Grubhub, Uber Eats and Door Dash have characterized a 15 percent cap on fees charged to restaurants as an unconstitutional measure that will hurt consumers.
Chef-prepared, small-batch meal delivery startup CookUnity is undergoing a major expansion after closing a $47 million Series B round.
Insight Partners led the round and was joined by Endeavor Capital and current investors IDCV, Fuel Ventures and Gaingels. The latest funding comes eight months after New York-based CookUnity closed a $15.5 million Series A round led by Fuel Venture Capital. The company has now raised a total of $70 million since its inception in 2018.
Mateo Marietti, founder and CEO of CookUnity, had the idea for the subscription-based company five years ago. Marietti, who is from Argentina, was working in food tech and saw that modern delivery services were only able to offer limited food options and pricing, and was a trade-off between convenience and variety.
He went looking for a similar experience to apps like Spotify, where the music selection was limitless, and created CookUnity to connect creators of food with the people who would be eating it.
CookUnity combines the ready-to-eat meal category with a chef-focused business model that provides restaurant-quality meals at home. The rotating menu features hundreds of dishes, starting at $10.49 per meal, with an option of a subscription plan for four, six, eight, 12 or 16 meals per week. Meals heat up in minutes and also include both fast-cooking instructions, like in a microwave, or how the chef might prepare it at home, like with an additional squeeze of lemon or other toppings.
Chefs are also given tools and resources to create a digital-first business, and Marietti told TechCrunch that top-selling chefs bring in upwards of $1 million a year.
“We are building the infrastructure, working with farmers, providing the ingredients and the tech layer for both the consumer app and the chef app,” he added. “We don’t employ any talent or cook the food, but we give chefs the tools to start recruiting cooks, gather information on new recipes, organize their team and expand into new markets while also seeing their sales for the day or week.”
The company’s platform is already working with notable chefs like Jean-Georges Vongerichten, Marc Forgione and Esther Choi, and the Series B funding will enable it to add more chefs, including local rising stars and established restaurateurs, enabling them to sell beyond the typical on-demand food delivery zone, Marietti said.
Starting with the flagship kitchen in Brooklyn, CookUnity initially expanded to San Francisco, Dallas-Fort Worth, Boston and Washington, D.C. Following the Series A, the company opened kitchens in Los Angeles, Austin and Chicago. The new funding will now enable the company to accelerate its nationwide expansion with new kitchens in Atlanta and Miami by the end of the year. When all of the new kitchens are online, Marietti estimates that CookUnity will be able to serve 88% of the U.S. population.
In the last 12 months, CookUnity saw over 550% growth and to date has over 50 chefs on its roster, with plans to increase to 150 across all of its kitchens by mid-2022.
As part of the investment, Rebecca Liu-Doyle, principal at Insight Partners, is joining the CookUnity board of directors. Insight’s model is to track companies for a long time before investing; in CookUnity’s case, Liu-Doyle was watching them for more than two years. She said the timing was right for Insight to invest.
In addition to product-market fit, strong chef retention and liking the company’s focus on the food market, which is a “massive total addressable market,” she said, CookUnity was on its way to building a big business with subscription-based revenue as it took on the complexities of the back-end business for chefs.
The value proposition is unique for both of the stakeholders — on the chef side there is a creator economy tailwind, which is taking the friction out of scaling a business while also enabling chefs to build a business with a larger footprint than they just selling food around their restaurants. On the consumer side, Liu-Doyle said CookUnity is providing affordable and convenient food without having to compromise on taste and quality.
“Very few companies can offer that: it is democratization on both fronts,” she added. “In order to execute on the vision, you need a specific team, which Mateo has, and show incremental improvement to the experience. It doesn’t just happen overnight. You have to be patient and deliberate in the way you improve the experience.”
The bill would curb production quotas at Amazon and other companies that critics say are excessive and force workers to forgo bathroom breaks.
Amazon announced this morning it’s expanding its faster, same-day delivery service to half a dozen more U.S. cities. The service, which the retailer has been working to make same-day delivery even faster over the past year, now offers consumers in a number of markets the ability to shop up to 3 million items on Amazon.com, then receive their orders in only a few hours.
To do so, Amazon invested in what it called “mini-fulfillment centers” closer to where customers lived in select U.S. markets, initially in Philadelphia, Phoenix, Orlando, and Dallas. Those customers could then shop across a dozen merchandise categories, including Baby, Beauty & Health, Kitchen & Dining, Electronics, Pet Supplies, and more. As the pandemic continued to impact Amazon’s business, in November 2020, Amazon expanded its faster same-day service to more cities, to include Nashville and Washington, D.C.
With today’s expansion, Amazon is rolling out same-day delivery to Prime members in Baltimore, Chicago, Detroit, Tampa, Charlotte, and Houston, bringing the total markets served to 12. In these markets, shoppers will be able to place orders online throughout the day then have items on their doorstep in as fast as 5 hours, Amazon says. Customers can also place orders by midnight to have their orders arrive the following morning.
The service continues to be free with no additional charges on orders over $35 that qualify for same-day delivery. Orders under $35 have a $2.99 fee for Prime customers, and a $12.99 fee for non-members. Prime membership, meanwhile, is $12.99 per month or $119 per year.
The time frame commitments for same-day delivery are the same as those Amazon promised last year when it first announced its plans to speed up Prime delivery. Orders placed between midnight and 8 AM will arrive today by 1 PM. Orders placed between 8 AM and 1 PM arrive by 6 PM; those placed between 1 PM and 5 PM will arrive by 10 PM; and those placed between 5 PM and midnight will arrive overnight by 8 AM. That means customers can place orders fairly late and receive their items before they head out of the house the next day.
Faster same-day delivery has been one of the most significant services Amazon has used to challenge rivals like Walmart and Target, who both benefit from having a large brick-and-mortar footprint that allows them to more quickly serve their customers through same-day order pickup, curbside pickup, and same-day delivery services. While Walmart partners with third-parties on its same-day service, Express delivery, largely focused on grocery, Target acquired delivery service Shipt in 2017 to bring its fast delivery services in-house.
In response to the growing competition, Amazon has been recently acquiring smaller warehouse space inside major urban metros, including in these six new markets where it’s now announcing same-day delivery, as well as larger markets, like New York, and even suburban neighborhoods. It also acquired Whole Foods for $137.7 billion in 2017, not only to more fully participate in the online grocery business, but also in part because of its large retail footprint.
As Amazon has sped up the pace of what’s available under “Prime” delivery, it has wound down its older “Prime Now” business, which was retired Aug. 30 and will be fully shut down by year-end. The separate app had allowed customers to shop items that were available in one or two hours for an additional fee.
The news follows Amazon’s earning miss last week, when the retailer fell short of Wall St.’s estimates for revenue, and gave a weaker than-expected outlook for the quarter ahead, which Amazon attributed to difficult comparisons with a time frame that included Covid lockdowns during height of the pandemic in 2020. The company reported $113.08 billion in revenue and earnings of $15.12, versus expectations of $115.2 billion and $12.30.
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“We’re building a decentralized ghost kitchen,” is a sentence that could launch a thousand investor calls, and Alex Canter, the chief executive officer behind Ordermark, knows it.
The 29 year-old CEO has, indeed, built a decentralized ghost kitchen — and managed to convince Softbank’s latest Vision Fund to invest in a $120 million round for that the company announced today.
“We have uncovered an opportunity to help drive more orders into restaurants through this offering we have called Nextbite,” Canter said. “Nextbite is a portfolio of delivery-only restaurant brands that exist only on UberEats, DoorDash, and Postmates.”
After hearing about Nextbite, Softbank actually didn’t take much convincing.
Investors from the latest Vision Fund first reached out to Canter shortly after the company announced its last round of funding in 2019. Canter had just begun experimenting with Nextbite at the time, but now the business is driving a huge chunk of the company’s revenues and could account for a large percentage of the company’s total business in the coming year.
“We believe Ordermark’s leading technology platform and innovative virtual restaurant concepts are transforming the restaurant industry,” said Jeff Housenbold, Managing Partner at SoftBank Investment Advisers, in a statement. “Alex and the Ordermark team have a deep understanding of the challenges that independent restaurants face. We are excited to support their mission to help independent restaurants optimize online ordering and generate incremental revenue from under-utilized kitchens.”
It’s an interesting pivot for a company that began as a centralized hub for restaurants to manage all of the online delivery orders coming in through various delivery services like GrubHub, Postmates and Uber Eats .
Canter is no stranger to the restaurant business. His family owns one of Los Angeles’ most famous delicatessens, the eponymous Canters, and Ordermark apocryphally started as a way to manage the restaurant’s own back-of-the-house chaos caused by a profusion of delivery service orders.
Now, instead of becoming the proprietor of one restaurant brand, Canter is running 15 of them. Unlike Cloud Kitchens, Kitchen United or Reef, Ordermark isn’t building or operating new kitchens. Instead, the company relies on the unused kitchen capacity of restaurants that the company has vetted to act as its quasi-franchisees.
While most of the restaurant concepts have been developed internally, Ordermark isn’t above the occasional celebrity sponsorship. Its Nextbite service has partnered with Wiz Khalifa on a delivery-only restaurant called HotBox by Wiz, featuring “stoner-friendly munchies”.
The first brand Canter launched was The Grilled Cheese Society, which took advantage of unused kitchens at places like a Los Angeles nightclub and mom-and-pop restaurants across the East Coast to build out a footprint that now covers 100 locations nationwide.
It’s perhaps the growth of the HotBox brand that shows what kind of growth Nextbite could promote. Since the brand’s launch in early October, it has grown to a footprint that will reach 50 cities by the end of the month, according to Canter.
In some ways, Nextbite couldn’t exist without Ordermark’s delivery aggregation technology. “The way that Ordermark’s technology is designed, not only can we aggregate online orders into the device, but we can aggregate multiple brands into the device.”
For restaurants that sign up to be fulfillment partners for the Nextbite brands, there are few additional upfront costs and a fair bit of upside, according to Canter. Restaurants are making 30% margin on every order they take for one of Ordermark’s brands, Canter said.
To become a part of Nextbite’s network of restaurants the business has to be vetted by Ordermark. The company takes cues on what kinds of restaurants are performing well in different regions and develops a menu that is suited to match those trends. For instance, Nextbite recently launched a hot chicken sandwich brand after seeing the item rise in popularity on different digital delivery services.
Restaurants are chosen that can match the menu style of the delivery-only brand that Ordermark’s Nextbite business creates.
Behind those menus is Guy Simsiman, a Denver-based chef who is in charge of developing new menus for the company.
“We’re building things that we know can scale and we do a lot of upfront vetting to find the right types of fulfillment partners,” said Canter. “When a restaurant signs up to become a fulfillment partner, we’re vetting them and training them on what they need to do to … We’re guiding them to become fulfillment partners for these concepts. There’s a whole bunch of training that happens. Then there’s secret shopping and review monitoring to monitor quality.”
While Nextbite may be the future of Ordermark’s business, its overall health looks solid. The company is about to cross $1 billion worth of orders processed through its system.
“We are laser focused right now on helping our restaurants survive COVID and the best way we can do that is by doubling down on the incremental revenues of the Nextbite business,” said Canter when asked where the company’s emphasis would be going forward.
Nextbite is something we’ve been developing for a while now. We took it to market at the end of last year prior to COVID. When COVID kicked in every restaurant in America needed to be more creative. People were looking for alternative ways to supplement the loss in foot traffic,” he said. Nextbite provided an answer.
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