Meal delivery is a simple service that has been garnering a lot of attention from startups including but not limited to Home Chef, GrubHub, Swiggy, Uber Eats, DoorDash, Sun Basket, HelloFresh, and others. Uber Eats will actually bring McDonalds to your door. The world is changing so fast those of us who remember the days before the internet are constantly amazed at how the youth have it so easy and convenient. Soon we may not need to live our city apartments at all, as the entire Maslow pyramid can be delivered to us on a silver platter (for a fee).
In a ranking of meal delivery services it’s possible to compare them such as is done on this site top10.com:
When looking for a meal delivery service, there are a few things to consider beyond just the price per meal. Most meal kit delivery services allow you to pick your meals from a selected group of recipes that changes each week. Make sure that the variety of meals is to your liking, and in particular if you have any dietary issues - such as a gluten sensitivity or if you’re a vegetarian - you’ll want to make sure that the company can provide enough options for it to be worth your time - and money. Also, life can be unpredictable, you’ll want to look for a company that will allow you to skip a week if you’d like, or that makes cancelling your membership painless and simple.
But what’s really interesting is the trend in the launching of these services, especially interesting is the amount of interest in the Venture Capital (VC) community. For example, at the top of the list is Home Chef, which has received $57 Million USD in funding, according to Crunchbase:
This model is so popular, Home Chef was acquired by Kroger (KR), publicly traded supermarket chain for $200 Million:
Kroger Co., the largest supermarket chain in the U.S., is paying $200 million to acquire Chicago-based meal kit company Home Chef in a deal the companies say will bring the kits to more customers and help redefine shopping habits. The deal, which is expected to close in about a month, includes future "earn-out" payments of up to $500 million over five years, contingent on achieveing milestones such as meal kit sales growth.
Paying $200 Million for a company that had only $57 Million in investment, plus an earn-out agreement was a great deal, but Kroger (KR) is not stupid, they are obviously betting that they are going to make much more than that on the deal. This is also a note for Pre IPO Investors, an IPO is not the only exit. Companies like AirBNB, Palantir, and others are acquisition targets. Typically publicly traded large companies are not innovative like startups, so instead of being innovators themselves they look to acquire innovators at an early stage.
Food delivery has more than 1,417 names listed on Crunchbase, with a total funding amount of more than $28 Billion USD ($28 B is the funding amount of the top 1,000 names):
Many of these names like GoJek are not known in the west, as GoJek is based in Indonesia and serves mostly the southeast Asian market. But GoJek isn’t only food delivery, they will deliver just about anything that will fit on a scooter. It’s an Indonesia thing.
So what’s the next logical step for companies like GrubHub (GRUB) ? Soon will they be fixing broken toilets and cleaning out gutters? There’s no limits to what delivery services may bring. Amazon (AMZN) is the inventor of delivery, but their Amazon Fresh service is lagging behind it’s peers.
There’s no telling where Food Delivery will go, but we can see clearly that the service-as-delivery is a growing part of the business ecosystem that should be considered.
The bigger questions are – will this impact infrastructure concerns, such as growing traffic problems and other related bottlenecks? New York City (NYC) is a great example. Since the deregulation of the Taxi business NYC streets have been clogged. One advantage of a regulated Taxi system is NYC could literally control the amount of cars on the road. Having a huge $50 entry ticket to bring a car into the city isn’t enough. They have put up roadblocks and rerouted traffic but it remains to be a big mess. So it’s not necessarily that delivery means less traffic. As we have seen with Uber (UBER) in the case of NYC it can create unforeseen bottlenecks.
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