“If anything is good for pounding humility into you permanently, it’s the restaurant business.” — Anthony Bourdain
I’ve been incredibly fortunate to have grown up in the restaurant business. My dad worked his way up from a busboy in his 20s to an operator focused on scaling full-service and QSR concepts across multiple vertically-integrated restaurant groups. My mom has handled the intricacies of licensing and permitting for large-scale restaurant groups to sole proprietors for the past decade. My sister has been working in restaurants for the past 15 years, going from line cook to chef and operations director for full-service restaurants to large hospitality organizations. They all say the same thing: Food is a nightmare to scale, hard work, and an even harder business. And at the core of all of these difficulties are people.
In early 2018 I wrote a post titled How To Win With Robots in Restaurants that detailed our thesis on investing in food robotics. I had been thinking about how to scale restaurant groups and meaningfully change the restaurant business across multiple vectors. As many others, I believed robotics was an incredibly compelling way to achieve this. As the component costs have fallen and automation has become a more attainable goal with things as complex as food, I’ve grown increasingly bullish on what this would mean for the industry. I’ve also continued to be bearish on the idea of robotics companies selling to restaurants as well as bringing pure “tech people” to the idea of drastically “disrupting” a business as complex and difficult as food service.
Our thesis was broken down as four bullet points in that post surrounding owning and operating the entire stack, using scalable hardware, a team with food experience, and a focus on maintaining some semblance of human UX. This framework was the best way in which I believed it would be possible to capture venture-scale value and growth. My guiding principle though, burned into my brain from a family of food service professionals, was that regardless of robotics, ultimately restaurants come down to people.
People means building a brand that stands for something to both the employees and consumers of the product. In 2019 this means things like high-quality, sometimes local ingredients, an understanding of the story behind the food, the overall experience feeling special, and even how the food impacts your body and health.
People also means labor and the complicated economics of properly staffing a food service organization to meet the high bar that consumers want with respect to all of the things I mention above. Both macroeconomic factors surrounding wages and rent in urban environments, as well as concept-specific economics have pushed restaurant groups from all stages (fast food, QSR, full-service) to rethink their businesses and distribution mechanisms while also risking alienating a large portion of consumers. These issues have put an upper-bound on the capital efficiency and scalability of high-quality, affordable, and incredible food experiences.
Shortly after I published my post, Stephen Klein emailed me about a new company he was starting with his friend Daniel Fukuba. After chatting with Stephen and Danny, I was sold on the people and their vision.
Stephen and Danny had a perfect balance as a founding team of what the future of food service looked like to me. Stephen’s deep experience in operating and scaling tangential companies like Instacart to related companies in CafeX, as well as his deep passion and knowledge of the food service industry blew me away. Danny’s past experience as an engineering manager at L2F, having worked on automation for companies from SpaceX to Creator to Zume Pizza similarly displayed some of the deepest understanding of the necessary (and over-engineered) complexities that exist within food robotics, as well as the technical approaches needed to create truly scalable and fault-tolerant automation systems.
Throughout our conversations, Stephen and Danny surgically broke down food service economics, paired with a vision of how to create a massively scalable, and economically dominant food service brand, starting with modular, mobile restaurants. After spending more time with them, pressure testing their views on food service, technology, and the marriage between the two, Compound became the first investors in Ono Food Co.
Over the past year the team at Ono has consistently hit countless technical and operational milestones at an order of magnitude greater capital efficiency than any other food robotics company in history. Recently, they’ve reached their most important milestone, which will culminate in the launch of their first mobile restaurant serving Ono Blends in Los Angeles. Unlike other competitors that charge 2–3x the price for similar products, some healthy, some loaded with sugar, Ono is making affordable healthy blends (similar to smoothies) available to Los Angeles. And of course, Ono is Hawaiian for “delicious”, so as a heavy beta tester (often via my own request, not for any actual purpose to the company) you know they are delicious.
We’re incredibly excited about the future of Ono and their goal to build the next massive food brand across multiple modalities, concepts and geographies, enabled by automation. While we can’t talk about all the future plans, Ono Blends is just the start.
To read more about Ono Food Co. go here.