Basil Street's Dead End
Plus: Orionstar's cool new robot, Chipotle's $50M, Chili's Bear market and a big change for OttOmate.
Before we begin, a quick word.
I’m making some big changes at OttOmate. After today, there will no longer be a free version of OttOmate. OttOmate is not going away, it’s just changing things up to provide more focus and deliver even greater value. So, going forward:
OttOmate will continue to publish, but only for paid subscribers. A lot of people paid for annual subscriptions upfront to support me when I first started and I want to honor those subs.
I like writing about food robotics, and I think there is still a need for informed analysis of the food automation space (which is going to be busy this year). So I will continue to write a weekly OttOmate newsletter providing you with the same level of insight and context you can’t get anywhere else.
While there is no longer a free tier, I have reduced the price of an OttOmate subscription to just $5/month. That should make it easier for those who want to keep reading to do so.
If you have any questions/comments/complaints/concerns, please feel free to email me directly.
Thank you, again, for your continued support. I’m super proud of OttOmate and look forward to its next phase. I hope you’ll keep reading along!
Now, on to the news!
Ch-Ch-Ch-Charred! Basil Street Pizza Shuts Down
We broke the news this week that pizza vending machine startup Basil Street has basically shut down and is looking to sell off its assets.
As I wrote earlier this week:
There were two main factors that forced the closure of the company. First, COVID delayed component manufacturing out of China by eight months. Second, getting through regulatory compliance issues around crowdfunding took longer than anticipated and the company basically lost a year of investment. The combination of those factors ended Basil Street’s runway and the board decided to shift operations to an asset sale.
We’re bummed to see any food automation company shut down, and there are a couple of takeaways for other startups in this space.
First, crowdfunding ain’t for the faint of heart. It’s not like slapping together a Kickstarter campaign. As Basil Street learned the hard way, there are plenty of regulatory hoops to jump through. In addition to all governmental paperwork, running a crowdfunding campaign is also a lot of work. You have to produce a steady stream of content and spend marketing dollars to attract potential investors and get their money.
The second thing to note is that Basil Street was seemingly doing all the right things. It had a pretty huge addressable market (who doesn’t like pizza?). It not only had an actual product, but it had 12 production units already in the field generating revenue. And it also had a distribution deal with Prepango, which would get Basil Street machines into venues like airports.
But all that wasn’t enough. Scaling food robotics is expensive, so you better make sure you have enough money in the bank before you head to market.
I’m not sure where Basil Street is in their sale process. When I spoke with its Chief Restructuring Officer Jeff Klemp this week, he said that among their assets was the company’s unique approach to cooking pizzas — which did not use microwave heating. If you’re looking to buy a pizza vending machine startup, you can email Jeff at email@example.com.
Ch-Ch-Ch-Chipotle’s Got a New $50M Fund
Chipotle announced this week that it has formed Cultivate Next, a new $50 million venture fund that will invest in “seed to Series B stage companies that can accelerate the company's strategic priorities such as running great restaurants, amplifying technology and innovation, further advancing its Food With Integrity mission, and expanding access and convenience for consumers.”
Looks like Chipotle got bit by the tech bug. Last month the restaurant chain announced it was piloting the use of Chippy — a version of Miso Robotics’ Flippy platform modified to make tortilla chips.
Now Chipotle’s given Cultivate Next a barrel full of money to invest. And listen, I’m sure there are plenty of smart people at Cultivate, but to help them out, I put together a list of three startups that the new fund should take a look at. To give you a taste, here’s my recommendation for a potential Seed round investment.
Amount Raised: Undisclosed
What do they make? Now Cuisine is making a self-contained, autonomous restaurant in a box. The company’s machine is still in development, but it’s already being designed to build burrito bowls, with the ability make 36 - 48 meals per day.
Why invest? Now Cuisine is still early stage, so it fits with Cultivate Next’s investment strategy. Investing in Now Cuisine could potentially give Chipotle a say in the design of the machine, making it work better with Chipotle recipes. Kiosks could be branded and these Chipotles-in-a-box could then be installed just about anywhere without the need to build a full-on restaurant, cost effectively extending Chipotle’s reach.
Head back to the site to see what Series A and B startups I think make a lot of sense for Cultivate.
Ch-Ch-Ch-Chill with Orionstar’s Luckibot Plus
Orionstar has a cool new robot… literally. Up until now, Orionstar’s Luckibot platform was just another server robot. An autonomous rack of trays on wheels. But the Luckibot Plus has ditched the racks and bolted on a refrigerator.
The move makes sense because 1.) server robots are basically commodities at this point (they all really do the same thing), so adding a fridge also adds some differentiation and 2.) Luckibot has already been used for in-store promotion of beer brands like Heineken and sodas like Coca-Cola, and impulse beverage purchases tend to work better if those beverages are frosty rather than room temperature.
I go into more detail about the coming oneupsmanship (is that one word?) in the battle of the server bots, and why Orionstar should hook up with Byte Technology.
Ch-Ch-Ch-Chili’s Adding Servis to 51 More Stores
Speaking of server robots. Bear Robotics got a big name boost this week when Chili’s announced it was expanding its use of Bear’s Servi robots to 51 more locations.
Nation’s Restaurant News was first to report the story, and they got a statement from Wade Allen, Brinker International Vice President of Innovation saying:
In recent polling in some of our 'Rita-fied' restaurants, 82% of guests felt their experience was better overall because of Rita, and 77% said their server spent more time with them due to Rita [the name Chili’s gave their Servis].
I sound like a broken record, always touting the immediate value of server robots, but Chili’s is kinda proving my point. Unlike kitchen robots, server robots are affordable, don’t require a big build out, and legitimately take over some of the heavy lifting, allowing human staff to do more customer service.
Servis may only be at roughly 4 percent of Chili’s 1,610 locations as of this expansion, but you can expect adoption to accelerate after this next pilot phase.
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That’s it for this week. Thanks for reading!
Stay cool. Have a great summer. Class of ‘90 rulez.