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Illustration: Sarah Grillo/Axios

Food Rocket, a new San Francisco-based mobile app, promises to deliver grocery items within 10 to 15 minutes in certain areas. It’s the latest in a slew of similar apps cropping up in the U.S. and abroad.

Why it matters: Startups and VCs are far from done with on-demand services.

How it works: On Wednesday, I ordered a few items to test Food Rocket, which also promises no delivery fees or order minimums and was touting multiple, limited-time discounts (I even added a couple of extra items at the end because my order was initially under $2). It arrived seven minutes later.

  • The company, which raised $2 million in April — from AltaIR Capital, Baring Vostok fund and the Angelsdeck group of business angels, including Philipp Bashyan — currently stores its inventory at three locations in San Francisco, strategically situated so it can hit its 15-minute delivery maximum. It has already signed leases to expand to Los Angeles and Chicago, founders Vitaly Alexandrov and Jerrin James says.
  • Food Rocket’s delivery workers are full-time employees of the company, make guaranteed earnings and ride e-bikes (presumably to avoid getting too tired from the city’s hills).

The big picture: A number of these fast-delivery services have cropped up around the world and in dense U.S. cities like New York.

  • The idea is not too dissimilar from so-called ghost kitchens, another growing trend over the last few years, where restauranteurs make meals to be delivered to customers without having retail space for diners.

Yes, but: It’s unclear if this new breed of on-demand delivery startups have margins that are any better than their predecessors.

  • An order for a single avocado, for example, is unprofitable for the company, Alexandrov admits. And the current discounts and lack of delivery fees will likely change as the company becomes more established.
  • So it’s a game of volume and scale — the math will only work out if and when the company hits a level of efficiency.
  • Of course, Alexandrov assures that it’s possible, pointing out that similar companies in other countries have been able to achieve profits. The company also plans to eventually generate revenue from product ads in its app, he adds.

Go deeper

Dan Primack, author of Pro Rata
Sep 24, 2021 - Economy & Business

German delivery startup Gorillas is raising $1 billion

Photo: Tobias Schwarz/AFP via Getty Images

Gorillas, a German grocery and convenience item delivery platform, reportedly is raising $1 billion at a $2 billion pre-money valuation from backers like Delivery Hero.

Why it matters: This reflects how "legacy" delivery players are seeking access to instant, hyperlocal upstarts (i.e., the GoPuff model). That's why DoorDash was in talks earlier this year to back Gorillas, but reportedly is participating in a round for rival Flink at a $2.1 billion valuation.

Updated 2 mins ago - Politics & Policy

Omicron dashboard

Illustration: Brendan Lynch/Axios

  1. Health: Omicron pushes COVID deaths toward 2,000 per day — The pandemic-proof health care giant.
  2. Vaccines: No evidence that healthy children, teens need boosters, WHO says — Starbucks drops worker vaccine or test requirement after SCOTUS ruling — Kids' COVID vaccination rates are particularly low in rural America.
  3. Politics: Biden concedes U.S. should have done more testing — Arizona says it "will not be intimidated" by Biden on anti-mask school policies.
  4. World: American Airlines flight to London forced to turn around over mask dispute — WHO: COVID health emergency could end this year — Greece imposes vaccine mandate for people 60 and older.
  5. Variant tracker
Updated 47 mins ago - World

Biden cleans up comments about Russia invading Ukraine

Photo: Doug Mills-Pool/Getty Images

President Biden sought to clarify his suggestion that a "minor incursion" by Russia into Ukraine may not draw the same response as a large invasion, telling reporters Thursday that "Russia will pay a heavy price" if any troops cross the border.

Why it matters: Some officials in Kyiv saw Biden's comments as inviting Russian aggression.