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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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Freemium isn’t a trend — it’s the future of SaaS

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As the COVID-19 lockdowns cascaded around the world last spring, companies large and small saw demand slow to a halt seemingly overnight. Enterprises weren’t comfortable making big, long-term commitments when they had no clue what the future would hold.

Innovative SaaS companies responded quickly by making their products available for free or at a steep discount to boost demand.

While Zoom gets all the attention, there were hundreds of free SaaS tools to help folks through the pandemic. Pluralsight ran a #FreeApril campaign, offering free access to its platform for all of April. Cloudflare made its Teams product free from March until September 1, 2020. GitHub went free for teams in April and slashed the price of its paid Team plan.

A selection of new free, free trial and low-priced offerings from leading SaaS companies. Image Credits: Kyle Poyar/OpenView.

The free products were aimed squarely at end users — whether it be a developer, individual marketer, sales rep or someone else at the edge of an organization. These end users were stuck at home during the pandemic, yet they desperately needed software to power their working lives.

End users prefer to do the vast majority of their research online before ever talking to a sales rep, making free products the ideal way to reach them.

End users prefer to do the vast majority of their research online before ever talking to a sales rep, making free products the ideal way to reach them. Many end users want to jump straight into a product, no hassle or credit card or budget approval required.

After they’ve set up an account and customized it for their workflow, end users have essentially already made a purchase decision with their time — all without ever feeling like they were in an active buying cycle.

An end user-focused free offering became an essential SaaS survival strategy in 2020.

But these free offerings didn’t go away as lockdowns loosened up. SaaS companies instead doubled down on freemium because they realized that doing so had a real and positive impact on their business. In doing so, they busted the outdated myths that have held 82% of SaaS companies back from offering their own free plan.

Myth: A free offering will cannibalize paying customers

GoDaddy is a digital behemoth, known for being a ’90s-era pioneer in web domains as well as for their controversial Super Bowl ads. The company has steadily diversified into business software, now generating roughly $700 million in ARR from its business applications segment and reaching millions of paying customers. There are very few businesses that would see greater potential revenue cannibalization from launching a free product than GoDaddy.

But GoDaddy didn’t let fear stop them from testing freemium when lockdowns set in. Freemium started out as a small-scale experiment in spring 2020 for the websites and marketing product. GoDaddy has since increased the experiment to 50% of U.S. website traffic, with plans to scale to 100% of U.S. traffic and open availability to other markets in 2021.

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Metafy adds $5.5M to its seed round as the market for games coaching grows

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This morning Metafy, a distributed startup building a marketplace to match gamers with instructors, announced that it has closed an additional $5.5 million to its $3.15 million seed round. Call it a seed-2, seed-extension or merely a baby Series A; Forerunner Ventures, DCM and Seven Seven Six led the round as a trio.

Metafy’s model is catching on with its market. According to its CEO Josh Fabian, the company has grown from incorporation to gross merchandise volume (GMV) of $76,000 in around nine months. That’s quick.

The startup is building in public, so we have its raw data to share. Via Fabian, here’s how Metafy has grown since its birth:

From the company. As a small tip, if you want the media to care about your startup’s growth rate, share like this!

When TechCrunch first caught wind of Metafy via prior seed investor M25, we presumed that it was a marketplace that was built to allow esports pros and other highly capable gamers teach esports-hopefuls get better at their chosen title. That’s not the case.

Don’t think of Metafy as a marketplace where you can hire a former professional League of Legends player to help improve your laning-phase AD carry mechanics. Though that might come in time. Today a full 0% of the company’s current GMV comes from esports titles. Instead, the company is pursuing games with strong niche followings, what Fabian described as “vibrant, loyal communities.” Like Super Smash Brothers, its leading game today in terms of GMV generated.

Why pursue those titles instead of the most competitive games? Metafy’s CEO explained that his startup has a particular take on its market — that it focuses on coaches as its core customer, over trainees. This allows the startup to focus on its mission of making coaching a full-time gig, or at least one that pays well enough to matter. By doing so, Metafy has cut its need for marketing spend, because the coaches that it onboards bring their own audience. This is where the company is targeting games with super-dedicated user bases, like Smash. They fit well into its build for coaches, onboard coaches, coaches bring their fans, GMV is generated model.

Metafy has big plans, which brings us back to its recent raise. Fabian told TechCrunch any game with a skill curve could wind up on Metafy. Think chess, poker or other games that can be played digitally. To build toward that future, Metafy decided to take on more capital so that it could grow its team.

So what does its $5.5 million unlock for the startup? Per its CEO, Metafy is currently a team of 18 with a monthly burn rate of around $80,000. He wants it to grow to 30 folks, with nearly all of its new hires going into its product org, broadly.

TechCrunch’s perspective is that gaming is not becoming mainstream, but that it has already done so. Building for the gaming world, then, makes good sense, as tools like Metafy won’t suffer from the same boom/bust cycles that can plague game developers. Especially as the startup becomes more diversified in its title base.

Normally we’d close by noting that we’ll get back in touch with the company in a few quarters to see how it’s getting on in growth terms. But because it’s sharing that data publicly, we’ll simply keep reading. More when we have a few months’ more data to chew on.

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Snap to launch a new Creator Marketplace this month, initially focused on Lens Creators

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Snap on Wednesday announced its plan to soon launch a Creator Marketplace, which will make it easier for businesses to find and partner with Snapchat creators, including Lens creators, AR creators and later, prominent Snapchat creators known as Snap Stars. At launch, the marketplace will focus on connecting brands and AR creators for AR ads. It will then expand to support all Snap Creators by 2022.

The company had previously helped connect its creator community with advertisers through its Snapchat Storytellers program, which first launched into pilot testing in 2018 — already a late arrival to the space. However, that program’s focus was similar to Facebook’s Brand Collabs Manager, as it focused on helping businesses find Snap creators who could produce video content.

Snap’s new marketplace, meanwhile, has a broader focus in terms of connecting all sorts of creators with the Snap advertising ecosystem. This includes Lens Creators, Developers and Partners, and then later, Snap’s popular creators with public profiles.

Snap says the Creator Marketplace will open to businesses later this month to help them partner with a select group of AR Creators in Snap’s Lens Network. These creators can help businesses build AR experiences without the need for extensive creative resources, which makes access to Snap’s AR ads more accessible to businesses, including smaller businesses without in-house developer talent.

Lens creators have already found opportunity working for businesses that want to grow their Snapchat presence — even allowing some creators to quit their day jobs and just build Lenses for a living. Snap has been further investing in this area of its business, having announced in December a $3.5 million fund directed toward AR Lens creation. The company said at the time there were tens of thousands of Lens creators who had collectively made over 1.5 million Lenses to date.

Using Lenses has grown more popular, too, the company had noted, saying that more than 180 million people interact with a Snapchat Lens every day — up from 70 million daily active users of Lenses when the Lens Explorer section first launched in the app in 2018.

Now, Snap says that over 200 million Snapchat users interact with augmented reality on a daily basis, on average, out of its 280 million daily users. The majority (over 90%) of these users are 13 to 25-year-olds. In total, users are posting over 5 billion Snaps per day.

Snap says the Creator Marketplace will remain focused on connecting businesses with AR Lens Creators throughout 2021.

The following year, it will expand to include the community of professional creators and storytellers who understand the current trends and interests of the Snap user base and can help businesses with their ad campaigns. The company will not take a cut of the deals facilitated through the Marketplace, it says.

This would include the creators making content for Snap’s new TikTok rival, Spotlight, which launched in November 2020. Snap encouraged adoption of the feature by shelling out $1 million per day to creators of top videos. In March 2021, over 125 million Snapchat users watched Spotlight, it says.

Image Credits: Snapchat

Spotlight isn’t the only way Snap is challenging TikTok.

The company also on Wednesday announced it’s snagging two of TikTok’s biggest stars for its upcoming Snap Originals lineup: Charli and Dixie D’Amelio. The siblings, who have gained over 20 million follows on Snapchat this past year, will star in the series “Charli vs. Dixie.” Other new Originals will feature names like artist Megan Thee Stallion, actor Ryan Reynolds, twins and influencers Niki and Gabi DeMartino, and YouTube beauty vlogger Manny Mua, among others.

Snap’s shows were watched by over 400 million people in 2020, including 93% of the Gen Z population in the U.S., it noted.

 

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