May 17, 2020

Will virtual kitchens deliver?

Digital Transformation
Food & Drink
Harry Menear
4 min
The Virtual Kitchen company just revealed that it raised $17mn in venture capital funding and exited its stealthy early growth stage, ready to take on a steadily growing pond already full f some very big fish. 
Today, another group of ex-Uber executives revealed to the world their plans to get into the virtual kitchen game. Uber co-founder Travis Kalanick has b...

Today, another group of ex-Uber executives revealed to the world their plans to get into the virtual kitchen game. Uber co-founder Travis Kalanick has been running his own delivery-only startup Cloud Kitchen since he left the ride-hailing giant back in 2017, receiving $400mn in funding from the Saudi Royal Wealth fund earlier in the year.

Following behind Kalanick - and Uber itself, which also dipped its toes into the virtual kitchen pond this year - this latest crop of ride-sharing veterans are entering a crowded and cutthroat market. The Virtual Kitchen company just revealed that it raised $17mn in venture capital funding and exited its stealthy early growth stage, ready to take on a steadily growing pond already full f some very big fish. 

First of all, what is a virtual kitchen? 

Running a restaurant is expensive. Especially if you have to, you know, run an actual restaurant. Rent costs, staffing, maintenance - it adds up. In fact, across pretty much every industry, the idea that every company is a totally self-sufficient entity that does everything itself has been dead for at least a decade. Companies outsource their clouds, their maintenance, their cybersecurity, marketing, HR, etc. to companies with specialised capabilities that mean they can meet these needs more easily as a service than their clients can by starting from scratch. Now, it seems odd, but apply that idea to a restaurant. 

From outside, Frato’s Pizza, located in Schaumburg, Illinois, looks exactly like your average mom and pop pizza joint. Step inside, however, and reporters from USA Today found the business is cooking the food for four other restaurants that only exist on the internet. 

“There is, of course, the gourmet pizza that patrons have come to expect from Frato’s when they walk through the door. But there are also spicy chicken gyros for Halal Kitchen, barbecue chicken tenders for Tenderlicious, salmon grilled cheese for Cheesy Deliciousness and Butterfinger milkshakes for Heavenly Shakes – all of which can only be ordered through online sites Grubhub, DoorDash and UberEats.” 

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Attracted by lower real estate costs (for tax purposes, CloudKitchen is a real estate company, not a catering business), more efficient labour and lower upfront costs to setting up, entrepreneurs are betting big that on-demand delivery sites will create a new restaurant-as-a-service economy. 

There are virtual kitchens - where more than one restaurant is run out of an existing business - and ghost kitchens - places with no street presence that can only be ordered from online. 

The online food delivery market is worth $26.8bn in the US alone, and is the fastest growing segment of the restaurant sector, with a CAGR of around 20%. 

It makes sense, then, for anyone and everyone with a spare garage on the edge of town to throw in some fryers and a grill and watch the money pour in, right? 

Maybe. 

Let’s meet the Virtual Kitchen Company. Founded by Ken Chong, ex head of Uber’s marketplace product team; Matthew Sawchuk, who used to work at Uber Eats; and catering entrepreneur and chef Andro Radonich; the Virtual Kitchen Company’s core conceit is that it uses data analytics to identify the best properties to lease, and provides a sophisticated back end to the restaurant brands it partners with. 

“A restaurant brand can go from one location to twenty locations doing delivery only with minimal effort or upfront cost,” Chong, the CEO, said in an interview with VentureBeat. “We use data to find and lease the best delivery locations, and turn it into a turnkey offering in which restaurants can expand their food delivery business.” 

Whether this means the restaurant is dead remains to be seen and, frankly, isn’t all that likely (despite the growth of the delivery market, restaurant attendance figures have remained pretty much flat over the past few years). It however, interesting to see a new market taking shape that harnesses data, AI-powered analytics and the experience-as-a-service model to bring a dramatically expanded array of choice to customers in an economically sustainable way. 

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Aug 1, 2021

Who Will Be the Next Tech Giant to Back Bitcoin?

Bitcoin
Apple
Microsoft
Amazon
Simon Chandler, Writer at Cryp...
4 min
Simon Chandler from Cryptovantage discusses Bitcoin in the technology sector and discusses rumours around which tech giant will be next to buy it,

PayPal was the first truly major tech giant to throw its weight behind Bitcoin, unveiling a cryptocurrency buying-and-selling service in October. Next was Tesla, which shocked onlookers in February by announcing the purchase of $1.5 billion in bitcoin, as well as plans to accept the cryptocurrency as payment.

 Since then, things have calmed down as far as Big Tech and Bitcoin are concerned (although a number of banks have rolled out cryptocurrency investment services for their wealthier clients). This raises the question: when will another significant tech firm take the plunge and back bitcoin?

This is a difficult question to answer, if only because the bitcoin market is in something of a funk right now. At the same time, regulators worldwide are looking to restrict crypto in the name of curbing money laundering and other illicit activities. Nonetheless, rumours continue to swirl through the sector that a few other important names in the tech industry may be on the cusp of embracing bitcoin, with Apple being the most notable.

Is Apple Buying Bitcoin?

If you tend to spend any amount of time on Crypto Twitter, you may be aware of rumours to the effect that Apple has recently bought something in the region of $2.5 billion in bitcoin.

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Such rumours were almost certainly a desperate attempt to boost the price of bitcoin. And given that the market didn’t witness a sudden, dramatic rise (but rather a steep loss), it seems pretty clear that Apple didn’t buy a substantial quantity of bitcoin in the past few weeks or so.

That said, there remains a good chance that Apple will enter the cryptocurrency sector at some point, even if it won’t be adventurous enough to buy crypto for itself. Back in May, it placed a job ad for a business development manager for “alternative payments.” 

Such a manager would be tasked with cultivating partnerships with “strategic alternative payment providers,” implying that Apple may be weighing up the possibility of launching its own cryptocurrency-purchasing service (à la PayPal) via Apple Pay.

Needless to say, it would be huge for Bitcoin and cryptocurrency if the Cupertino company were to follow through with this.

Microsoft, Amazon, Facebook?

Rumours have also revolved around possible bitcoin interest from Microsoft, Amazon and Facebook, although there’s a little less substance to most of these rumours.

Back in October former Goldman Sachs hedge fund manager Raoul Pal predicted that Microsoft (along with Apple) would buy bitcoin in five years. Unfortunately, a CNN interview with Microsoft’s Brad Smith in February (shortly after Tesla’s bitcoin purchase) revealed that the company had no plans to purchase crypto, although Smith vaguely hinted that it might one day change its collective mind.

More interestingly, Amazon purchased three cryptocurrency-related domain names back in 2017: amazonethereum.com, amazoncryptocurrency.com, amazoncryptocurrencies.com. Nothing has been heard since then, while a job listing from February of this year revealed that the retail giant may be planning to launch its very own digital currency.

Facebook is another tech firm with plans for its own digital currency (Diem, formerly known as Libra). As for whether it’s likely to turn to bitcoin, a few relatively respected figures within the cryptocurrency industry (e.g. Alistair Milne) did spread rumours in April that the social media company would disclose bitcoin holdings on its Q1 financial statement. This didn’t happen, although Mark Zuckerberg did reveal in May that one of his pet goats is called “Bitcoin,” fuelling further speculation as to his and his firm’s interest in the cryptocurrency.

Risks and Rewards of Cryptocurrency

Again, it’s arguable that some or most of the rumours are generated largely to pump crypto prices. But if bitcoin and other cryptocurrencies do continue to appreciate in value and attract more adoption, it will become increasingly harder for large tech companies to ignore them.

But at the moment, it’s likely that most major tech firms will shy away from actually buying bitcoin, if only because it remains highly volatile and unpredictable as an asset. And as we saw with Tesla, buying a massive chunk of the cryptocurrency effectively turns you into a hedge fund overnight, something which can adversely affect your stock price if bitcoin goes down.

 Even so, there’s clearly a considerable amount of money tied up in the cryptocurrency market. And with numbers of holders growing every year, it’s only a matter of time before other big tech firms attempt to siphon off some of this value for themselves.

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