- Food Rocket launched in 2021 focusing on fast grocery delivery in the Bay Area.
- The Circle K-backed startup is opening up its dark warehouses to walk-in customers.
- Food Rocket is also competing with Gopuff by launching hot-meal delivery in Chicago.
When it comes to the ultrafast-delivery wars, the nascent sector appears to be fizzling out.
Take note of the current landscape: Fridge No More, Buyk, Jokr, and 1520 have shuttered or pulled out of the US market. Getir, Gopuff, and Gorillas have laid off workers this year in an attempt to reach profitability. And some publications are reporting that Getir might buy Gorillas.
Amid the uncertainty, one fast grocery-delivery startup has been playing the long game. Vitaly Alexandrov, the CEO of Food Rocket who founded the ultrafast company in 2021, told Insider he’s been perfecting the model in two markets: San Francisco and Chicago.
“Instead of opening tens of stores very quickly, we decided to invest the vast majority of our money into building our own software that will help us to increase efficiency,” Alexandrov told Insider.
Food Rocket, backed by the owner of Circle K, offers about 3,000 grocery and convenience-store items. With grocery margins notoriously razor-thin, the startup leverages Circle K’s supply chain to source convenience items such as beverages, snacks, and ice cream at a value price.
Alexandrov said Food Rocket is now ready to take its next step, with average delivery times hitting 20 minutes.
The startup is taking a page from Gopuff’s playbook by introducing hot- and cold-meal delivery and drinks from its Chicago stores. The prepared-meals menu includes espresso-based hot beverages, pizzas, cold drinks, and breakfast and lunch sandwiches. Prices range from $1.49 to $10.95.
By evolving Food Rocket’s business to include fast delivery of everything from snacks and groceries to hot meals, Alexandrov said the fast-delivery model can be viable. Eventually, he sees Food Rocket delivering more than convenience goods.
Alexandrov added that weekly sales have grown by about 35% with the addition of prepared meals and beverages. About 20% of customers ordering groceries are also ordering a hot meal.
Food Rocket can also make these deliveries within its average delivery time of 20 minutes, beating rival Gopuff, he said. Gopuff launched its prepared-foods program in mid-2021 and sells foods such as pizza from roughly 60 Gopuff Kitchens located at its distribution centers and stores.
“It’s important to note that most current players aren’t yet ready to deliver freshly cooked food that is restaurant-quality, and, if they can, it’s often unclear how fast they can deliver it,” Alexandrov said. “Our competitor Gopuff is doing that somewhere. But we think we can do that much better.”
Opening up warehouses to customers is good marketing
In New York City, “dark stores” run by rivals such as Gorillas and Getir have been criticized for ruining the city’s lively, walkable neighborhoods as many initially papered over their storefronts.
Food Rocket launched in San Francisco with papered-over windows, as well.
But not anymore.
The startup is opening its Chicago and San Francisco stores to the public for walk-in purchases. Opening the miniature fulfillment centers is a good marketing strategy, Alexandrov said.
“It brings us free customers from the streets because they see our storefront so they get inside the store,” he said.
Food Rocket soft launched the public stores with walk-in shoppers a few months ago. Sales from those locations increased revenue by 15%, according to the company.
With “Food Rocket” marquee signs visible to walk-in customers, Alexandrov said the startup won’t have to invest in money-losing promotional ads like rivals. He was referencing promotional deals rapid-delivery startups made to draw customers in cities like New York. Robert Mollins, a Gordon Haskett analyst, wrote in a February research note that these discounts, often ranging between $20 and $25 off for first-time customers, were “very unsustainable.”
At the beginning of the year, Alexandrov projected that the company’s hot-meal program would expand to 200 locations by the end of 2023. But, when the economic landscape started to take a turn for the worse in the spring, he scaled back those plans to focus on its two core markets.
The pause and the leveraging of Circle K’s supply chain allowed the company to stay nimble with no layoffs this year, Alexandrov said. And some expansion plans are now in the works. Food Rocket plans to launch rapid-delivery services in North Carolina.
Eventually, once the economy picks up again, Alexandrov said he imagines Food Rocket evolving into a last-mile delivery hub for big brands such as Nike and Apple.
These marquee companies “could use our stores” for delivering new iPhones or exclusive “new Nike drops,” within 30 minutes, Alexandrov said. “We want to build a large last-mile delivery infrastructure for other players that could use our stores for delivery.”