Thanks for the comment Obi! The point on profitability per meal is an important one – I’ve noticed that after several weeks Sprig does sometimes recycle a previous menu item, and I’d assume this is based on profitability / popularity (I’d hope the two are correlated). So hopefully they are constantly trimming the number of different meal options to keep only the most profitable. In terms of reducing delivery costs, I think the way they are doing it now is by deeply penetrating markets rather than trying for a broad expansion – that way you can have a lot of batching of large volumes of meals, and ensure maximum hourly utilization of its drivers. The worst scenario would be to have a driver circling around with a bunch of meals in their warming bags, and having only one or two people to deliver to in their assigned territory.
Thanks for the comment! The flexibility point is a good one – it looks like they are consciously trading this off in favor of convenience / 15 min delivery. They do however make sure that across the 3 options there is always a vegan and gluten-free option, and in line with the “quality” image they spell out in great detail the ingredients and even where they are sourced from (I don’t have a picture of this above, but in the app you can click on the menu item and it will reveal this info).
The offline / online combination is also interesting – they haven’t done anything yet, but the partnerships with acclaimed chefs helps people get over the hump a bit – e.g. in SF, when news spread that Sprig was offering meals prepared by the chef of State Bird Provisions (a highly sought over restaurant), the brand got a huge bump in awareness and first-time trials
I agree, there’s an inherent trade-off between guys like Sprig who control their food (maintain strong quality control, food is prepped to be carried for long periods of time, healthier, etc.) vs. those who deliver restaurant food (greater flexibility to changing consumer tastes, more variety, consumers already “know” the dishes). In light of these differences, it will be interesting to see how much these two services end up being substitutes vs. complements.
Great post Sophia! In terms of the business model, I love that Instacart has started to move away from item-level markups to revenue sharing partnerships. Initially I hated the idea of using Instacart because I knew they were sneaking in increased margins, and there was no way for me to easily compare say the Instacart price vs. the price I’d see in Whole Foods. But their ‘same price’ guarantee has me hooked now.
However, I wonder how possible this business model is with retailers who have a smaller margin / mark-up to play with. Whole Foods carries the most premium items, so I can see why they would be willing to part with a % of their margin, but this may be more difficult for lower cost guys (for example, Star Market in Boston still carries Instacart mark-ups).
Great post Sam! I’m obsessed with Chipotle, which is why recent events have troubled me regarding the E-coli cases and the norovirus case in our own backyard: https://www.bostonglobe.com/metro/2015/12/10/chipotle-official-apologizes-for-outbreak-that-sickened-dozens-boston-college-students/bDQ05PjoiiBv63EgnbmTZN/story.html
These cases are very interesting when you consider one of Chipotle’s key operating model characteristics – high quality ingredients. I wonder whether these health issues are more a result of certain stores not being kept as clean, or ingredients handling. Given the sharp uptick in number of cases nationally, it seems to be more on the ingredient handling side, which is especially troubling.
Great post Maggie! I’m a big fan of 23andMe for exactly the reason you’ve pointed out – the massive genetic database they are building and the potential for that data to lead us to novel therapies. However, I’m less bullish on their recent push into drug discovery, for a couple of reasons. First, it seems to conflict with their partnerships business model – if 23andMe wants to be first to market with new therapies, it shouldn’t really be sharing it’s core competitive advantage (the data) with other pharma companies. Second, 23andMe will have to build internal drug discovery capabilities from scratch, and these capabilities are far removed from their current business. Guess time will tell!