The Week Food Fizzled

The Week The Food Fizzled

Generally speaking, food is not the sort of thing that easily fizzles — if for no other reason than we all need it to survive. Individual favorites can rise and fall, chains come into and out of fashion — but food as a category is usually safe from misses.

But as anyone paying even glancing attention to the news these days can attest, we live in unusual times.

In fact, if the headlines from this week when it comes to the wide world of eating are to be believed, it seems possible that Americans have gone a little bit off the reservation. Because this week food managed the hat trick with different and distinct fizzles.

Uber’s Instant Food delivery program shuttered, and we learned that Square tried really, really hard to unload its food delivery platform, Caviar, but couldn’t find a buyer. Those were interesting stories, but the winning food fizzle this week has to come from Blue Apron, which seems to have an ongoing issue with fight clubs in its warehouses.

Yes, you read that right. What happened? We’ll get to it.

Goodbye Uber Instant

It seems that, after a short period of experimentation, Uber’s Instant Delivery food delivery service has driven off into the sunset across a host of North American cities. Seattle, San Francisco, Chicago and Toronto have all signed off. Uber pulled the plug on the New York version back in April.

The service allowed customers to pick from a selection of lunch items from local restaurants in the area, which Uber guaranteed would be delivered in 10 minutes or less as drivers drove around with prepared meals in temperature-controlled containers. It first debuted about a year ago.

And it seems to have more or less run its course.

“Instant Delivery started as a proof of concept — if we could get a car to you in five minutes, what else could we deliver?” Uber said in a statement. “We started with speed and a limited selection of menu items. Since launching Instant Delivery, UberEATS has significantly expanded from allowing people in downtown to pick four to five meals during the lunch hour to offering thousands of items at all hours of the day and throughout the Puget Sound region. Our focus will remain on bringing customers an even better selection of on-demand meals, delivered as fast as possible.”

It is worth noting that, while Uber Instant Delivery is fizzling out, UberEATS is sizzling and expanding rapidly around the nation and planet.

Square’s Overpriced Caviar Troubles

When Square bought food delivery service Caviar in 2014 for $90 million, the theory of the case was to use the service to help Square build up relationships with restaurants that could go on to buy the rest of Square’s service suite.

It has apparently not lived up to that expectation. And so, Caviar finds itself for sale, without much luck. The asking price is $100 million, and it can’t find a buyer at that price.

Reportedly, the potential buyers list has included Uber Technologies Inc., GrubHub Inc. and Yelp Inc. Uber reportedly put in a counteroffer and was rejected by Square, with an insider calling it “a lowball.”

Negotiations between Square and potential buyers lasted from late 2015 to the middle of 2016, which means that Caviar fell out of favor with Square fairly quickly. Business Insider said that Caviar does not make a profit, and the extent of the losses are not shown in the company’s financials. It, of course, couldn’t be the first company in this business not to make a profit, so it’s not clear that that alone is its death knell.

More broadly, food delivery startups have not really hit it out of the park. There are the big guys — Seamless and GrubHub, of course — but the pickings get slim once you get below those two. For example, Postmates and DoorDash have found it difficult to raise necessary financing, and the path to profitability has been much longer than many have expected. Insiders say that Square CEO Jack Dorsey remains fond of Caviar, profitability issues aside. His executive team does not agree.

Luckily, they have not come to blows over that difference of opinion.

Which turns out is an accomplishment in the food sector this week — just ask the team at Blue Apron.

Food Fights For Real

If recent reports are to be believed, assembling those fancy-schmancy meal kits in Blue Apron’s factory is dangerous work.

Those reports suggest that the problems all start with Blue Apron’s Bay Area fulfillment warehouse, where it was alleged that sweatshop-like conditions led to violence, fighting and a dangerous work environment for employees onsite. Police were called frequently.

Management responded with shock, horror and assurances that this was one warehouse gone out of control.

Except that the New York Post sent a reporter to Blue Apron’s Jersey City facility to ask around, and workers and managers pretty consistently described working conditions as “bedlam.”

Highlights include a single evening a few weeks ago when three separate physical altercations had to be broken up.

“One had the other in a headlock — he was basically choking him in the box,” one witness noted. “It went on for maybe about six seconds. Then, everyone realized they weren’t playing, and some of the other employees broke it up.”

About an hour later, two female workers were pulled apart, followed by some kind of group fist-fighting incident between three workers and one supervisor trying to break up the fight. That fight also apparently involved knives.

This led to complaints that the frequent fighting had led some plant employees to come to work armed — a problem that prompted management to post a sign, “No Firearms,” next to the main entry gate. All workers pass through a metal detector and are subject to having their bags checked as they report for their shifts.

The now escalating personnel issue has gotten the attention of Blue Apron’s management, which has offered an official statement. To date, Blue Apron has raised nearly $200 million from Silicon Valley investors, valuing the company at $2 billion.

“With over 5,000 employees nationally, it is unfortunate but unavoidable that incidents may occur from time to time, as they do at any employer of our size,” Blue Apron said in a statement. “If they do occur, we take immediate and appropriate action.”

A quick note: Amazon employs 138,000 workers in the U.S., and Walmart employs 2.2 million. Granted, not all of those workers work in fulfillment centers, of course, but we think we can safely assume that both employ at least 10–20 times more fulfillment center workers than Blue Apron does.

No matter how hard we Googled, we could not find a single report of a fight club, knife fight or bedlam-like eruption at any fulfillment center operated by either firm in the last year (or last five years, for that matter).

We’re just saying, “unavoidable” might be putting too fine a point on it.

But calling it a fizzle, certainly doesn’t.

So, food was this week’s highlight, but the news wasn’t all bad. We also had some legit sizzlers this week as well…

SIZZLE

Apple 

One man’s poison is another man’s meat. Said another way, one tech firm’s PR disaster and exploding phone fiasco is another tech firm’s possible triumph.

Samsung, as is well-known by this point, has shuttered its Galaxy Note 7. The fallout to the company, which issued a global recall of the phones and then stopped production altogether, has yet to be determined. But the fact that Apple’s common stock hit the highest levels seen to date this year speaks volumes about how the smartphone race might shake out. For Apple, the impact may be positive and fairly immediate, as those who abandon their Galaxy phones, defunct as they will be, might gravitate toward the iPhone, where the grumbling is somewhat limited to the absence of headphone jacks. Samsung had roughly a 22 percent share of the global smartphone market earlier this year, roughly twice that of Apple’s, and one might expect that gap to narrow. Analysts also say that at least 20 percent of Samsung’s would-be sales will now head Apple’s way.

SMBs

Can Amex and Intuit fill the gap that has been left by traditional banks when it comes to lending to SMBs? It won’t be for lack of trying. And may be enough to goose some lenders into sitting up and taking notice.

The winners will be the SMBs, and the sizzle comes from opening up the cash flow spigot by providing working capital where and when working capital is needed. Amex is providing short-term financing, through QuickBooks, to joint clients. Might be a sizzle in an environment where capital is still cheap, and firms are looking for talent.

PHH

The latest salvo in the war against the Consumer Financial Protection Bureau — as in, is this agency constitutional or not? — has decidedly gone to mortgage lender PHH. This week, a federal appeals court ruled that the very structure of the regulator is indeed not constitutional, and the single director structure (that would be Richard Cordray at the helm) gives more authority to a single person than is warranted. In fact, the court said, the executive power is concentrated within a single person and can give rise to “arbitrary decision-making.” Plus, a $103 million fine against PHH just got vacated, a nice chunk of change to save.

FIZZLE

Apple Watch

Not really a favorite among consumers, now, the Apple Watch is a no-go at the highest echelons of the British government. U.K. Prime Minister Theresa May has banned the Apple Watch from being worn during Cabinet meetings. The reason, according to several trade press sources, centers around worries over plain, old eavesdropping. The key culprit here? Russian hackers.

Twitter

Live by the buyout rumor, die by the buyout rumor. Not much steam left to the idea that Google, Apple, et al. want a piece of this action. And for a firm marked by a tough slog for user stickiness, a crashing stock price and, oh yes, a poster boy in Donald Trump (responsible, on a good day, for at least a good chunk of tweets sent out — and that’s just from Trump himself), the fizzle looks set.