You don’t need Venture Capital money, to start a Meal Kit Service
Wait, What? I don’t need VC money to start my own meal kit brand? Are you crazy? How would I have the huge warehouse, mammoth inventory, automatic packing machines, development team and one thousand employees? Leave apart all of this, how would I do marketing for my brand? I’ve heard that meal kit industry have the highest consumer attrition?
Above described thoughts must have ran through your "business brain" while you read the title of this article. You aren’t alone! You’re correct! Your thoughts are valid. Meal kit has been a challenging industry whose current growth can be attributed to the millions of "VC dollars".
Let me tell you my story! I’m Rishi, founder of Dailykit.org. I was 23, Just graduated from college, when I had the idea of meal kit in my young mind. Back then, we used "Recipe Kit" instead of meal-kit. I had the idea come to me organically and in fact for 3 months since I was in business, I didn’t knew there was any meal kit company (We were googling recipe kit).
So, with all the young energy, me and my friend, went head first into this business. I have been very fortunate that my parents were able to help me with my entrepreneurial ambitions. During the initial days, we had this Utopian version of the product that would satisfy each and every type of consumer in all of their need state. We’d identified that the keys for success in meal kit business were "Convenience, Customisation and Choice". I believe, part of the reason, we were starkly different from any other venture in this industry, was because we didn’t knew any other company and were able to think it through the first principles.
Anyways, moving forward, we’d set up a small team doing the R&D for recipes while we envisioned the operations. Our expectations from our product were to deliver it within 60 minutes, to offer ingredient level customisation (think of subway), and choice of dishes which would dwarf biggest of restaurant menus. We realised that to master our vision, we’d require an excellent technology that would streamline all of our challenges.
Fast forward, 2 years, and $ 150,000 of our parent’s hard earned money, we were able to achieve 200-250 orders a day delivering under 60 minutes. Exemplary, isn’t it? In fact, we had the world’s first meal kit store where any person could come and pick up a freshly packed meal kit under 20 minutes. So, what happened with that? Well, we closed that unit.
The reason? It wasn’t sustainable! Though, our kitchen was producing enough revenue to give us a good profit, our technology department was the sink all of this profit. Even after generating such revenue, we were burning cash. We’d contacted VCs, in hopes to raise funds and jump start our growth but to no avail. At that point, we realized that our problem wasn’t inability to raise funds rather a bad business model. Our technology department was building a technology that could support countless number of meal kit brands while our kitchen was producing revenue for one brand.
Well, this is a story that would be synonymous to virtually every meal kit company founder. Chef’d, closed down because they were unable to raise funds. In my recent interaction with a lady from Texas, who wanted to start a meal kit brand for kid friendly recipes, she shared how instead of focusing upon the business, she had to spend her energy towards raising funds.
Are we all wrong? Why weren’t we focusing on business? Because, right now, to provide the user experience that has retention, requires resources which are difficult to bootstrap, and that’s the truth. So, how come the situation has changed from then to now? Why wouldn’t a meal kit brand require VC money to realize their vision? Because, what you require to run a meal kit brand, you probably have it.
When we discuss technology, we aren’t talking about a simple e-commerce or food ordering website that you can build over shopify or magento. We are talking about technology that helps your operations become idiot proof, flexible and manageable by a single person.
Let’s say for a moment, you were starting a restaurant. Would you hire your own developers to build the tools of business? The dashboard with real time ordering system? the website? the inventory management and warehousing tools? No, Right? You would probably look for a software company that has the tools you require or can probably tweak their existing tech to your needs. So, in all essence, you wouldn’t go to a VC with a deck, mentioning 30% expenditure in technology and operations team. Because for restaurant industry, you have companies like upserve, limetray and 100s others.
Well, after closing Groctaurant, I had the same vision. But this software company is meant for meal kit industry. It is for all those founders who want to start a meal kit brand because they love the concept and know that it is the future of cooking. This company is called Daily Kit. And, our aim at Dailykit, is to empower, existing food businesses, start their own meal kit brand, without going knocking on VC doors who won’t listen.
How much does it cost with DailyKit? Well, there are all types of answer but to feed your frenzy, let me say it explicitly; Dailykit is an open-source platform. Well, yes, we would need to earn revenue too, for which we offer enterprise solutions and some paid features but it wouldn’t cost you more than $5000 - 10000.
Meal kit industry is currently termed as competition to existing food businesses whereas in our argument, we envision meal kit to fill the gaps and make existing businesses more sustainable. That is why, if you’re a restaurant owner or an independent grocery store, you wouldn’t have to break a bank to start meal kit business.
Let’s take a closer look on how you can integrate meal-kit in your existing restaurant business
What do you need???
- Commercial Kitchen and Appliances
The current state of your kitchen is fully equipped to handle and complete the additional demand of the meal kits. The same appliances, including the refrigerators, ovens, stove and etc. can be used to prepare the ingredients for the meal kits. Your kitchen will be using the same ingredients for the meal kit that will go into the dishes for cooked food.
- Current inventory
While operating your kitchen you would be maintaining an inventory of vegetables and sauces as well as all other raw materials that is used to preparing the food for the customers coming to your restaurant. Whether it is the different dressings or the different types of spices that are included in the kit, all the ingredients for the kit is right inside your kitchen. Your stock of fresh vegetables used for the restaurant will be used to prepare the meal kit.
Restaurants in the US waste about 43 billion pounds of food every year. In a $100 billion dollar industry, 43 pounds of food wasted for every $100 spent. Besides the mammoth wastage, this wastage adds to the cost of the business operations. By providing meal kits you will be optimising your own inventory, thereby increasing your total sales without spending additional on extra inventory.
- Light Packaging
The kits will be sealed and delivered to the new clients straight from your kitchen. These foodies will be from around the city and will be cooking the meal once they receive your kit. The process of delivery will be within minutes of the order being placed, you will have to pack in the same manner as a take-away or home-delivery order. The packing will be easy to handle both at the time of packing and at the time of receiving the meal kit.
You can outsource technology from DailyKit, your partner in profit, for guided user experience. For a F&B business, the technology need not be developed independently, rather it is advisable to license the technology available in the market and customise it your needs. This technology will lead your customers to continually place orders from your kitchen for the perfect blend of your recipe, ingredients, packaging and delivery.
What you don’t need??
- Large Physical space
Physical space is probably the most expensive component in any business. However, since the food will be finally cooked and eaten in the kitchen of the customer, you will not need any additional space neither in your kitchen nor in the dining area of your restaurant. You can accommodate the meal kit customers without incurring expenses on the physical space.
- Change in the kitchen strength
While running your business, you must have witnessed that the entire kitchen staff is not fully occupied the entire day. Other than the lunch and the dinner hours, they must be lingering around, looking for a way to entertain themselves. You will be utilising their time better, and getting more productivity.
You will be able to cater to the a new set of consumers, without incurring any acquisition cost. So you will not need to invest any amount in your existing restaurant for such operations. Thus, without any extra infrastructure or any new appliance, you will be able to serve food to more number of customers.
So an existing restaurant owner can easily increase their sales by selling meal-kits. All you need to is pack the ingredients of the dish in one place, and let the customer do rest. For you, it will be as good as preparing the ingredients before it cooked in the restaurant. The best part about curating the kit, is that you don’t have to worry about the financials or the cost to sell this kit, since everything you need is already there in your kitchen.
By Making Meal-Kits, What do you get?
- The biggest advantage of providing meal-kits is that you are gaining access to new customers
- Achieve higher sales with many more happy customers
- You will be able to manage your inventory and stock better
- You will be able to optimally utilise the time of the staff employed at your restaurant
Daily Kit technology will bridge all the gaps and will help you provide the meal kit without making any changes to your existing kitchen, by providing the technology needed. You will be able to process the meal kit as soon as you have receive the order. Your restaurant will be catering to more number of customers without making any change.
"So partner with Daily Kit, don’t waste time looking for VC money. At Daily Kit, our slogan is "bring us today, our daily kit". So, my question to you is, Will you?"