Maple, a restaurant without walls
Maple, a NYC-based food-delivery service founded in 2014, offered restaurant-quality food for delivery through an app and online. The industry was abuzz about this new food startup – but was its business model viable?
Maple, a restaurant without walls
Maple, founded in late 2014, was a food-delivery operation that prepared and delivered restaurant-quality meals to select areas in New York City (NYC). With no retail locations, the company offered a rotating menu of lunch and dinner options via a network of kitchen facilities scattered throughout the city. Maple combined culinary expertise with advanced production and logistics technology to provide collaborative meal customization as customers specified where, when and what they would eat. Customers no longer needed to make a tradeoff between food quality and convenience when selecting workday dining options. The question remained, however, as to whether Maple could profitably address this customer sacrifice gap in NYC meal preparation and delivery, a chief concern for the company’s executive team as they considered capital needs to support future growth.
Featured on today’s menu: (s)Kale
Maple’s executive team was focused on two key, near term initiatives to improve unit economics and achieve overall profitability: 1) reduce food costs through scale and more cost-effective sourcing, and 2) leverage technology to improve labor utilization and fulfillment efficiency through optimized route planning. A typical restaurant spends about 60% of its revenue on combined food and labor costs. Maple, in comparison, was spending nearly 125% of its revenue on food and labor driven by limited purchasing power, significant food waste and suboptimal use of technology to manage meal preparation and delivery.
As a nascent business with a daily rotating menu, Maple was unable to achieve economies of scale in food purchasing and suffered from high food waste, 26% of revenue, as recipes were designed with limited consideration of supply chain cost and complexity. Through sustained growth, the company expected to reduce food costs and food waste through stronger purchasing power with vendors and optimized demand planning. And while Maple was producing and delivering 1,100 meals per hour compared to Chipotle’s industry standard 300 meals per hour throughput, delivery costs and route planning remained inefficient with significant available capacity on most deliveries. Greater scale would enable improved delivery labor utilization and thus reduce the delivery labor cost per meal.
Over the next decade, the company’s senior leaders were fixated on reducing food costs and improving labor utilization through even greater scale with expansion planned beyond NYC and into other metropolitan cities as well as to surrounding suburban areas. The company also planned to introduce demand planning tools such as meal delivery windows and dynamic pricing models to optimize route efficiencies and further reduce food waste.
Less is more… profitable
In addition to the actions described above, I recommend that Maple’s management team take several steps to provide profitable, collaborative meal customization for customers in NYC and beyond. First, the company should consolidate its menu and reduce daily and weekly menu variation to enable stronger purchasing power and reduce food costs. Second, the company’s culinary team should focus on designing menus that utilize a core set of ingredients common across several meal options. The team’s objective should be to reduce the number of unique ingredients featured on the menu while maintaining cuisine-type and flavor variation.
These changes would enable Maple to focus on what I believe is its core value proposition: delivering restaurant-quality food conveniently at a good value. True, menu variation offers excitement and may encourage higher individual customer order frequency. A weekly, rotating menu may also enable Maple to better compete against pure-play meal delivery services such as GrubHub that partner with hundreds of restaurants to provide thousands of meal options. However, the consequence of Maple’s substantial menu variation is substantial supply chain complexity and cost. Rather than expand its menu, I recommend that Maple focus on optimizing menu options for delivery and win against pure-play competitors through improved food quality and comparable convenience.
Through the cooking glass
Maple went out of business in May 2017 after just two years of operations. In the end, the company could not achieve profitable unit economics and was absorbed by UK-based food delivery company, Deliveroo, for an undisclosed amount. Two key, open questions:
- What matters most for food delivery customers in urban areas during the workweek: price, quality, convenience or variation?
- How do you think Maple’s model – assuming the company achieved profitability in NYC – would need to be refined to serve less dense urban and residential areas?
Word count: 799
 Maple went out of business in May 2017 but I assume Maple is an on-going business concern for the purpose of this essay.
 Griswold, A. (2017, May 8). Inside Maple’s failed dream of delivering a better office lunch. Retrieved from www.qz.com.
 Del Rey, J. (2016, Dec 23). Leaked documents from startup Maple show the brutal economics of food delivery. Retrieved from www.recode.net.
 Kessler, S. (2016, May 21). How Maple Built An Insanely Efficient, Chipotle-Crushing Food Delivery Machine. Retrieved from www.fastcompany.com.
Student comments on Maple, a restaurant without walls
Thanks for posting this Ian. Your paper provides an interesting dialogue as food delivery startups fight for market share in today’s competitive landscape. I found it interesting that Maple’s business model was so heavily dependent on assumptions of achieving economies of scale. To your point, it seems as though it would have been much more sustainable to grow from a simplified menu and offering within the NY metro and then to expand after gaining a user-base. It also seems as though they could have reduced waste through a stronger focus in building a supply chain with less perishable foods and/or employed more data in making decisions on quantities to purchase. Interested to see what Deliveroo chooses to integrate from Maple’s supply chain and broader operations post acquisition.
I really enjoyed your post Ian – as someone who is also interested in this space, I’m curious about who you think has a competitive advantage in this already heavily saturated market. Additionally, with Amazon’s recent acquisition of Whole Foods and Uber’s fast growing UberEats service, do you think other players like Munchery, Seamless, DoorDash etc. have a chance? I’m not convinced that with so many companies already delivering restaurant/restaurant-quality meals (including healthy options), and with the invention of meal kit delivery services like Blue Apron that optimize for customers who like to cook, companies like Deliveroo could compete in a market like NYC. What competitve edge does Deliveroo have that existing players don’t have? Do any players that enter this space have a chance to steal marketshare, let alone win in the space?
I like your suggestion that Maple should consolidate and simplify the menu to reduce food waste and leverage economies of scales. I feel that variation is one of the least import aspects that you mentioned about food delivery in urban area during workweek. Food delivery services in urban area, especially in NYC, will have inevitably high labor costs. Labor costs is hard to reduce, so using less varied food ingredients and less expensive packaging materials seem to be viable ways to reduce cost. Maple’s current business model needs investment in both the food making process and the delivery system. It may be better for Maple to focus on just one business in order to reach profitability. Maple can either outsource the delivery part to third party or become a pure food delivery company. For a start-up to run two capital intensive businesses at the same time, it is very risky.
This reminds me of a similar company, that also went out of business: Sprig. These are businesses that I like as a customer, but probably not so much as an investor. The key question in this market seems to be: “for how long can we keep losing money?”.
The assumption that by pleasing customers and undercharging them for a while, you will build your user base, achieve economies of scale, and reach profitability is certainly appealing, but it seems to struggle to pass the empirical test.
Thanks for posting, Ian! This is a very similar business model to a company called SpoonRocket in the SF bay area that I was a big fan of. Your simplified menu planning was spot on. I remember them offering a handful of “everyday option” like a basic sushi roll or a curry chicken. Then the other items rotated. Where you have to be careful with too much simplifying is pushing people away with boredom or uninteresting dishes to save on costs, because there are plenty of alternatives. If your value prop is restaurant quality food, it is hard to move towards less unique options. I think the consumer that is busy enough to value the convenience of a delivery is likely willing enough to pay for unique offerings. But I guess the Maple story would say otherwise… To your second question, I just don’t think this model makes any sense in a less populated area. A company will only be hurt by further delivery times, more complicated routes and fewer people ordering consistently making demand planning nearly impossible.
Great post Ian!
It’s interested to hear about how this restaurant/food delivery service tried and failed. While food delivery start ups have proven hot in recent years in terms of VC funding, the industry faces incredible challenges reaching profitability due to the inherently unattractive economics of last mile delivery combined with perishable products. That being said, I agree with your recommendations of limiting the menu for a more profitable offering. Thank you for sharing!
As others have mentioned, I also like your suggestion to limit the menu. However, I’m not sure that would have been enough. I would advise them to pick a focus. It’s hard enough to succeed as either a stand-alone restaurant or a food delivery business, but this company was trying to do both, which is an extremely complex and challenging undertaking, so I’m not surprised the idea failed.
Going back to the idea of simplifying the menu – there’s a company called Peach that does just that – though their business model is a bit different (see link to website below) because they don’t handle the food preparation, they just source the food from different restaurants. Every day, Peach sends out a text message to subscribers, and asks them to pick one of three options for lunch, from a different restaurant every day. At lunch time, the company makes mass deliveries to everyone at the company that placed an order. They also set a minimum order threshold for delivery at a specific company. The limited menu and the minimum order sizes help them cut down on the high costs that were Maple’s downfall.