‘Non-restaurant restaurants’ pose tangible challenges

Is the front of house disappearing? That’s been the buzzed-about question in the industry of late. Concepts such as Sprig, Maple, Munchery, SpoonRocket and others are popping up around the country and promising restaurant-quality, chef-prepared meals; there’s just no dining room or even walk-up counter to visit. By leveraging technology, on-trend food is ordered via app, cooked in a commissary-style kitchen and delivered—no customer entrance necessary.

Equity firms and big-name backers are buying into the movement, pouring millions of dollars into these delivery-only concepts. So conventional restaurateurs and other trend watchers assume these are the new competitors to watch. But are they indeed the next big thing?

“They’re not working yet,” notes Gagan Biyani, CEO of Sprig, which recently received $45 million in funding from backers that include former White House chef Sam Kass. “The business model is still unproven. There’s no reason to believe this will or won’t work."

The uncertainty isn’t worrisome to tech veterans like Biyani. “As internet entrepreneurs, we bet on things that have a 10 to 20 percent chance of succeeding, but if they do, there’s a big opportunity to make an impact,” he explains.

Success in the restaurant business has traditionally been elusive for newcomers, be they Hollywood celebrities, sports stars or the home chef with big ambitions. Internet entrepreneurs branching into foodservice have the backing of veterans like Kass and David Chang (the celebrity chef behind Maple), but Biyani is learning the answers aren’t always Google-able. “We’re used to the internet business where you can search and find what you need. It’s a lesson on different industries,” says Biyani.

For instance, he found it “a huge pain” to spend time with a number of packaging vendors to find a compostable option that worked with Sprig’s better-for-you message.

It’s part of the learning curve Biyani admits he’s sill going through. How does he train delivery drivers to be service-minded or keep food attractive and hot after it leaves the kitchen? “We’re still working on it.”

He had a similar answer for how Sprig handles waste and inventory when the menu changes twice daily. “We’re still figuring it out,” he says. “We’re happy with the progress we’ve made. We don’t know [all of] the answers, but we know they’re worth answering.”

What his team does know is tech. “We have a team of 15 full-time engineers and designers who build infrastructure. It’s where most of our funding goes,” he says.

Since there’s no technology on the shelves today to run a business like Sprig, the team has developed an algorithm for route optimization, based on where an order is coming from, where cars are, which is the best one to dispatch and how long the trip should take. While there’s no guaranteed delivery time—a big misconception, says Biyani—the orders, priced at $10 to $12 plus a delivery fee, take an average of 15 minutes to get to customers’ doors.

Biyani is open about Sprig still being a work in progress. He’s run into some bumps along the way—for example, having to invest more in packaging and delivery bags than he’d have liked. But he’s brought in a founding executive chef, Nate Keller, who provides food knowhow from his days as Google’s executive chef. “We were off the bat able to leverage Nate’s experience to [create] menu items that are reproducible at scale,” says Biyani.

Scale is what’s slowed down some partnering to this point. Biyani has brought in local chefs, mostly from fine-dining restaurants, to create meals to go for Sprig. The problem, he says, is “there’s not a whole lot of people making consistently good food to scale.”

But it’s a challenge posed by hopeful developments. Biyani says 2 percent of San Francisco’s population has already downloaded Sprig’s app.

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