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SpoonRocket shuts down

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Re: SpoonRocket shuts down

#101

Post by mathattack »

tptacek wrote: post #2

The company had actually reached contribution margin positive — it was selling meals for more than it cost to cook them. But due to other costs and the frosty fundraising climate, wasn’t able to get the money it needed to continue operating. Am I reading this correctly, and the business metric this company managed to achieve is simply "selling food above cost", like every deli and diner in the country does? Or is the…

Yes - I assume there is some cooking labor and other items (electricity) factored in. So yes, they're on par with the deli. :-)

With early stage companies, many haven't even gotten to that point though. The first step is "Will someone pay for this?" Then the second is "Can we make money on each unit they sell." True profitability is "Can we sell enough units to cover our fixed costs"

What makes this interesting is the norm for a while was to fund #1. (And good ideas are still funded that way) #2 used to be the bar to get further funding, but now it looks like #3.

Re: SpoonRocket shuts down

#102

Post by pbarnes_1 »

azinman2 wrote: post #58
autotune wrote: post #54

Earlier quoted context omitted.

Sprig (pricey + limited selection), Bento (very limited selection), HealthyOut (super generic and not enough relavent results), Thistle (very limited selection).

Sprig's food is way better than spoonrocket, so at least their cost is justified. For SF, it's pretty normal pricing. Bento is meh, but munchery probably is the highest quality (and most expensive) of all. Hadn't heard of healthyout or thistle until now, but they don't seem to be on-demand food services?

Munchery has gone down hill.

Calling meals with 70g of fat "healthy" is a bit of a stretch.

They used to be more focused on good quality/fresh/healthy.

The menu is now the same every day and it's basically a restaurant delivery service where they pre-make the food in large quantities.

Presumably this is more sustainable for them money wise, but I used to order Munchery for dinner every single day (when open) for years, and now I do it maybe 1-2 times a week, begrudgingly.

Hopefully just a phase. They tried this same-every-day thing last year and lost a tonne of users.

Re: SpoonRocket shuts down

#104

Post by Fomite »

tptacek wrote: post #62
pc86 wrote: post #61

Earlier quoted context omitted.

You could absolutely get investors. Just not any VCs.

In fairness, that's because VCs can't really make money investing in companies like those.

Chipotle, even after getting hammered in the recent past, has a market cap of 15.5 billion dollars. It's rare, but it's possible.

Re: SpoonRocket shuts down

#105

Post by Fomite »

pbreit wrote: post #93
tikhonj wrote: post #75

Earlier quoted context omitted.

Food service has a terrifying reputation as a business sector—restaurants routinely go out of business in their first year. Deep funding would create a buffer and help it grow, of course, but I still wouldn't want to bet on a restaurant.

Indie restaurants, maybe. But for franchises, the opposite.

Depends on the franchise. Subway, for example, is apparently an absolutely brutal franchise to run, whereas Chik-fil-a is super careful about who they give them to.

Re: SpoonRocket shuts down

#106

Post by calbear81 »

shrikant wrote: post #74
calbear81 wrote: post #43

Earlier quoted context omitted.

I can see how these businesses rationalize short term losses with a bet on a long term play that consists of one of the following outcomes: 1) Monopoly - If they can get enough lock-in on customers, they can outlast their competitors and then eventually move the prices up without losing customers (since there would be few viable alternatives). 2) Economies of Scale - In many businesses, the marginal cost does go down…

Are there any examples of (1) actually ever happening in practice?

I believe this is Uber's strategy, no? Basically sell at a loss and force your competitors to follow suite (and lose money even faster) which in turn drives them out of business leaving only Uber as the dominant player in a market.

Re: SpoonRocket shuts down

#107

Post by bdcravens »

jedrek wrote: post #67
tptacek wrote: post #62

Earlier quoted context omitted.

In fairness, that's because VCs can't really make money investing in companies like those.

In fairness, that's because VC culture is a parasite on normal society.

Are they really? The high failure, high return model has allowed many programmers (and others within VC-backed companies) to have employment that wouldn't otherwise exist. I'm happy to be outside of SV, doing well in a 100% bootstrapped company, but I think VC culture has had the opposite effect of a parasite (or at worst, I'd call it a symbiote)

Re: SpoonRocket shuts down

#108

Post by kevinflo »

anexprogrammer wrote: post #22
tptacek wrote: post #2

The company had actually reached contribution margin positive — it was selling meals for more than it cost to cook them. But due to other costs and the frosty fundraising climate, wasn’t able to get the money it needed to continue operating. Am I reading this correctly, and the business metric this company managed to achieve is simply "selling food above cost", like every deli and diner in the country does? Or is the…

Ignoring the app, and disruptive gimmick, I have to wonder what your average diner could have achieved with $13.5m in funding. You could build a small, well branded chain. Probably selling food above cost to boot! :)

Yes, but on a serious note the difference in potential upside between investing in this vs. a traditional restaurant chain is like that between investing in Amazon vs. a traditional book store chain. If you can find a way for the business model to work it is operating in a way where the inventory and distribution are handled in fundamentally different ways than in the past.

Re: SpoonRocket shuts down

#110

Post by Fomite »

tptacek wrote: post #2

The company had actually reached contribution margin positive — it was selling meals for more than it cost to cook them. But due to other costs and the frosty fundraising climate, wasn’t able to get the money it needed to continue operating. Am I reading this correctly, and the business metric this company managed to achieve is simply "selling food above cost", like every deli and diner in the country does? Or is the…

Those are "lifestyle businesses", this is a "startup". They're different, because reasons...
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