Food delivery startups are competing in a saturated market, which has proven to be especially difficult to survive in. SpoonRocket and other smaller startups have gone out of business, as Postmates and DoorDash are slowly starting to lose momentum with less investments.
Although we are seeing a rise in virtual restaurants, Maple, a restaurant via app by chef David Chang is also struggling in this market.
According to an investor presentation, the delivery company lost money on every meal in 2015, totaling to a whopping $9 million loss, with only $2.7 million in gross revenue.
However, starting in March of this year, Maple started to make a profit of 30 cents per meal after reducing food costs.
But, the company is still anticipating an operating loss of $16 million for 2016, with a revenue of $40 million. While there were plans for Maple to expand further in the Northeast, the startup remains in Manhattan.
So what does the future hold? Will Maple, like Uber, be able to survive on investor money during the first few years? Or is this just the start of the end?
“The on-demand delivery sector has been a notorious cash burner in recent years, and Maple’s business does not appear to be an exception, especially with the added cost of preparing its own meals. Food costs equaled 63 percent of gross revenue in 2015, a very high number for a food business. Costs from food waste came in at 26 percent of gross revenue. The startup also spent 17.5 percent of its sales on marketing,” writes “Recode.”
Maple did successfully raise more than the $22 million it did in its Series A investment round.
The company remains optimistic and has projected in annual income of $213 million for 2017, a significant spike. Maple also predicts to eventually have a 42% gross profit margin on each meal once the market is “mature.”
Do you think that Maple will be able to stay competitive since it lacks the operational costs of a brick-and-mortar? Read more about the startup’s financials here.