We all like simple solutions. Tired after work, your teenagers have friends over, and everyone’s getting hungry? Just order pizzas and the problem is solved. But how complicated is it to get pizzas to customers? Is there much room for innovation in this market?
The answer, apparently, is yes. The NPR blog The Salt had a feature on a Silicon Valley start up Zume that aims to use robot and specialized equipment to cut the time and cost to make and deliver pizzas (Our Robot Overlords Are Now Delivering Pizza, And Cooking It On The Go, Sep 29). This video shows how Zume (which should not be confused with a failed media player) works.
Here is the key point from The Salt article:
Here’s how it works. A customer places an order on the app. Inside the Zume factory, a team of mostly robots assembles the 14-inch pies, each of which gets loaded par-baked — or partially baked — into its own oven.
Whether the truck has five pies or 56, it needs just one human worker — to drive, slice and deliver to your doorstep.
“She doesn’t have to think about when to turn the ovens on, whether to turn the ovens off,” Collins says. “She doesn’t have to think about what route to take or [whom] to go to first. All of that is driven off of our algorithm.” …
The driver then parks, cuts the pie with a special blade and delivers it piping hot.
There are a couple of interesting operational challenges here. First, how do you use those trucks? They can hold 56 half-baked pies. As the video notes, they use cars for the nearby deliveries and trucks for ones that are further out. Also, only part of the inventory is spoken for. Some are built on spec in anticipation of demand. Assuming that they have a reasonable margins on their pizzas this makes sense. They will be able to respond quickly to customers even though the customer is relatively far from their kitchen and if customer demand is reasonably predictable, food waste shouldn’t be too bad. The trucks also let them get better utilization of their robots; the pre-made pies can be produced earlier in the day freeing kitchen capacity during peak times.
A second question here is how well this system can handle peak loads. Having the trucks allows for smoothing of peak demand, but if the bottleneck is Marta the sauce-spreading robot, expanding the capacity could be hard. A conventional pizza operation can potentially flex capacity up and down by varying the number of workers. If Tuesday evenings are slow, then you have a lean kitchen staff. If Fridays are bonkers, you have lots of cooks.
There is also the question of whether this is going to work — as in make money. Things like this have been tried before. There was Super Fast Pizza in Fond du Lac, Wisconsin. They also cooked pizzas on the way to the customer but were not as tech savvy; robots didn’t do the cooking. The driver had to put the pizza in the oven before driving to the customer’s. Note that the last few sentences were all written in the past tense as Super Fast is no longer with us.
Before there was cooking pizzas on the way to the customer, there were trucks with warming oven that could be loaded up with a couple dozen pizzas for rapid response to orders. A pizzeria owned by some family friends of mine owned one of those back in the early 90s. There is even a Harvard case on the concept. Again, not a thriving business model.
So what is the problem here? An article from Crain’s Chicago Business hints at an issue (The meal delivery business seems like a cakewalk. Here’s why it’s not., Oct 29).
Food delivery is tricky: Most startups lose money on each order. It’s hard to find good help. It’s difficult to scale. The market is crowded.
“The reality is when you base your company 100 percent on the requirement to deliver food, you have a shitty-margin, hard-to-scale logistical nightmare,” says Matt Maloney, CEO of Chicago-based pioneer Grubhub. “(This) is just a crummy business model, no matter how many millions of dollars they get to fund it. That’s what people didn’t realize and what everyone is facing right now.” …
Companies like Sprig and Radish that took the delivery model a step further with their own kitchens have even higher overhead costs and are more difficult to scale, Maloney says.
That question of capital and overhead is what strikes me as the real issue. A typical pizza delivery place can scale up and down with demand because they rely on delivery drivers who use their own cars. Yes, at some point, driver figure out they are burning lots of gas and need to be compensated for the wear and tear on their vehicles, but the pizzeria doesn’t have to own the vehicles. You are not paying for vehicles you are not using. If you have a truck loaded with 56 robot controlled ovens, you have to pay for that even if it’s Tuesday and you don’t actually need it. Additionally, you are probably a little particular about who drives that thing. While a mom-and-pop shop might be OK having a high school trying to make money delivering pizza, Zume needs a responsible grown up for each truck. This seems to leave Zume with a really hard choice; they can have enough trucks to keep up with demand on busy day and pay for a lot of equipment they don’t need most days or they can use a more modest fleet size but have service suffer on buys days.