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JustKitchen is using cloud kitchens to create the next generation of restaurant franchising

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JustKitchen operates cloud kitchens, but the company goes beyond providing cooking facilities for delivery meals. Instead, it sees food as a content play, with recipes and branding instead of music or shows as the content, and wants to create the next iteration of food franchises. JustKitchen currently operates its “hub and spoke” model in Taiwan, with plans to expand four other Asian markets, including Hong Kong and Singapore, and the United States this year.

Launched last year, JustKitchen currently offers 14 brands in Taiwan, including Smith & Wollensky and TGI Fridays. Ingredients are first prepped in a “hub” kitchen, before being sent to smaller “spokes” for final assembly and pickup by delivery partners, including Uber Eats and FoodPanda. To reduce operational costs, spokes are spread throughout cities for quicker deliveries and the brands each prepares is based on what is ordered most frequently in the area.

In addition to licensing deals, JustKitchen also develops its own brands and performs research and development for its partners. To enable that, chief operating officer Kenneth Wu told TechCrunch that JustKitchen is moving to a more decentralized model, which means its hub kitchens will be used primarily for R&D, and production at some of its spoke kitchens will be outsourced to other food vendors and manufacturers. The company’s long-term plan is to license spoke operation to franchisees, while providing order management software and content (i.e. recipes, packaging and branding) to maintain consistent quality.

Demand for meal and grocery deliveries increased dramatically during the COVID-19 pandemic. In the United States, this means food deliveries made up about 13% of the restaurant market in 2020, compared to the 9% forecast before the pandemic, according to research firm Statista, and may rise to 21% by 2025.

But on-demand food delivery businesses are notoriously expensive to operate, with low margins despite markups and fees. By centralizing food preparation and pickup, cloud kitchens (also called ghost kitchens or dark kitchens) are supposed to increase profitability while ensuring standardized quality. Not surprisingly, companies in the space have received significant attention, including former Uber chief executive officer Travis Kalanick’s CloudKitchens, Kitchen United and REEF, which recently raised $1 billion led by SoftBank.

Wu, whose food delivery startup Milk and Eggs was acquired by GrubHub in 2019, said one of the main ways JustKitchen differentiates is by focusing on operations and content in addition to kitchen infrastructure. Before partnering with restaurants and other brands, JustKitchen meets with them to design a menu specifically for takeout and delivery. Once a menu is launched, it is produced by JustKitchen instead of the brands, who are paid royalties. For restaurants that operate only one brick-and-mortar location, this gives them an opportunity to expand into multiple neighborhoods and cities (or countries, when JustKitchen begins its international expansion) simultaneously, a new take on the franchising model for the on-demand delivery era.

One of JustKitchen's delivery meals, with roast chicken and vegetables

One of JustKitchen’s delivery meals

Each spoke kitchen puts the final touches on meal before handing them to delivery partners. Spoke kitchens are smaller than hubs, closer to customers, and the goal is to have a high revenue to square footage ratio.

“The thesis in general is how do you get economies of scale or a large volume at the hub, or the central kitchen where you’re making it, and then send it out deep into the community from the spokes, where they can do a short last-mile delivery,” said Wu.

JustKitchen says it can cut industry standard delivery times by half, and that its restaurant partners have seen 40% month on month growth. It also makes it easier for delivery providers like Uber Eats to stack orders, which means having a driver pick up three or four orders at a time for separate addresses. This reduces costs, but is usually only possible at high-volume restaurants, like fast food chain locations. Since JustKitchen offers several brands in one spoke, this gives delivery platforms more opportunities to stack orders from different brands.

In addition to partnerships, JustKitchen also develops its own food brands, using data analytics from several sources to predict demand. The first source is its own platform, since customers can order directly from Just Kitchen. It also gets high-level data from delivery partners that lets them see food preferences and cart sizes in different regions, and uses general demographic data from governments and third-party providers with information about population density, age groups, average income and spending. This allows it to plan what brands to launch in different locations and during different times of the day, since JustKitchen offers breakfast, lunch and dinner.

JustKitchen is incorporated in Canada, but launched in Taiwan first because of its population density and food delivery’s popularity. Before the COVID-19 pandemic, food delivery penetration in the U.S. and Europe was below 20%, but in Taiwan, it was already around 30% to 40%, Wu said. The new demand for food delivery in the U.S. “is part of the new norm and we believe that is not going away,” he added. JustKitchen is preparing to launch in Seattle and several Californian cities, where it already has partners and kitchen infrastructure.

“Our goal is to focus on software and content, and give franchisees operations so they have a turnkey franchise to launch immediately,” said Wu. “We have the content and they can pick whatever they want. They have software to integrate, recipes and we do the food manufacturing and sourcing to control quality, and ultimately they will operate the single location.”

Lyron Foster is a Hawaii based African American Musician, Author, Actor, Blogger, Filmmaker, Philanthropist and Multinational Serial Tech Entrepreneur.

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Lime unveils new ebike as part of $50 million investment to expand to more 25 cities

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Lime said Monday it has allocated $50 million towards its bike-share operation, an investment that has been used to develop a new ebike and will fund its expansion this year to another 25 cities in North America, Europe, and Australia and New Zealand. 

If the company hits its goal, Lime’s bike-share service will be operational in 50 cities globally by the end of 2021.

The latest generation e-bike, known internally as 6.0, has a swappable battery that is interchangeable with Lime’s newest scooter. Additional upgrades to the e-bike include increased motor power, a phone holder, a new handlebar display, an electric lock that replaces the former generation’s cable lock and an automatic two-speed transmission. The new bikes are expected to launch and scale this summer. 

The hardware upgrade builds off of the 5.8, a bike developed by Jump that was supposed to be deployed in 2020. That never happened at scale because Uber, which owned Jump, offloaded the unit to Lime as part of a complex $170 million investment round announced in May.

“Jump made great hardware,” Lime President Joe Kraus said in a recent interview. “And we made some further improvements on top with the new bike.”

The hardware upgrades and expansion were funded from its own operational funds, not new financing from outside investors, Kraus said. The funding was possible as a result of Lime achieving its first full quarter of profitability in 2020, according to the company.

“We have figured out how to be profitable and we are funding this,” Kraus said.

Lime not only added a new motor to the bike, it moved its location in an aim to make it easier to handle at low speeds and enough power to climb hills, Kraus said. The swappable battery was perhaps its most important upgrade directly tied to its drive towards profitability, Kraus added.

“When our operations teams is roaming around the city, they take can care of bikes and the scooter fleet, which allows us to both operate profitably and continue to have affordable pricing,” he added.

Lime’s investment in its ebike operation comes a month after it announced plans to add electric mopeds to its micromobility platform as the startup aims to own the spectrum of inner city travel from jaunts to the corner store to longer distance trips up to five miles. Lime is launching the effort by deploying 600 electric mopeds on its platform this spring in Washington D.C. The company is also working with officials to pilot the mopeds in Paris. Eventually, the mopeds will be offered in a “handful of cities” over the next several months.

“This idea of how to service more trips five miles within a city is part of why we continue to do multi modality,” Kraus said. “When we add a new modality like bikes into a scooter city, or when we add scooters to a bike city both modalities go up in usage.”

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Istanbul’s Dream Games snaps up $50M and launches its first game, the puzzle-based Royal Match

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On the back of Zynga acquiring Turkey’s Peak Games for $1.8 billion last year and then following it up with another gaming acquisition in the country, Turkey has been making a name for itself as a hub for mobile gaming startups, and specifically those building casual puzzle games, the wildly popular and very sticky format that takes players through successive graphic challenges that test their logic, memory and ability to think under time pressure.

Today, one of the more promising of those startups, Istanbul-based, Peak alum-founded Dream Games, is announcing the GA launch of its first title, Royal Match (on both iOS and Android), along with $50 million in funding to double down on the opportunity ahead — the largest Series A raised by a startup in Turkey to date.

While Dream Games will focus for the moment on building out the audience for puzzle games with more innovative ideas, it also has its sights set on a bigger goal.

“We’re building this as an entertainment company,” CEO Soner Aydemir said in an interview, where he described Pixar as a key inspiration not just for size but for quality in its category. “What they did for animated movies, we want to do for mobile gaming. We are focusing on casual puzzle games first because everyone plays these, but we will also move forward with other genres. We want to be a huge interactive entertainment company that builds high quality games.”

The Series A is being led by Index Ventures, with participation also from Balderton Capital and Makers Fund. The latter two backed Dream Games previously, in a $7.5 million seed round in 2019. Index, meanwhile, is a notable VC to have on board: other successful gaming startups it has backed include Discord, King, Roblox and Supercell.

Interestingly, this is not Index’s first investment in a gaming startup founded by Peak Games alums: in December it led a $6 million round for another Istanbul mobile casual puzzle gaming startup founded by ex-Peak employees: Bigger Games.

Dream Games is not disclosing its valuation with this round.

Dream Games raising $57.5 million ahead of launching any games — or proving whether they get any traction — may sound like a risky bet, but there is some context to the story that sets up the odds in this startup’s favor.

The founding team all come from Peak Games, the Istanbul gaming startup that was so nice, Zynga bought it twice — first, in the form of one small acquisition of some specific titles, and then the whole company some years later.

CEO Soner Aydemir is Peak’s former director of product who built the company’s two biggest hits, Toy Blast and Toon Blast. Ikbal Namli and Hakan Saglam were Peak’s former engineering leads. And Peak product manager Eren Sengul and an ex-Peak 3D artist Serdar Yilmaz round out the rest of the founding team.

(Aydemir notes that the team left and formed Dream Games in 2019, about a year before Zynga’s full acquisition.)

The other indicators that Dream Games is on to something are its metrics for its limited test run of Royal Match.

Royal Match — in which players are tasked with helping King Robert restore his royal castle “to its former glory” by rebuilding it through a series of match-3 levels and obstacles, with new rooms, royal chambers and gardens making up the different levels of the game — was launched first as a limited test on iOS and Android in the U.K. and Canada in July leading up to this launch. In that time, Aydemir said it saw 1 million downloads and 200,000 daily average users.

“We think the numbers are very promising compared to previous experiences,” he said.

While Aydemir likes to describe Dream as an “entertainment” company, there is a lot of technology going into the product, from the graphics and the mechanics of the puzzles themselves through to the data science behind them.

“If you want to create an iconic game, you need to combine engineering, art and data science together with high quality user acquisition and a strong marketing approach,” he said.

And he believes that when you focus on these it will inevitably lead to quality, which means you no longer have to focus on simply trying to find a hit.

“We don’t like that approach,” he said. “We don’t want to find a hit.”

That was also the mix that Index also wanted to back.

“Building iconic titles requires a harmonious mix of craft, science and flawless execution,” said Index Ventures partner Stephane Kurgan, who led the round together with Index’s Sofia Dolfe. “The Dream Games team has perfected this mix over many years of working together, and has put it on full display in Royal Match. We could not be more excited to work with them in their journey to build the next global casual champion.”

While Dream Games’ long-term ambition is to build out interactive experiences around different audiences and genres, Aydemir said that casual games, and puzzles in particular, have proven to be a huge hit with consumers.

The strength of that trend has up to now meant that puzzle games generally have proven to have more staying power than other genres in mobile games, which have soared in popularity but also somewhat fizzled out.

“Every year we see the bigger market of users growing by 20%,” he said. “It will remain for decades.”

Interestingly, the focus on casual gaming startups in Turkey seems like a perfect storm of sorts. Undeniably, the proven success of Peak has brought in more punters, but it has also shown the way to developers: you can build a successful and global consumer tech startup out of Turkey, and perhaps puzzles — which focus on shapes — are especially good at transcending different language barriers.. Alongside that, Aydemir pointed out that the country is strong on engineers and developers but slim on opportunities with bigger tech companies.

“Mobile gaming is a younger industry, so that presents an opportunity,” he said.

Updated to correct that Index is not an investor in Rovio, and that the limited test had 200,000, not 200, DAUs.

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Qualcomm veteran to replace Alain Crozier as Microsoft Greater China boss

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Microsoft gets a new leader for its Greater China business. Yang Hou, a former executive at Qualcomm, will take over Alain Crozier as the chairman and chief executive officer for Microsoft Greater China Region, according to a company announcement released Monday.

More to come…

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