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SpoonRocket shuts down

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Re: SpoonRocket shuts down

#181

Post by cstejerean »

true_religion wrote: post #167
ruddct wrote: post #119

Earlier quoted context omitted.

Reminds me of recent Instacart news. http://www.bloomberg.com/news/articles/2016-03-11/instacart-... Here's the money quote: "[Instacart] said 40% of the company's volume is profitable - meaning most orders still lose money. It also said that it will be profitable globally by summer. However, its calculation for profitability doesn't include the cost of office space, the cost of acquiring shopper workers, or the sala…

At traditional restaurants and cafes, not every item on the menu is a profitable one. Often some items are actually loss-leaders, enticing you to come in more often, or to pair it with a more profitable item that makes up for its cost. Sometimes it is, even more, obvious that something is a 'loss leader'; such as at fancy dinners where they'll simply give you bread for free while you wait for your meal or bars where…

A loss leader is one thing, but imagine a restaurant that only sold 40% of their meals above cost, and the 40% that are above cost only have enough margin to cover the minimum wages owed to the waiters.

Re: SpoonRocket shuts down

#182

Post by BWStearns »

mikeash wrote: post #94
BWStearns wrote: post #85

Earlier quoted context omitted.

I think he was suggesting that when something falls apart it's always at the last minute for that something. Kind of like how you always find something in the last place you look. I guess it's kind of accurate since you wouldn't describe an early stage deal as having "fell through".

That doesn't make any sense. If the deal falls through in the middle of negotiations, you would never describe that as "at the last minute" even though it turned out to literally be the last minute for that particular deal. That phrase means "right before we would have completed the deal," not "right before we stopped."

Sorry, I wasn't intending to say it was correct, only that I think it's the only way to read what he wrote as internally consistent.

Re: SpoonRocket shuts down

#183

Post by Hydraulix989 »

azinman2 wrote: post #123
autotune wrote: post #80

Earlier quoted context omitted.

I'll have to try Munchery, looks like they have a pretty decent selection of healthy and tasty meals. My problem with Sprig beyond price point is much of the food doesn't seem appetizing enough for the price to be worth paying, not that I can't actually pay it. Thistle is more in the category of "healthy food delivery" than on-demand ordering, which is another downside, but I'd still say at least that one category ov…

Munchery has before so maybe it wasn't successful for them.

Munchery got old pretty quickly for us. I remember them having the same "questionable lasagne" entree on the menu four days in a row. Anything decent would sell out almost immediately.

Re: SpoonRocket shuts down

#184

Post by pinot »

ams6110 wrote: post #50
azinman2 wrote: post #45

Earlier quoted context omitted.

It's not legal to do so. You have to be a licensed commercial kitchen to do this stuff.

Just like you need to be a licensed hotel operator to rent out rooms?

Usurping city hotelier taxes is one thing, hitting up the state BOH and FDA and asking for forgiveness after not being permitted is another.

Re: SpoonRocket shuts down

#185

Post by makomk »

prawn wrote: post #139
pbarnes_1 wrote: post #102

Earlier quoted context omitted.

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 year…

IMO, these companies would be insane not to pre-make suitable food in large quantities (curries, etc) in order to achieve profitability at reasonable pricepoints.

Usually anyone who does that would pre-make a different selection of food each day to give people variety, though.

Re: SpoonRocket shuts down

#186

Post by creamyhorror »

yishanl wrote: post #90
willchen wrote: post #17

As someone who's ordered from spoon rocket dozens of times over the past two years, I'm definitely sad to see it go. A quick timeline (from what I can remember): - Initially started out in Berkeley / Emeryville area by a couple of Berkeley alumni who had previously launched a food delivery startup focused on midnight munchies (aka, unhealthy food for college-type students). Each meal was initially only $6, tasted qui…

We tried a variant of this with Mise very early on but we've since pivoted to a much more stable model with massively improved results & proper regulation. There are some highlights from what we learned trying "Airbnb for food." 1. Our target was not home chefs, but instead professional chefs. We worked in the industry for several months and identified how difficult being a chef. Lack of progression, opportunity, and…

Thanks for the enlightening view from the inside. Maybe you should submit it to HN as a blogpost and get more attention for Mise.

Re: SpoonRocket shuts down

#187

Post by ssharp »

patio11 wrote: post #122
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…

"Positive unit economics; couldn't cover engineering salaries, marketing, or G&A" is how I'd read that. This is notable because some of the on-demand companies are engaged in a bidding war out of perceived land-grab economics, either on the supply or demand side (or both), so they price the customer-side service or the supply-side cut in such a way that the company loses money on most or all orders. Think like: We'll…

That's the way I read it as well. They were selling food for more than it cost them make/buy it and deliver it, but not enough to cover all other expenses.

Under sane conditions, I'd presume this is the type of company that could get money, either through debt or equity. The business model works, it just needs scaled. However, that also assumes scaling the business does not also scale those other expenses at a ratio well below 1. If the ratio is closer to 1, it's a bit dubious to not count those towards the unit costs.

Maybe the Uber playbook shouldn't be used for every on-demand service or maybe it would be smart for on-demand services to offer a non-commodity product so their success is a lower bar than shooting the moon.

Re: SpoonRocket shuts down

#188

Post by jonnathanson »

S_A_P wrote: post #129

Why would a business like this get funding and ultimately be viewed differently than any other restaurant? It looks like the pizza delivery model to me, so why is the funding so much higher?(serious question)

Because there has been a mini-bubble in the "on-demand economy," a.k.a., delivery businesses. Investors are highly subject to groupthink and trend chasing. When one or more companies start to take off in the same space, a category is (theoretically) born. And then everyone wants exposure to the category.

Now, in the public markets, there's no problem jumping into a category; just buy some stock in X, Y, Z companies. But in the private market, if you didn't get in on X company's Series Y, you can't just buy in tomorrow to gain some exposure. So you invest in the next company with a similar concept (but perhaps in a different vertical).

All the while, nobody stops to think whether the newborn category they're chasing is even fundamentally viable, or if viable, whether it's nicely profitable at scale. Or whether it can bear so many entrants into the space.

Re: SpoonRocket shuts down

#189

Post by yekim »

ruddct wrote: post #119
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…

Reminds me of recent Instacart news. http://www.bloomberg.com/news/articles/2016-03-11/instacart-... Here's the money quote: "[Instacart] said 40% of the company's volume is profitable - meaning most orders still lose money. It also said that it will be profitable globally by summer. However, its calculation for profitability doesn't include the cost of office space, the cost of acquiring shopper workers, or the sala…

"Technology has a peculiar ability to light gigantic piles of money on fire."

Just wanted to say thanks for the laugh! It's not often than a comment on HN makes me laugh out loud. As in laughing with you, not at you...

Re: SpoonRocket shuts down

#190

Post by prawn »

makomk wrote: post #185
prawn wrote: post #139

Earlier quoted context omitted.

IMO, these companies would be insane not to pre-make suitable food in large quantities (curries, etc) in order to achieve profitability at reasonable pricepoints.

Usually anyone who does that would pre-make a different selection of food each day to give people variety, though.

Yes, for sure. But have a set suite of meals that they can make affordably, and rotate through those.
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