the most open.

Do you see this bill as the first in a push towards national rolllout? (And will other states follow suit)?

Jorgensen: We’re taking a different advocacy approach in each state– while we’re supporting Garcia’s legislation in CA, we’re actually looking at various administrative paths in other states. In Portland for example, we have strong support letter from the Mayor for a proposed pilot program. In other states like Wyoming the low-risk behaviors we are proposing are already legal.

How does Josephine business work? Is it similar to other sharing economy services that take a % of the overall bill? Charge a flat service fee?

Jorgensen: There’s no cost to set up a cook account or post meals. For each meal cooks serve, they keep 90% of your total sales and 10% of your sales will go toward covering credit card fees and the cost of our services. We also partner with values aligned non-profits for no cost.

How does Josephine find new cooks?

Jorgensen: Mostly through word of mouth and through offline communities. Many cooks are already partaking in the types of activities we support before choosing to partner with Josephine.

How does Josephine ensure people are going to be quality cooks? I assume getting a “cottage cook” license (as permitted by the bill) would be one step. But are there other things you do?

All cooks go through a vetting process from the masters of public health on our team and have access to our knowledge base before posting their first meal. We work with them to ensure a quality first experience, but all meals are also reviewed by customers (built-in accountability).

Is Josephine the only cottage cooking platform app, and if so why hasn’t this market taken off (is it legal restrictions, or something more as well).

Jorgensen: Some other companies have tried to make this business work, but we believe we are still in the early days of building the cook confidence and public trust necessary for this business to succeed.

How big is Josephine and what is your funding?

Jorgensen: We have a few hundred cooks across the country, a staff of 10 in Oakland, CA, and funding from a handful of different impact, angel, and venture capital investors. We’ve raised a little over $2m so far from angel and impact investors including Kapor Capital.

A Bittersweet Ending And New Beginning For KitchenBowl’s Waliany

Last fall when I reached out to KitchenBowl founder Ryan Waliany about speaking at the Smart Kitchen Summit, he told me he was in the process of acquisition talks for his company, and because of the likelihood that he would be in the middle at the deal at the time, he would have to decline.

Now, with his the cooking education and discovery site a part of Japan’s ABC Cooking School, he’s willing to share some of the deal’s backstory.

Waliany, who told Geekwire the deal sprung out of a cold email sent to ABC Cooking School a year ago, says the new owner of the KitchenBowl assets plans to use it to expand the company’s online presence. ABC, which runs cooking studios in 134 locations in Japan as well as in China, Korea, and Singapore, also sees leveraging what they have with KitchenBowl to create an online community for their students to connect in between classes. KitchenBowl will continue to offer image-heavy recipes but the main focus over time, according to Waliany, will be to convert online visitors to cooking class customers.

Waliany and his team are moving on after what he said was a three month transition period in which he and the KitchenBowl team migrated the product over to ABC. In addition to the sale of the KitchenBowl assets, Waliany also negotiated a deal for his team (outside of co-founder Serena Wu) to go to work at Uber under Andrew Chen.  According to Waliany, the move doesn’t mean the rideshare company will be increasing its focus on food or cooking anytime soon, as his team will be working on “core product” and not UberEATS (Chen heads up rider acquisition efforts at Uber). Cofounder Wu, who is Waliany’s spouse, will be leveraging some of the food-related learnings from KitchenBowl at Instacart where she is now a senior product designer.

For Waliany, the experience of selling his company and moving on to Uber is bittersweet, but he sees lots of potential for the product and its impact on cooking education under it’s new owners.

“While it’s hard to part with something that was heavily integrated into our lives, we feel at peace, yet excited with ABC Cooking’s vision,” Waliany told me. “It involves creating a new cooking studio based on our technology and changing cooking education as we know it.”

Analysis: How UberEATS Continues To Compete in a Crowded Food Delivery Market

As the icon of the app-driven sharing economy, Uber never lets its followers forget that it sees itself as more than a ride-hailing service. The eight-year-old’s company’s aim is to become the logistics standard-bearer for the digital world and beyond. FedEx disrupted the package delivery business, and Uber has made clear that their mission is to follow that lead into the future digital world.

Depending on the source, Uber is valued at between $30 billion and $60 billion. Therefore, the San Francisco-based company is long on resources which drive its vision to explore all avenues in profitably moving things from point A to point B. The March 2014 move into restaurant delivery was easy and a low-risk one for the company building the new service as an adjunct to its existing infrastructure and brand.

UberEATS is now in 65 cities in North America, Europe, Asia, South America, Australia, and Africa. While that total pales compared to acknowledged industry leader GrubHub, with more than 1,100 locals in its fold, UberEATS is coming on strong. UberEats poses a major threat because of the massive reach of its ride-hailing business, thus providing the company access to a huge total available market. In addition, major chains such as McDonald’s are more favorably inclined to work with Uber than its competitors because of its army of drivers.

In Southern Florida, McDonald’s is running a test with 164 area restaurants where customers can order Big Macs and other fast-food delights using the UberEats app. A $4.99 service charge is added to all orders. “We are most certainly very interested in the fast-growing delivery business not just in the U.S. but globally, so we are excited about the opportunity to provide even more convenience and more accessibility to our customers who have been asking for us to deliver, “Pam Williams, director of growth platforms for McDonald’s USA told the Miami Herald. Uber has more than 10,000 drivers in the Miami area alone that provide food delivery service.

UberEATS is positioned to take a bite out of the food delivery market. According to App Annie, a measurement site for app downloads, UberEats is the number one app for food and delivery. That ranking compares to competitors GrubHub at number seven and Postmates at number eight. However, UberEATS does not offer its restaurant’s partners an API to allow integration of its service with the eatery’s Point of Sale System. Most of its competitors, including GrubHub, Postmates, and DoorDash offer POS APIs which allow the restaurant to gather customer data and push directions and special instructions to drivers.

Even with all its digital ducks in a row, UberEATS might be little more than an experiment for the high-flying startup. In addition to its lack of an API for its partners—a vital element—there is little transparency on how it reimburses its drivers as well as the percentage it takes from the restaurants it serves. There is driver concern over the lack of guarantee hourly rate, as well as some major bumps in its logistics platform. Many drivers complain that deliveries that appear to be nearby can be much further than indicated, negatively impacting their daily delivery totals. And then there is the rule that UberEATS does not allow tipping. In summary, Uber offers little beyond its brand and dynamic driver network to differentiate itself in this space.

Much like other digital companies in growth mode, Uber has a number of new products and service trials in the pipeline– UberPool is a new service aimed at providing corporations carpooling services; working with Daimler; the company is experimenting with self-driving cars in San Francisco; and with partner Ehang, it is looking at drone taxis with vertical takeoff and landing capabilities. Where does food delivery fit into this future scape?

Unlike its closed-loop ride-hailing business, the food delivery business includes the reputation and brand of its restaurant partners. Once a meal leaves to the establishment for a customer’s home, the eatery loses control of its brand. For that reason, many restaurateurs maintain their own delivery drivers which give them some control of their name and reputation. As it scales, quality control for its food delivery arm will be something UberEats must address. Uber cannot afford more negative headlines such as the $20 million settlement ordered by the FTC for misleading drivers about potential earnings.

Nearly three years after the launch of UberEATS, food delivery is still a high-risk, high-reward proposition for Uber. Tempting data about the eating habits of millennials point to opportunity in the food delivery business. In order to be successful, Uber must also contend with an overcrowded market, plus the entry of Amazon which has more money, a superior infrastructure, a larger footprint and more experience in home delivery. Perhaps the wisest decision for Uber is to buy one of its competitors and marshal its resources into getting people—rather than food—from one place to another.

Welcome To Uber For The Kitchen

You don’t have to be a technology insider to know the world has been Uberized.

The reason ‘Uber-for-X’ companies are popping up like daisies is the sharing economy concept is both simple and revolutionary. Rare is it that a model works so well for people on both sides of a transaction, but that’s exactly what Uber-models do by creating low-friction marketplaces that earn the owner a little money for an underutilized asset –  whether it’s a car, a basement room or their labor – while providing access at an affordable price to the buyer.

Because of the win-win nature of Uber models, it was only a matter of time before they ended up in the home kitchen. Not only are companies aspiring to give grannies and wannabe chefs a way to share their home cooking, but large appliance companies are beginning to explore ways to enable buyers of their products to share them via an Uber-like marketplace.

One of the Uber-for-kitchen concepts is Josephine, a platform for home cooks to feed people in their neighborhood. Sign up for Josephine as a customer, and you’ll find yourself chowing a neighbor’s chili and cornbread.  The goal is to match cash-hungry home cooks with people who are hungry. However, while there is no shortage of home cooks and hungry people, the market narrows considerably when looking for folks willing to invite strangers into their home or buy food from a complete stranger. But, just as we saw with Uber, what once seems weird fast becomes the new normal when people begin to do it at scale.

Want to go on a food tour of Miami or Seoul? You can now book with local home cooks through Trips from Airbnb. The home sharing service company recently expanded more fully into dining and travel more with Trips, an evolution of the Airbnb Experiences program which the company launched into beta in 2014. This expansion allows for food to be offered as what is essentially a tourist package, where aspiring cooks can offer home cooked meals to travelers or local foodies can create food tours of local cities.

Electrolux is exploring the Uber concept for home appliances. While the company CEO initially mentioned they were toying with the idea of Uber for washing machines, their out-of-the-box thinking could also include dishwashers and even stoves.

Appliance sharing is still in its early days, but as I wrote a few weeks ago, manufacturers are evaluating how connectivity and smarts to can enable new business models. They’ve watched as smart devices reinvented a whole slew of industries from travel to home security to transportation, and are exploring how they can transform themselves from makers of metal boxes into trusted service providers using the same foundational technologies. By creating a sharing platform, these companies could make themselves more indispensable by not only enabling a new way to purchase fractional access to appliances but by also creating business opportunities for their consumers.

And while I’ve yet to see an Uber-for-kitchen company for renting out an entire kitchen, it’s only a matter of time. After all, if you can rent a single room in a home to sleep in, why not rent a kitchen to cook a meal? At least that way, you might be able to skip going home to that weird uncle of your’s for the holiday meal.

BringMe Combines Food Delivery And The Sharing Economy

Food delivery is a hot sector right now – from meal kits to grocery delivery and everything in between, the market still garners the most investment dollars in food tech despite a dip in 2016 from the previous year. But the convenience and ubiquity of food delivery have a long way to go. In most areas, outside of large cities, grocery delivery is monopolized by one or two major grocers, limited choices and options for consumers and third-party delivery apps don’t work with just anyone. The problem is mostly scale – startups and major companies start in larger markets to prove their concept and grow and then they’re able to spread.

But one startup may have a more grassroots, sharing economy-minded solution to the food delivery model. BringMe was founded by a group of students in Fairfax, VA who wanted to pair people’s wants and needs with other people’s desire to make quick and easy money. If you’re someone who wants something delivered, you place a request in the app for the thing you need. It might be your order at the Thai restaurant a few miles away or items from the grocery store. You pay for the items via the app and you list what you’re willing to tip.

Anyone who’s interested in becoming a deliverer can respond to your request, and upon delivery, get paid via the app. Sound familiar? It’s a version of the Uber model – give people an easy platform on which to connect, and let them negotiate the details. There is even less oversight with BringMe, who doesn’t seem to set minimum tipping although it does make suggestions. And if you want to be a “Bringer” as the company calls them, you do have to fill out an application which requires you have a smartphone, some mode of transportation and a “clean record.” And although it seems like the model Uber Foods is working towards, in some ways removing the regulatory and political challenges Uber faces in the transportation sector, BringMe has some advantages.

Right now, the model is secluded to the Fairfax area, where the students reside, but it has the potential to expand giving the grassroots nature of the infrastructure. And the delivery isn’t limited to food – though it’s possibly the largest use case – and BringMe says the only things it *won’t* deliver are illegal or restricted items like drugs, alcohol and prescriptions. You could imagine a strong use case for adoption across college campuses and in suburban areas where public transit is weak and the need for more convenience are high. The company says it has Bringers on hand to deliver 24/7, providing that the place you’re ordering from is also open during those hours.

Ben & Jerry’s delivery at 1 am from the local convenience store anyone?