Should you transform your kitchen in a closet?
Hi,
In our last newsletter, we talked about our recent report on FoodTech unicorns (you can download it here). As said, 73% of those unicorns are operating delivery services. As time goes by, these startups are getting everywhere and enable a no-cooking-loving person to think it could be possible to get each day a meal delivered to its door. Indeed, at the same time, renting or buying a place to live in the cities these startups operate is getting harder as the prices continue to skyrocket.
Thus, we wondered if it would be economically interesting to just rent or buy places without a kitchen. Here is what we have done. We have looked at 8 expensive and very different cities around the world and for each of them we looked at:
- the price to rent a small 5 square meter kitchen (including taxes) inside a 30 square meter apartment
- the price to cook a simple plate with fresh ingredients for a single person
- the price of being delivered the equivalent plate (including delivery costs) in each city
The map above sum up the conclusions in these 8 cities with 3 groups:
- cities were it is clearly not profitable to rent a kitchen (and therefore better to order meals each day) such as HK, Singapore and NY
- cities were space is not an issue (and therefore either rent is not too expensive or delivery costs are high due to distances)
- indecisive cities where ordering or cooking are both on the table
And if you were considering to buy your apartment (rather than renting it). It would become profitable after a very long time (we supposed you cooked all your meals and never ordered one and never going out) as shown below.
To make things worse, for someone in Paris ordering twice a week and going out once, it would then take 40 years to make the acquisition profitable!
This partly explains the success of delivery startups and the rise of new models delivering you with your week of fresh meals such as Seazon, Freshly or Territory.
Tell us what you think about these results! They are much more conclusive than we thought they could be. If there is some interest, we’ll dig deeper.
Have a great week!
Matthieu
Big deals
Keatz, a German-based cloud kitchen business raises an additional $12 million to expand in other European countries. Cloud Kitchens (virtual restaurants) target customers through delivery apps and are on the rise globally.
Starbucks is launching a new VC fund dedicated to food and retail startups. With an initial $100 million to invest, the fund is seeking $300 million from other partners.
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