{"id":21501,"date":"2017-11-12T16:43:26","date_gmt":"2017-11-12T21:43:26","guid":{"rendered":"https:\/\/digital.hbs.edu\/platform-rctom\/submission\/maple-a-restaurant-without-walls-and-profits\/"},"modified":"2017-11-13T16:45:34","modified_gmt":"2017-11-13T21:45:34","slug":"maple-a-restaurant-without-walls","status":"publish","type":"hck-submission","link":"https:\/\/d3.harvard.edu\/platform-rctom\/submission\/maple-a-restaurant-without-walls\/","title":{"rendered":"Maple, a restaurant without walls"},"content":{"rendered":"

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Maple, a restaurant without walls<\/strong><\/p>\n

Maple, founded in late 2014, was a food-delivery operation that prepared and delivered restaurant-quality meals to select areas in New York City (NYC)[1]<\/a>. With no retail locations, the company offered a rotating menu of lunch and dinner options via a network of kitchen facilities scattered throughout the city. Maple combined culinary expertise with advanced production and logistics technology to provide collaborative meal customization as customers specified where, when and what they would eat. Customers no longer needed to make a tradeoff between food quality and convenience when selecting workday dining options. The question remained, however, as to whether Maple could profitably <\/em>address this customer sacrifice gap in NYC meal preparation and delivery, a chief concern for the company\u2019s executive team as they considered capital needs to support future growth.<\/p>\n

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Featured on today\u2019s menu: (s)Kale<\/strong><\/p>\n

Maple\u2019s executive team was focused on two key, near term initiatives to improve unit economics and achieve overall profitability: 1) reduce food costs through scale and more cost-effective sourcing, and 2) leverage technology to improve labor utilization and fulfillment efficiency through optimized route planning. A typical restaurant spends about 60% of its revenue on combined food and labor costs. \u00a0Maple, in comparison, was spending nearly 125% of its revenue on food and labor[2]<\/a> driven by limited purchasing power, significant food waste and suboptimal use of technology to manage meal preparation and delivery.<\/p>\n

As a nascent business with a daily rotating menu, Maple was unable to achieve economies of scale in food purchasing and suffered from high food waste, 26% of revenue[3]<\/a>, as recipes were designed with limited consideration of supply chain cost and complexity. Through sustained growth, the company expected to reduce food costs and food waste through stronger purchasing power with vendors and optimized demand planning. And while Maple was producing and delivering 1,100 meals per hour compared to Chipotle\u2019s industry standard 300 meals per hour throughput[4]<\/a>, delivery costs and route planning remained inefficient with significant available capacity on most deliveries. Greater scale would enable improved delivery labor utilization and thus reduce the delivery labor cost per meal.<\/p>\n

Over the next decade, the company\u2019s senior leaders were fixated on reducing food costs and improving labor utilization through even greater scale with expansion planned beyond NYC and into other metropolitan cities as well as to surrounding suburban areas. The company also planned to introduce demand planning tools such as meal delivery windows and dynamic pricing models to optimize route efficiencies and further reduce food waste.<\/p>\n

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Less is more\u2026 profitable<\/strong><\/p>\n

In addition to the actions described above, I recommend that Maple\u2019s management team take several steps to provide profitable<\/em>, collaborative meal customization for customers in NYC and beyond. First, the company should consolidate its menu and reduce daily and weekly menu variation to enable stronger purchasing power and reduce food costs. Second, the company\u2019s culinary team should focus on designing menus that utilize a core set of ingredients common across several meal options. The team\u2019s objective should be to reduce the number of unique ingredients featured on the menu while maintaining cuisine-type and flavor variation.<\/p>\n

These changes would enable Maple to focus on what I believe is its core value proposition: delivering restaurant-quality food conveniently at a good value. True, menu variation offers excitement and may encourage higher individual customer order frequency. A weekly, rotating menu may also enable Maple to better compete against pure-play meal delivery services such as GrubHub that partner with hundreds of restaurants to provide thousands of meal options. However, the consequence of Maple\u2019s substantial menu variation is substantial supply chain complexity and cost. Rather than expand its menu, I recommend that Maple focus on optimizing menu options for delivery and win against pure-play competitors through improved food quality and comparable convenience.<\/p>\n

Through the cooking glass<\/strong><\/p>\n

Maple went out of business in May 2017 after just two years of operations. In the end, the company could not achieve profitable unit economics and was absorbed by UK-based food delivery company, Deliveroo, for an undisclosed amount. Two key, open questions:<\/p>\n