Few startup sectors are as poised for growth as the companies that make up Berlin’s food scene. These fledgling companies, all less than ten years old, have found their footing in the city of startups and provide a variety of services: prepped meal delivery, indoor vertical farms and food sampling opportunities.
Their focus? Convenient options that simplify life for hospitality services and their customers.
Delivery is a big business
One of the biggest investors in this sector is none other than Rocket Internet.
Rocket Internet first founded Foodpanda, a delivery startup, which was later sold to its competitor Delivery Hero in 2016 to avoid conflicts of interest as Rocket Internet went on to acquire 40 per cent of Delivery Hero’s shares. Delivery Hero also bought up two other Berlin-based delivery services, Pizza.de and Foodora, previously known as Volo, in 2015.
Then there is the UK-based startup Hungryhouse that Rocket Internet bought only to sell it to Just-Eat, the startups main competitor.
Investors at Rocket Internet also recently announced raising €6 million with CaterWings, a newly launched service that taps “into a €36 billion global market,” while “capitalizing on the global trends of employee wellbeing, order convenience and flexibility.” HelloFresh, yet another delivery startup backed by Rocket Internet, raised €85 million in funding.
All in the last five years.
Rocket Internet’s investments make a clear statement: Food delivery services via online portals are an area with untapped growth potential.
Tech efficiency for the sake of convenience
Another big player, Metro Group, strategically invested in Orderbird in May 2015 and they received €20 million in a Series C financing round a year later, which was used to venture outside German-speaking markets and for product development.
The software producer gives restaurants the flexibility to split bills, place special orders and manage discounts or price adjustments all through an iPad.
And then there are startups like Data Kitchen, a digital restuarant near Hackescher Markt, that also lets people order food online, but with a twist. At Data Kitchen the food ordered is presented on a silver tray in a labeled glass box, decorated with futuristic-looking designs. Customers schedule when they want their food to appear in the glass box and pay for the food online.
Once an order is made the individual receives an email saying which box contains your food: box A or maybe box J. To open the box just click the link provided in the email and voilà! Bon appétit.
Berlin’s food startup failures
As all these food startups aim to make life easier, breaking into the market place is anything but. Berlin has seen its fair share of food startups go belly up.
Rocket Internet’s million dollar flops – Shopwings, Bonativo and EatFirst – highlight how difficult it is the break into the German market. But what makes it so hard? One theory is that Germans are accustomed to high quality foods at incredibly low prices. This means that convenience foods and services, which are popular in many international cities, like London, New York and San Francisco, struggle to gain traction.
As a result, founders, in an attempt to differentiate their startup and stay relevant, often become niche-specific, which also proves problematic as it narrows the number of potential customers.
Other well-known fallouts include EatÜber, a healthy delivery service, which was founded in 2013 by Chanyu Xu. A year later Xu ended the venture saying: “After a year we weren’t seeing what we had hoped.” She went on to say EatÜber could have worked, but only with much more investment and a lot of personal effort.
In 2015, Xu went on to start another food startup, Eating with the Chefs, which received backing from Peter Thiels’ Founders Fund. The startup, however, has been awfully quiet, leaving many wondering whether this startup is also struggling to make it.
And who could forget the quasi food-delivery startup backed by Coca Cola, Home Eat Home? Home Eat Home also concerned itself with convenience by developing “cooled stations from which customers can pick up pre-packed food packages to cook at home.” They went bankrupt in 2016 after two years.
Home Eat Home placed roughly 40 cooled stations in convenient locations around Berlin, such as supermarkets, gyms and near public transportation. The hope was that potential customers would simply pick up everything they needed for dinner on their way home, but it didn’t play out as planned.
Ups and downs are normal in all sectors and startup ecosystems, but there is little room for doubt that when it comes to food startup ecosystems in Germany, Berlin is where the action is at.