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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

Jun 17, 2021 - Technology

The ravenous economy around delivering your dinner

Data: Oblander, Elliot Shin and McCarthy, Daniel, "How has COVID-19 Impacted Customer Relationship Dynamics at Restaurant Food Delivery Businesses?" with data from Earnest Research; Chart: Axios Visuals

When the pandemic shut down indoor dining and kept people at home for more than a year, food delivery apps like UberEats, DoorDash and GrubHub boomed. Now with COVID-19 curbed in the U.S., those companies are hoping that growth is more than a bubble.

Why it matters: The app surge has reallocated a vast amount of money and jobs to the delivery economy. If food delivery continues to grow, that means restaurants will have to keep forking cash over to the platforms and gig work will become even more common.

Jun 15, 2021 - Economy & Business

Scoop: Gopuff launching an ads biz

Gopuff

Gopuff, the $9 billion food delivery startup, is launching its own ad network, sources tell Axios.

Why it matters: It's the latest delivery giant to use advertising to boost revenues and increase sales. Insider reported Monday that rival Instacart is quietly building a $1 billion ads business.

Manhattan, Westchester prosecutors request evidence from Cuomo investigation

Gov. Cuomo during a press conference in New York City on Aug. 2. Photo: Lev Radin/Pacific Press/LightRocket via Getty Images

The district attorneys for Manhattan and Westchester County on Wednesday requested evidence related to New York Attorney General Letitia James' investigation into sexual harassment allegations against Gov. Andrew Cuomo (D), according to a letter obtained by NBC News.

Why it matters: The district attorneys are investigating if alleged conduct highlighted in an independent report published by James' office that occurred in their jurisdictions was criminal in nature.