Money is no object: China’s Luckin sets sights on rivaling Starbucks

A one-year-old Chinese startup called Luckin is busy waging war against Starbucks as the new year unfolds. At an event on Thursday, Luckin announced that it aims to be the largest coffee chain in China by number of cups sold and outlets by 2019.

Caffeinated drinks are taking off in the tea-drinking nation. Average coffee consumption per Chinese consumer is expected to grow 18 percent between 2014 and 2019, well above 0.9 percent in the US. Starbucks is currently the largest player in China’s coffee market with 3,300 stores as of last May and a goal of topping 6,000 outlets by 2022.

Loss-making Luckin vows to more than double its number of locations from just over 2,000 to over 4,500 by the end of this year. It sounds like some kind of mission impossible given it took Starbucks 20 years to reach its current scale, but not all of Luckin’s facilities are the size of Starbucks’ sit-down shops.

Rather, Luckin operates a combination of cafes, tiny booths for customer pickup and take-out kitchens that dispatch deliverymen who bring drinks to people within 30 minutes, a big selling point of the company.

It also helps that Luckin has nailed powerful partners like food delivery giant Meituan Dianping after Starbucks teamed up with Ele.me. These moves in a way represent a proxy war between China’s two largest internet companies — Tencent and Alibaba, which backs Meituan and owns Ele.me, respectively.

Luckin has also scooped up loads of investments to power its lightspeed expansion. The company secured a $200 million series B funding round in December that valued it at $2.2 billion, only five months after it raised $200 million. It ventured into the market by shelling out large subsidies for consumers, with deep discounts like “buy five get five free.” It’s thus not surprising to see the company operating in the red. Luckin’s net loss amounted to at least 850 million yuan, or $124 million, within nine months in 2018, the company recently told local media.

“Our chief strategy is to quickly grab market share through subsidies, so losses are expected,” said Luckin, adding that it will press on with its subsidy-powered expansion.

Nestle Plans Vegan Push With Meatless Burgers and Purple Walnut Milk

Hold the ground chuck: Nestle SA sees the future in a meat-free burger made from soy and wheat protein. Soon you may be able to wash it down with purple walnut milk or a spirulina latte.

The Swiss company is gearing up for its biggest push yet into the booming vegan market: the Incredible Burger, to be introduced under the Garden Gourmet label next spring. As consumers swap meat for leafy greens, Nestle wants to turn the trend in plant-based eating into a billion-dollar business.

It’s a big shift for the world’s largest food company, whose products include Herta sausages and ham. While Nestle and its competitors have been dabbling in vegan fare for years, growth has become more essential amid stagnant sales of mainstream supermarket brands. Many of whose products contain dairy and meat, which vegans don’t consume.

Nestle is racing against rivals Unilever and new entrants like Beyond Meat, backed by Bill Gates and Leonardo DiCaprio, to find alternatives that resonate with a new generation of consumers turned off by animal protein and high cholesterol content. The Anglo-Dutch company in December snapped up Dutch plant-based food maker The Vegetarian Butcher, while the U.S. startup sells a burger that includes beetroot juice to simulate the myoglobin in beef.

The Swiss company’s plant-based business may reach more than 1 billion francs ($1 billion) in sales within a decade, according to Laurent Freixe, chief executive officer of the Americas region. That’s up from just a few hundred million francs now, with the bulk of Nestle’s 90 billion francs in sales still coming from coffee, bottled water and other long-standing businesses. The company says about half of its protein used, including in pet food, comes from plant rather than animal sources.

‘Food Tribes’

Nestle Chief Technology Officer Stefan Palzer identified consumers who focus on plant-based eating as one of several fast-growing “food tribes,” along with those following gluten-free or lactose-free diets. Veganism’s popularity with millennials makes it particularly appealing to food giants.

“While digging deeper into consumer trends, we found they changed a bit in the last couple of years depending on how consumers define a healthy diet,” he said in an interview.

Big Food has bolstered its vegan presence through acquisitions over the past two years. Nestle bought California-based Sweet Earth and snack maker Terrafertil, while Danone is looking at adding milk-free ranges to some of its flagship brands, such as Activia and Actimel, following its $10 billion purchase of WhiteWave. Read mo re: Danone Swaps Cows for Almonds in Vegan Yogurt Brand Push

Snacks and drinks are one thing. The holy grail of veganism remains a meat substitute that tastes and feels like the real deal — something a series of pretenders have claimed. Garden Gourmet has also introduced would-be chicken nuggets, while Nestle’s Haagen-Dazs now offers a vegan ice cream line. Maggi offers sauces and seasonings that Palzer said complement plant-based meat alternatives, and even Herta sells veggie sausages and lunch meat.

Nestle signaled its interest in plant-based food at an investor seminar in London in 2017, attended by activist shareholder Dan Loeb, who’s been pushing the company to revamp itself more aggressively. The company served a vegan dinner for fund managers more accustomed to expense-account steak.

Nuts, Berries

At Nestle’s research and development center in Lausanne, Switzerland, scientists are exploring the potential for other vegan proteins. While the bulk of dairy-free milk available to consumers now is soy-based, for example, the company is experimenting with a liquid derived from walnuts and blueberries, with a purple hue. There’s also a blue latte featuring spirulina algae.

“Vegetarianism has never been this popular before and it’s here to stay, I’m convinced about that,” Palzer said.

Starbucks challenger Luckin snags $200M investment on $2.2B valuation

Luckin, a startup that vows to topple Starbucks’ dominance in China, announced on Wednesday that it’s lifted its valuation to $2.2 billion after raising $200 million in a series B funding round.

That came only five months after the coffee upstart, which soft-launched in January, picked up $200 million in investment. Luckin has been on a spending spree to open shop and burnt through $150 million within the first six months in operation, its founder said in July when the company had a cash reserve of 2 billion yuan, or roughly $290 million.

Luckin currently operates across 21 major Chinese cities, totaling more than 1,700 shops. For comparison, Starbucks’s footprint spanned 3,300 stores in China as of May, though one has to take into account that the Seattle coffee chain entered China nearly 20 years ago.

Different from Starbucks, Luckin’s brick-and-mortar facilities are a mix of sit-down cafes and pickup booths, which double as delivery hubs, and take-out kitchens that are solely for delivery staff to pick up caffeine-infused orders and put them in customers’ hands within 30 minutes.

As a result, Luckin managed to build a dense network targeting office workers who may be drawn to the idea of coffee delivery because they can’t leave their desk. There’s at least one Luckin location within a 500-meter radius anywhere in downtown Shanghai and Beijing, the company claimed.

The light speed at which Luckin has expanded in less than a year probably got on the nerves of Starbucks, which went on to team up with Alibaba-owned food delivery giant Ele.me in August to bring coffee to people’s doorstep. The American company aims to expand its delivery services to 30 cities in China by the end of 2018.

Luckin’s co-founder and chief executive officer Qian Zhiya, who is the former chief operating officer at one of China’s largest auto rental firms CAR Inc, said her startup will continue to invest in products, technology and business development to improve user experience following the new round.

Luckin raised the fresh capital from existing investors Singapore sovereign wealth fund GIC, Chinese government-controlled China International Capital Corporation, Joy Capital and Dazheng Capital. Liu Erhai, founding and managing partner of Joy Capital, joined Luckin’s board of directors following the close of the round. Liu’s investment portfolio includes Car Inc, Facebook’s old Chinese rival Renren and Hong Kong-listed game publisher iDreamsky.

This Wine Advent Calendar Sold Out In Less Than a Day

A wine Advent calendar is an ideal, boozy way to count down the days until the holidays (or, for some, a good way to cope with the imminent stress of the season) — which is why it’s regrettable but hardly surprising that Aldi’s wine Advent calendar sold out within minutes of its first day on the market in America.

The calendars, which have been a confirmed hit for British stores across the pond, contained 24 6.37-ounce bottles of 12 different wines for the sweet price of $69.99, or $2.92 a bottle; the supermarket chain also offered cheese Advent calendars, which like their wine compatriots, sold out immediately.

Unfortunately for holiday wine enthusiasts, Aldi, whose $8 rosé is considered one of the best wines in the world, told USA Today in a statement that “the calendars will not be restocked once they are sold out.” Some are already up for grabs on eBay for a hefty price.

Not to fear, however — those still looking for adult beverage-fueled calendars, can spring for Vinebox’s $129 “Twelve Nights of Wine” or Virgin Wine’s $104.77 behemoth of a wine Advent calendar, which comes with 24 bottles of red, white, rosé, Prosecco, and a Champagne toast.

Philadelphia Burger King Takes a Stand Against the New Philly Cheesesteak Burger

A Burger King in Philadelphia is refusing to serve the chain’s new Philly Cheese King, a Philly cheesesteak-inspired burger out of respect for the “traditional recipe.”

The news was announced, interestingly enough, in a press release by Burger King themselves.

“Despite taste test approvals from Philadelphians, one restaurant in Philadelphia opted out of selling it completely to honor the traditional recipe,” the chain wrote. “So, on October 25, the PHILLY CHEESE KING® will not be sold at the BK® restaurant located at 15 S 8th St, Philadelphia, PA 19106 until otherwise overturned by the BURGER KING® brand.”

The burger features more than a half pound of flame-grilled 100% beef, carmelized onions, and American cheese.

In a statement to Munchies, Burger King doubled down on the respect they have for the OG cheesesteak.

“This restaurant is in the heart of Philly, and decided in order to honor their sacred Philadelphia Cheesesteak, they will not be selling the Philly Cheese King.”

The next big restaurant chain may not own any kitchens

If investors at some of the biggest technology companies are right, the next big restaurant chain could have no kitchens of its own.

These venture capitalists think the same forces that have transformed transportation, media, retail and logistics will also work their way through prepared food businesses.

Investors are pouring millions into the creation of a network of shared kitchens, storage facilities, and pickup counters that established chains and new food entrepreneurs can access to cut down on overhead and quickly spin up new concepts in fast food and casual dining.

Powering all of this is a food delivery market that could grow from $35 billion to a $365 billion industry by 2030, according to a report from UBS’s research group, the “Evidence Lab”.

“We’ve had conversations with the biggest and fastest growing restaurant brands in the country and even some of the casual brands,” said Jim Collins, a serial entrepreneur, restauranteur, and the chief executive of the food-service startup, Kitchen United. “In every board room for every major restaurant brand in the country… the number one conversation surrounds the topic of how are we going to address [off-premise diners].”

Collins’ company just raised $10 million in a funding round led by GV, the investment arm of Google parent company, Alphabet. But Alphabet’s investment team is far from the only group investing in the restaurant infrastructure as a service business.

Perhaps the best capitalized company focusing on distributed kitchens is CloudKitchens, one of two subsidiaries owned by the holding company City Storage Solutions.

Cloud Kitchens and its sister company Cloud Retail are the two arms of the new venture from Uber co-founder and former chief executive, Travis Kalanick, which was formed with a $150 million investment.

As we reported at the time, Travis announced that he would be starting a new fund with the riches he made from Uber shares sold in its most recent major secondary round. Kalanick said his 10100, or “ten one hundred”, fund would be geared toward “large-scale job creation,” with investments in real estate, e-commerce, and “emerging innovation in India and China.”

If anyone is aware of the massive market potential for leveraging on-demand services, it’s Kalanick. Especially since he was one of the architects of the infrastructure that has made it possible.

Other deep pocketed companies have also stepped into the fray. Late last year Acre Venture Partners, the investment arm formed by The Campbell Soup Co., participated in a $13 million investment for Pilotworks, another distributed kitchen operator based in Brooklyn.

Meanwhile, Kitchen United has been busy putting together a deep bench of executive talent culled from some of the largest and most successful American fast food restaurant chains.

Former Taco Bell Chief Development Officer, Meredith Sandland, joined the company earlier this year as its chief operating officer, while former McDonald’s executive Atul Sood, who oversaw the burger giant’s relationship with online delivery services, has come aboard as Kitchen United’s Chief Business Officer.

The millions of dollars spicing up this new business model investors are serving up could be considered the second iteration of a food startup wave.

An earlier generation of prepared food startups crashed and burned while trying to spin up just this type of vision with investments in their own infrastructure. New York celebrity chef David Chang, the owner and creator of the city’s famous Momofuku restaurants (and Milk Bar, and Ma Peche), was an investor in Maple, a new delivery-only food startup that raised $25 million before it was shut down and its technology was absorbed into the European, delivery service, Deliveroo.

Ando, which Chang founded, was another attempt at creating a business with a single storefront for takeout and a massive reliance on delivery services to do the heavy lifting of entering new neighborhoods and markets. That company wound up getting acquired by UberEats after raising $7 million in venture funding.

Those losses are slight compared to the woes of investors in companies like Munchery, ($125.4 million) Sprig, ($56.7 million) and SpoonRocket ($13 million). Sprig and Spoonrocket are now defunct, and Munchery had to pull back from markets in Los Angeles, New York, and Seattle as it fights for survival. The company also reportedly was looking at recapitalizing earlier in the year at a greatly reduced valuation.

What gives companies like Kitchen United, Pilotworks and Cloud Kitchens hope is that they’re not required to actually create the next big successful concept in fast food or casual dining. They just have to enable it.

Kitchen United just opened a 12,000 square foot facility in Pasadena for just that purpose — and has plans to open more locations in West Los Angeles; Jersey City, N.J.; Atlanta; Columbus, Ohio; Phoenix; Seattle and Denver. Its competitor, Pilotworks, already has operations in Brooklyn, Chicago, Dallas, and Providence, R.I.

While the two companies have similar visions, they’re currently pursuing different initial customers. Pilotworks has pitched itself as a recipe for success for new food entrepreneurs. Kitchen United, by comparison is giving successful local, regional, and national brands a way to expand their footprint without investing in real estate.

“One of the directions that the company was thinking of going was toward the restaurant industry and the second was in the food service entrepreneurial sector,” said Collins. “Would it be a company that served restaurants with their expansions? Now, we’re in deep discussions with all kinds of restaurants.”

Smaller national fast food chains like Chick-Fil-A or Shake Shack, or fast casual chains like Dennys and Shoney’s could be customers, said Collins. So could local companies that are trying to expand their regional footprint. Los Angeles’ famous Canter’s Deli is a Kitchen United customer (and an early adopter of a number of new restaurant innovations) and so is The Lost Cuban Kitchen, an Iowa-based Cuban restaurant that’s expanding to Los Angeles.

Kitchen United is looking to create kitchen centers that can house between 10-20 restaurants in converted warehouses, big box retail and light industrial locations.

Using demographic data and “demand mapping” for specific cuisines, Kitchen United said that it can provide optimal locations and site the right restaurant to meet consumer demand. The company is also pitching labor management, menu management and delivery tools to help streamline the process of getting a new location up and running.

“In all of the facilities, all of the restaurants have their own four-walled space,” says Collins. “There’s shared infrastructure outside of that.”

Some of that infrastructure is taking food deliveries and an ability to serve as a central hub for local supplier, according to Collins. “One of the things that we’re going to be launching relatively soon here in Pasadena, is actually in-service days where local supplier and purveyors can come in and meet with seven restaurants at once.”

It’s also possible that restaurants in the Kitchen United spaces could take advantage of restaurant technologies being developed by one of the startup’s sister companies through Cali Group, a holding company for a number of different e-sports, retail, and food technology startups.

The Pasadena-based kitchen company was founded by Harry Tsao, an investor in food technology (and a part owner of the Golden State Warriors and the Los Angeles Football Club) through his fund Avista Investments; and John Miller, a serial entrepreneur who founded the Cali Group.

In fact, Kitchen United operates as a Cali Group portfolio company alongside Miso Robotics, the developer of the burger flipping robot, Flippy; Caliburger, an In-n-Out clone first developed by Miller in Shanghai and brought back to the U.S.; and FunWall, a display technology for online gaming in retail settings.

“Kitchen United’s data-driven approach to flexible kitchen spaces unlocks critical value for national, regional, and local restaurant chains looking to expand into new markets,” said Adam Ghobarah, general partner at GV, and a new director on the Kitchen United board. “The founding team’s experience in scaling — in addition to diverse exposure to national chains, regional brands, regional franchises, and small upstart eateries — puts Kitchen United in a strong position to accelerate food innovation.”

GV’s Ghobarah actually sees the investment of a piece with other bets that Alphabet’s venture capital arm has made around the food industry.

The firm is a backer of the fully automated hamburger preparation company, Creator, which has raised roughly $28 million to develop its hamburger making robot (if Securities and Exchange Commission filings can be believed). And it has backed the containerized farming startup, Bowery Farming, with a $20 million investment.

Ghobarah sees an entirely new food distribution ecosystem built up around facilities where Bowery’s farms are colocated with Kitchen United’s restaurants to reduce logistical hurdles and create new hubs.

“As urban farming like Bowery scales up… that becomes more and more realistic,” Ghobarah said. “The other thing that really stands out when you have flexible locations … all of the thousands of people who want to own a restaurant now have access. It’s not really all regional chains and national chains… With a satellite location like this… [a restaurant]… can break even at one third of the order volume.”

 

Not Everyone Relishes This Pizza That Uses Sliced Pickles Where the Pepperoni Belongs

A pizzeria has been “convicted” of committing misdemeanors against pizza by the internet

Their crime? Creating a pickle-topped pizza with a side of ranch dressing.

Rhino’s Pizzeria and Deli created a pizza pie that swapped garlic sauce for the traditional marinara, put sliced dill pickles in lieu of pepperoni, and covered the entire thing in mozzarella cheese, according to WHEC. They posted the picture on Facebook with the suggestion to “Try it with ranch for dipping.”

That was the final straw for some pizza lovers. After the pizza shop posted the pizza on Facebook heir Facebook post has been shared more than 41,000 times as of Thursday morning and despite 14,000 comments, people continue to weigh in on the controversial pizza. While most seem to consider the pickle-topped pizza a travesty, demanding answers, “Why?! In the name of all that is holy, why did you do this to pizza?!” wrote one Facebook commenter. Another brought up that equally controversial topping—pineapple—writing, “And people have the damn nerve to complain about pineapples on a pizza.” One amateur food critic noted, “Pineapple and pickles have no business on a pizza. Once you vary off cheese and pepperoni it’s not pizza anymore…” Another summed it up, tidily: “Pickles on pizza, hell no.”

A surprising number of people, some admittedly in the throes of pregnancy-related food cravings, thought the pickle-topped pizza sounded delectable, some hoping for a sweet-pickle version, and others plotting day trips to New York state for a pie. These are undoubtedly the same people who like marshmallow Peeps on pizza and consider strawberries a reasonable topping.

‘No Snack Is Safe.’ People Are Losing Their Crackers About the Ritz and Goldfish Recalls

It’s been a rough week out there for crackers and snackers since Monday when a number of Ritz Crackers and Goldfish products were recalled over potential risk of salmonella.

The combination of the two go-to staples of paper bag lunches everywhere getting recalled: a snack emergency for internet users.

Both Pepperidge Farm and Mondaelz stated that they were taking the precautionary measures due to what appears to be the same reason: potential contamination of the whey powder used to season the snacks. Straight out of that Little Miss Muffet rhyme, whey powder is used to season many snacks.

Proving your whole cupboard can darken in a day, Pepperidge Farm announced a recall of four different Goldfish flavors: Flavor Blasted Xtra Cheddar, Goldfish Mix Xtra Cheddar + Pretzel, Flavor Blasted Sour Cream and Onion, and Goldfish Baked with Whole Grain Xtra Cheese, all sold in the U.S. Pepperidge Farm said it announced the recall “out of an abundance of caution.”

Both snack makers said there were no illnesses yet reported as a result of eating their snacks, but they recommend you toss your personal stash nonetheless. Neither company has said if these recalls are connected, but for now, it may be time to pivot to another summer snack.

You’ll need to complete a reimbursement form online to get your Goldfish refund.

Which Ritz crackers have been recalled?

According to the company’s statement, Mondalez’s recall list includes Ritz bits, Ritz cheese cracker sandwiches, Ritz bacon cracker sandwiches with cheese, Ritz whole wheat cracker sandwiches with white cheddar cheese, Ritz everything cracker sandwiches, and two multipack Mixed cookie cracker variety assortments.

Salmonella infection is a bacterial disease that can cause abdominal cramps, fever and headache, according to the Mayo Clinic, some of which run their course in a few days, though life-threatening complications are possible.

This is by no means the first recall of the year. Swiss rolls, Melons and eggs were recalled over salmonella fears this year. Meanwhile, ice cream bars and Panera cream cheese were also recalled due to listeria concerns.

The internet has taken note of these dual cracker recalls, expressing strong feelings on Twitter, with one user dubbing it a “cracker cancellation.”