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SpoonRocket shuts down

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Re: SpoonRocket shuts down

#41

Post by azinman2 »

imperialdrive wrote: post #26
mbesto wrote: post #8

Well, this sucks, I've been really enjoying my VC-subsidized services.

Dude, tell me about it, I was a VIP with them, and ordered almost every single day due to a busy schedule, they would show up within minutes... the meatloaf stack, the enchiladas, the pasta, I always enjoyed it except for a couple times in all. RIP I will miss you Spoonrocket! Now that I think about it more, there was something odd about how most times I would order, the app would say 30-60 minutes which was discoura…

Their food was largely gross and very unhealthy. Mac and cheese daily, often with ranch and/or bacon?! And that Korean dish?

I don't know where all they were located, but it felt more appropriate for dorm delivery than SF. Where's the kale man?!

Re: SpoonRocket shuts down

#42

Post by azinman2 »

autotune wrote: post #3

SpoonRocket actually had the most decent meals I'd seen out of any of the healthy food delivery apps and the most options. Just discovered it a week or two ago and this news is incredibly dissapointing.

They had essentially the same stuff everyday, all of it super heavy and NOT healthy. What other competitors are you even referencing?

Re: SpoonRocket shuts down

#43

Post by calbear81 »

vkou wrote: post #32
calbear81 wrote: post #25

Earlier quoted context omitted.

It was like the pizza place down the street if the pizza place made all their pizzas in the morning, put the into a truck and drove it around all day until they were delivered. Enjoy the pizza!

Well... That's a viable business model, if you want to run a family pizza shop, and have a 50% chance of going out of business in two years. I don't understand how anyone could think it has the margins to pay engineers, founders, and VCs.

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 once you scale up significantly. They probably expected to cut the cost of food production significantly with volume pricing on raw materials and perhaps more automation of the cooking processes.

I think all of these services understand that this is a low margin business so you have to make up for it in high volume and short term losses are acceptable if you will win out eventually and increase the margins.

Re: SpoonRocket shuts down

#44

Post by raverbashing »

morgante wrote: post #39
geofft wrote: post #13

Earlier quoted context omitted.

It makes a lot more sense if you don't make dinner, which I think is pretty common. (The ROI on that life decision is also ridiculously low.)

> The ROI on that life decision is also ridiculously low. How are you figuring the ROI? If you're not factoring in opportunity cost, then you're not even considering it as an investment. I make well over $100/hr doing contracting work. I can get a good meal delivered for $15. I highly doubt I could cook a decent meal in 9 minutes, and that's assuming ingredients and training are free (time and cost-wise).

$100 pre-tax right?

Also, it may take 10 min but it won't require 10 minutes of unbound attention

On a personal note cooking dinner is just relaxing, it's good to get off the screen sometimes

Re: SpoonRocket shuts down

#45

Post by azinman2 »

joshrotenberg wrote: post #28
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…

> - Lastly, what I'm hoping for is the "Airbnb" of food, where regular people could cook meals and sell them to neighbors on a marketplace with reviews, pictures, etc This is already happening here: https://josephine.com/

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

Re: SpoonRocket shuts down

#47

Post by eldavido »

untog wrote: post #9
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…

"contribution margin positive" ought to win a creative writing award.

Actually, this is standard finance terminology for "if I add X revenue to the business, how much flows to free cash flow" - what we can reinvest/pay back to shareholders.

I, for one, am surprised they shut it down if they in fact had achieved positive contribution margin. Probably just couldn't tell a good enough story for how they'd grow, and demonstrate good upside, for new money in, given all the preferences/dilution/creditors already in their capital stack.

Re: SpoonRocket shuts down

#48

Post by tyre »

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…

It appears they were still at the "do things that don't scale" stage. Every company goes through this, even a diner. Why it took $13+ million to get there, though, is the real question.

Some companies (e.g. in biotech, autonomous vehicles) may take significant upfront costs, but anything requiring massive scale to be profitable means the margins are going to be razor thin (see: Amazon vs. Jet.com, freight shipping, payment processors).

Re: SpoonRocket shuts down

#49

Post by vkou »

calbear81 wrote: post #43
vkou wrote: post #32

Earlier quoted context omitted.

Well... That's a viable business model, if you want to run a family pizza shop, and have a 50% chance of going out of business in two years. I don't understand how anyone could think it has the margins to pay engineers, founders, and VCs.

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…

I have a hard time seeing how you can get a monopoly on restaurant food/fast food. There are few barriers to small-scale competition, and it's very easy for your competitors to differentiate their offerings.

If McDonalds were to buy up every competing fast-food franchise in an area overnight, it'd be just a matter of time before somebody would open a Kurger Bing across the street.

Speaking of economies of scale, those are the kinds of economies of scale you need to compete with to make it big. You need to own half of your supply chain - which seems to be an anathema to VC-funded businesses.

A better question to ask is: Why aren't established food franchises, who own their logistics networks, and can compete on price, not interested in getting into this game? Perhaps they are all missing the forest through the trees - or perhaps food delivery-as-your-core-business is a race to unprofitability.

Now, if you do think that they are missing the forest through the trees, why not have your startup aim for a partnership with Subway, where they handle the food, and you handle the distribution?

Re: SpoonRocket shuts down

#50

Post by ams6110 »

azinman2 wrote: post #45
joshrotenberg wrote: post #28

Earlier quoted context omitted.

> - Lastly, what I'm hoping for is the "Airbnb" of food, where regular people could cook meals and sell them to neighbors on a marketplace with reviews, pictures, etc This is already happening here: https://josephine.com/

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?
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