Updated on 3-17-2016 by Lulu Chang: Included news of SpoonRocket’s acquisition by Brazil-based iFood.
It’s not over until it’s over, and that time hasn’t come yet for SpoonRocket. Despite officially announcing its shutdown on Tuesday, the on-demand meal delivery service has been plucked from the jaws of death, thanks to Brazil-based iFood. It certainly seems like a pivot for the Silicon Valley-based SpoonRocket, as its services will now be directed toward the less saturated Latin American on-demand market, but details of the deal have yet to be revealed.
This is by no means the first acquisition iFood has made — the well-funded firm previously absorbed other Brazilian competitors, including Central do Delivery, Papa Rango, and Alakarte. TechCrunch reports that American SpoonRocket is actually iFood’s 15th buyout in the last 48 months.
Initial plans suggest that iFood will utilize SpoonRocket’s advanced logistics platform to improve its own delivery times and order tracking to help them continue their sprint through South America. Already, iFood processes 1.5 million orders every month, and is turning a profit. So as far as Cinderella stories go, this may be a great one for SpoonRocket.
“We are very happy to have found a home for our technology with iFood,” said co-founder Anson Tsui in a release. “Even though SpoonRocket did not work out, I do believe we have one of the best food delivery systems in the world and it is amazing to see it live on through iFood.”
Following a promising launch three years ago as a pre-made meal delivery service, SpoonRocket on Tuesday shut its doors, citing funding issues as the coup de grace. In a related blog post, the company wrote, “We regretfully inform you that SpoonRocket will be shutting down,” and would no longer be able to pursue its mission of providing “delicious food to [its] customers with the most magical delivery experience.”
While TechCrunch reported that SpoonRocket was in fact profitable — in the sense that it managed to sell meals for more than it cost the company to cook, package, and send them off — the operational costs of the business ultimately proved too high to sustain.
Although it was saved by iFood at the last minute (in fact a bit after the last minute), SpoonRocket’s rocky path is a rather harsh wake-up call for other startups in the same space, which has become inundated lately by a range of ventures all promising fresh meals on demand. Even though SpoonRocket managed to raise $13.5 million from Y Combinator and other angel investors back in 2013, and went through a successful 2014 Series A funding round, that wasn’t enough absent an acquisition.
So if you’re looking to start a new company, we’re not saying not to do it — but you might want to think twice before entering the meals space, at least for the time being.