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Daily news and analysis about the food tech revolution

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Food Tech News: A New Potato Preserving Technology, Zomato Closes $660M Round

If you need a break from COVID-19 and vaccine-related news, you’re in the right place. In this week’s Food Tech News, we rounded up pieces on a new technology that helps preserve potatoes, Zomato’s latest funding round, a holiday Pepsi flavor, and carbon-neutral oat milk.

Funding for potato preserving technology

Hazel Technologies received an undisclosed amount in grant money this week from the USDA for its new potato preserving technology. The technology is called Hazel Root, which looks like a small package and is placed in a bin of potatoes after harvesting. The small package emits an undisclosed active ingredient that prevents potatoes from prematurely sprouting. Prior to this new development, Hazel Technologies focused on preserving fresh fruits for longer and has received a total of $900,000 in grant money. Last year, the company also raised $13 million in funding in an oversubscribed series B round.

Zomato closes $660M series J funding round

Indian delivery service Zomato closed its series J funding round this week, totaling $660 million USD. The recent round saw participation from Kora, Tiger Global, Luxor, Fidelity, D1 Capital, Baillie Gifford, Mirae, and Steadview. Zomato is currently valued at $3.9 billion USD, and Deepinder Goyal, the CEO of Zomato, shared that the company may launch its IPO sometime in the first half of next year.

Cocoa Cola for Christmas

On Twitter this week, PepsiCo announced that a new flavor is in the works: “Cocoa Cola.” Pepsi said if its tweet reached 2,021 reposts, the company would begin production of the new flavor. As of now, that tweet has been reposted 4,400 times so far, so it’s safe to say the new drink will go into production. It will have tasting notes of chocolate, marshmallow, and the classic cola flavor, and is expected to reach stores sometime this winter. Near Thanksgiving this year, PepsiCo also released a holiday flavor: a limited batch of apple pie-flavored soda.

Carbon neutral oat milk

Minor Figures, a London-based company that produces oat milk, announced this week it has become carbon neutral. The company partnered with EcoFye, a firm that helps companies lower their carbon footprint and purchase carbon credit for carbon offsetting projects. Becoming carbon-neutral has been quite the buzzword this year, with major companies like Starbucks, Amazon, and Microsoft also making the pledge.

Report: Indian Delivery Service Zomato Raises an Additional $52M

India-based food delivery service Zomato has raised $52 million in funding from Kora Investments. The Mint was first to report the news, citing a person close to the matter who asked not to be named. The $52 million is, according to that person, part of Zomato’s ongoing Series J funding round that could eventually be as high as $600 million. The new fundraise brings Zomato’s current total funding to $1.2 billion.

Even amidst difficulties brought on by the pandemic, it’s been a very busy year for Zomato, and one filled with more ups than downs. The company bought Uber Eats’ India business in March for $206 million, then raised $5 million in funding in April as part of its ongoing Series J. Like chief rival Swiggy, Zomato also unveiled a grocery delivery service as a way of diversifying its business model.

While Zomato did have to make cuts to its workforce in May, that hasn’t seemingly hampered the company’s overall growth. As of September, Zomato said it had recovered about 80 percent of its pre-pandemic sales. To top all that off, the company plans to go public in the first half of 2021.

Prosus-backed Swiggy is currently Zomato’s main competitor in India, and has raised $1.6 billion to date. However, Amazon’s recent entry into the India food delivery market could mean formidable competition for both Swiggy and Zomato, especially since Amazon already has a presence in India through its PrimeNow and AmazonFresh services.

Last month alone, Zomato closed a $62 million funding from Temasek unit MacRitchie Investments and a $103 million from Tiger Global. The Mint’s source said Kora is expected to make a follow-up investment “of a larger amount,” though no exact figure was given. 

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. 

Time to Recirculate the To-Go Cup Debate

Since we now live in a world where the to-go order is the main attraction at restaurants, we need to start treating the issue of excess single-use packaging with a whole lot more urgency.

Clearly I’m not the only one to have that thought, as two major QSR chains made sustainability announcements of their own this week. Both are aimed at reducing the amount of plastic that winds up in landfills and the ocean — no small feat considering the billions of single-use cups, straws, and containers we throw out each year, thanks in no small part to the convenience-driven delivery and to-go craze. 

On Thursday, Starbucks, sent out an update saying its “strawless lids” are now “the standard for iced beverages” at stores in the U.S. and Canada. The lids use roughly 9 percent less plastic than the normal lid-and-straw combo. The rollout of these lids applies to company-owned and licensed Starbucks stores, and is expected to be completed by the end of the month. Straws will still be available upon request. 

It’s an important milestone, especially considering Starbucks is arguably responsible for the populace’s current fixation with fancy drinks in plastic or plastic-coated cups. But it doesn’t actually remove single-use plastics from equation.

The latest initiative from McDonald’s does. This week, the company announced a partnership with zero-waste platform Loop to create a reusable cup program at McDonald’s locations in the UK. Users can opt for a reusable cup, for which they leave a small deposit that’s retrieved when they return the cup. Loop collects the empties, washes and sanitizes them, and puts them back into circulation. The concept is reminiscent of Dishcraft Robotics’ “dishes-as-a-service” model, which recently added reusable takeout containers to the items it collects, washes, and returns to the foodservice loop.

The obvious drawback here is that putting down a deposit at McDonald’s and then taking the time to return the cup is inconvenient. Inconvenience doesn’t sell with many consumers these days (which is another separate issue itself). 

A reusable cup system is, however, a bolder move than simply reducing plastic, and bold moves are what we need right now to get excessive packaging out of the foodservice world. That the McDonald’s pilot is coming from a multi-billion corporation with a $4 billion digital business is encouraging. But to become widespread, the entire restaurant industry is going to have to pitch in, from the major chains and supply companies to delivery services, mom-and-pop stores, and consumers themselves.

That’s no small ask at a time when the restaurant industry is utterly crippled from the pandemic and small chains and independent restaurants are permanently shuttering at an alarming pace. But with off-premises orders being the future of restaurants for the foreseeable future, no one can afford to shelve the glaring issue of single-use packaging for much longer, not without risking further environmental consequences.

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Zomato Raises $100M, Plans IPO

Zomato, one of India’s largest food delivery services, announced this week it has raised $100 million from Tiger Global and is preparing for an IPO in 2021.

The news is just another layer of development to what’s been a very busy year for Zomato. The company bought Uber Eats’ India business in March, raised a $5 million Series J round in April, and unveiled a grocery delivery service in the same month. It had to cut 13 percent of its workforce in May (thanks, pandemic), but things are clearly looking up for the service, as it raised $62 million from Temasek and just days ago said in a blog post that “recovery trends are strong.”

A prospective IPO is another sign of that recovery. In a letter to employees reviewed by TechCrunch, Zomato co-founder and CEO Deepinder Goyal set “sometime in the first half of next year” as a timeline for said IPO. At the moment the company has “no immediate plans” on how it will spend the investment from Tiger Global, if it spends it at all. Goyal called the cash a “war-chest” for future M&A and for fighting price wars from competition.

Given that Zomato competes fiercely with Swiggy for the Indian food delivery market, and given the consolidation the entire third-party delivery industry is undergoing, having a war chest doesn’t seem like a bad move right now.

Restaurant Tech ‘Round the Web

Fast-casual chain Sweetgreen this week launched Collections, a new digital-only menu available through the restaurant’s app and website. According to a press release sent to The Spoon, menu items are curated according to specific themes and dietary preferences/restrictions, and will make recommendations that are unique to each individual customer.

Order-ahead platform Allset has teamed up with digital ordering platform Olo to streamline the pickup order process for participating restaurants. Olo’s system lets restaurants manage menus, pricing, and order fulfillment across multiple third-party platforms, thus creating fewer manual workflows for restaurant staff.

Starting Sept. 30, NYC restaurants will be allowed to operate indoor dining rooms at 25 percent capacity. The announcement, made by Gov. Andrew Cuomo this week, comes just as the city gears up for the colder days ahead that will limit outdoor seating for most businesses.

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.

More COVID-Related Cuts for Food Delivery: Grab Lays Off 5 Percent of Its Workforce

Singapore-based food delivery service Grab is letting go of about 5 percent of its workforce and “winding down” several projects and functions, according to AgFunder News. 

The layoffs are part of Grab’s ongoing struggles with COVID-19’s impact on the global economy. Grab had previously asked its workers to accept decreased hours or take unpaid leave of absence in an effort to avoid having to reduce its workforce. The company also implemented pay cuts for senior management.

But in a letter to staff that was cited by AFN, Grab cofounder and CEL Anthony Tan noted that after trying everything possible to avoid staff reductions, the company now has to accept this reality. “In spite of all this, we recognize that we still have to become leaner as an organization in order to tackle the challenges of the post-pandemic economy,” he said.

Affected employees will receive “enhanced severance payments, expedited equity vesting, extended medical insurance coverage, and access to career advice and mental health support.”

Softbank-backed Grab bills itself as “your everyday everything app.” The company offers on-demand food delivery as well as ride hailing services in about 300 cities across Southeast Asia. 

And it’s hardly the first food delivery service to announce layoffs in the last few months. In India, the two major players in third-party delivery, Swiggy and Zomato, both announced layoffs in May. U.K.-based Deliveroo cut 15 percent of its workforce in April, citing coronavirus’s impact as the reason, and Uber recently laid off employees, including those working for the company’s Eats division.

At the same time, consolidation has come for the food delivery world, most notably in Just Eat Takeaway’s plans to acquire Grubhub. In 2019, Delivery Hero bought South Korean Woowa Bros.’ food delivery service, and Brazil-based iFood merged with Colombian service Domicillios.com.

Layoffs don’t necessarily signal that a company is about to get gobbled up by an acquisition, but the pandemic has certainly caused many on-demand businesses around the world to struggle, cut costs, and become leaner all around. Competition has long been fierce in food delivery, especially in Southeast Asia, where Grab competes with rival Gojek for dominance. Grab’s announced layoffs this week are hardly the last we’ll see in the coming months as the market for on-demand food delivery becomes even more cutthroat.

Amazon Launches a Restaurant Food Delivery Service in India

Amazon today announced the launch of its own restaurant food delivery service in India, according to TechCrunch. Dubbed Amazon Food, the service launched in select postal index codes of Bangalore before expanding to other cities in the future.

“Customers have been telling us for some time that they would like to order prepared meals on Amazon in addition to shopping for all other essentials,” an Amazon spokesperson said. The company will launch with a handful of restaurant and ghost kitchen partners from which customers can order meals.

Amazon’s starting a food delivery service in India was actually meant to happen in 2019 but got pushed to March of this year, just as the COVID-19 pandemic started to take the entire world in its grip. India’s nationwide stay-at-home order further delayed the Amazon Food service’s debut until now.

Amazon Food arrives in India at a time of upheaval for food delivery in that country. Uber Eats recently exited the Indian market, selling its business in that country to local delivery service Zomato for $206 million. But Zomato, along with its chief rival Swiggy, are currently struggling under the negative impact the pandemic has had on India. Both companies have cut jobs, and Swiggy is also scaling back its ghost kitchen division as a way to cut more costs and keep its operations “nimble.”

Amazon’s entry into the market could exasperate the challenges these local players already face. Even without a pandemic keeping India’s 1.3 billion people on lockdown, neither Swiggy nor Zomato is profitable yet — a common theme for third-party food delivery companies worldwide.

Amazon, meanwhile, has invested heavily into the Indian market and already operates Amazon Fresh and Amazon PrimeNow platforms in that country.  

Zomato Cuts 13 Percent of Its Workforce

Zomato, one of India’s largest third-party food delivery services, is cutting 13 percent of its workforce and requiring the rest of its employees to take a pay cut, according to the Economic Times. Not surprisingly, the moves are in response to the ongoing pandemic and its effect on the food delivery industry in that country. 

Those affected by the layoffs will receive their health benefits as well as half their salary for six months or until they find their next job. In June, the rest of the company will take a temporary pay cut to preserve as much cash as possible. The cuts are expected to be for at least six months.

In an email sent to staff, Zomato founder and CEO Deepinder Goyal wrote that the company is preparing for “things getting worse” in terms of COVID-19 and the simultaneous collapse of the restaurant industry as we know it. He noted that many restaurants in India have already shut down permanently. “I expect the number of restaurants to shrink by 25-40% over the next 6-12 months,” Goyal wrote.

Zomato’s news comes just after Swiggy, it’s chief rival in India, announced layoffs of its own, also in response to COVID-19. Swiggy cut about 1,000 jobs at the end of April, mostly in its ghost kitchen division. This came just weeks after it announced a $43 million Series I fundraise.

It’s not just India, either. Worldwide, third-party delivery services have been making cuts as business gets drastically and negatively impacted by the pandemic and country-wide lockdowns. Deliveroo cut 15 percent of its staff at the end of April. Uber has made layoffs that affect some Eats employees. The company also recently exited eight markets.

Zomato actually bought Uber’s Eats business in India for $206 million at the beginning of March, before the country went into lockdown. Goyal didn’t mention the deal in his letter, which was much more focused on outlining ways in which the company is going to save cash and prepare for things to get way worse before they get better. Seems like the rest of the food delivery industry should do the same.

Rebel Foods Raises $50M for Its India-based Cloud Kitchen Network

India-based ghost kitchen operator Rebel Foods announced this week it has raised $50 million in fresh funding from NY-based hedge fund Coatue Management. The new investment is part of an ongoing Series E round, according to AgFunder News.

As cloud kitchen networks go, Rebel Foods is Old Guard compared to newer entrants like Kitchen United and Travis Kalanick’s CloudKitchens. Rebel was founded in 2010 and launched as quick-service chain kebab chain Faasos in 2011, and as of last check was targeting a $1 billion valuation.

Rebel currently operates over 300 cloud kitchens across 35 Indian Cities and says it processes over 2 million orders per month. Faasos still operates as a restaurant brand within those kitchens, alongside other Rebel-owned virtual restaurants. Customers can order and pay for food through Rebel’s own app, and all meals are prepared in Rebel kitchens and delivered straight to customers. 

In the Indian food delivery market, Rebel competes with both Swiggy and Zomato, the latter of which also operates its own ghost kitchens. Until recently, Uber Eats was also a competitor, and its exit from the Indian market has left the landscape even more consolidated and competitive.

India’s entire population of 1.3 billion people is currently on lockdown in an effort to stem the spread of COVID-19, and demand for food delivery has skyrocketed in response. Rebel’s network of virtual restaurants is well suited to meet that demand. Since Rebel doesn’t operate any brick-and-mortar with actual sit-down space, the company isn’t taking a hit from forced business closures happening across the country, either.

In August, the company raised $125 million in funding from Coatue Management, Goldman Sachs, Indonesian delivery service Gojek and other investors. With Gojek, it plans to open cloud kitchens in Indonesia over the next 18 months. The company is also expanding to the United Arab Emirates.

Swiggy, Zomato Expand Delivery Services to Groceries and Beyond in India

Swiggy, one of India’s biggest food delivery services, announced this week it has raised $43 million as part of its ongoing Series I round. The round was led by existing investor Tencent, and new investors Ark Impact, Korea Investment Partners, Samsung Ventures and Mirae Asset Capital Markets. it brings Swiggy’s total funding to date to $1.42 billion and values the company at $3.6 billion, according to TechCrunch.

The round is also part of Swiggy’s ongoing efforts to expand its business from restaurant food delivery to include other items, including grocery, laundry, and other household items. The company says it will use the new funds to address market gaps in those areas.

Pre-pandemic, Swiggy was already headed in this direction. Two services, Swiggy Stores and Swiggy Go, launched in 2019 to deliver grocery, medicine, house keys, and many other items to customers within a one-hour timeframe.

With cases of COVID-19 on the rise worldwide, the company isn’t alone in branching out from restaurant meals — more services that traditionally peddled only restaurant food are widening the range of products they can deliver. DoorDash recently expanded its food delivery capabilities to include convenience-store items from 7-11, Wawa, and other such places. Postmates has a delivery partnership with Walgreens through which customers can get wellness products, medicines, and general household items. 

Those examples are in the U.S., though. In India, expanding into new delivery categories could give Swiggy a competitive edge at a time when the entire country is on lockdown and most business is disrupted. However, Swiggy’s biggest competitor, Zomato, has also gotten hip to the potential profitability of delivering more than just restaurant meals. The service just announced Zomato Market, which identifies nearby grocery stores delivering goods and delivers items.

Zomato also bought Uber Eats’ business in India earlier this year, creating a two-man race in the India food delivery market. With 1.3 billion people in the country on lockdown right now, there are plenty of customers to go around. Post-pandemic, whenever that is, the market may become more of a race to see which service can better prove profitability.

Indian Delivery Service Zomato Launches Relief Fund for Restaurants

Zomato, one of the largest third-party food delivery services in India, announced this week it has launched a fund to support restaurants whose business is impacted by COVID-19. All sales of Zomato Gold memberships in April will go into the Zomato Gold Support Fund, according to a blog post from the company. Proceeds from the fund go towards “restaurant housekeepers, cooks and servers in these uncertain times.”

Zomato Gold is the service’s premium membership pass that gives customers “buy one get one free” deals on purchases. For the month of April, customers can purchase a one-year membership to Zomato Gold for ₹1200 (~$16 USD) or extend an existing membership another year for the same price. Those that do, get an additional year of Zomato Gold for free.

The company notes that anyone receiving these funds will not be required to pay them back (something that’s not been the case with every third-party delivery service’s COVID-19-related offers).

India is currently in the midst of a three-week-long lockdown — the world’s largest — with all factories, markets, shops, houses of worship, and other public spaces closed for the country’s 1.3 billion people. Like other countries around the world, restaurants can continue operating for delivery, but that puts many in-house employees out of work for the time being. 

“Restaurant workers face a twofold setback, many have modest backgrounds, and coming from small towns, are stranded away from their homes,” Gaurav Gupta, the cofounder and COO of Zomato, wrote in the company’s blog post. “And a cash-strapped industry is struggling to provide sustenance for them and their families as business comes to an abrupt halt.”

Gupta recently noted that the Zomato Gold fund is currently happening in India and the UAE.