Kraver's - Fireside Chat

Summary

In this insightful interview, Victor Lim, co-founder and CEO of Cravers, shares how his ghost kitchen business in the Philippines has evolved from relying on third-party aggregators to launching its own meal plan services and B2B solutions. He highlights the benefits of tech-driven kitchen efficiency, the challenges of managing rapid growth and profitability, and the importance of building strong relationships with investors. Victor discusses balancing innovation with operational sustainability and offers valuable lessons for entrepreneurs navigating the complexities of food service, technology, and investor management.

Takeaways

• 😀 Expanding into meal plans and corporate services helps Cravers reduce reliance on third-party aggregators (like Grab and Food Panda) and creates a more sustainable business model with higher customer retention.
• 😀 Shifting focus from on-demand services to niche segments like meal plans allows Cravers to optimize kitchen operations while providing a more personalized service for a smaller but loyal customer base.
• 😀 Technology plays a key role in Cravers' operations, automating the conversion of orders into instructions for the kitchen, improving efficiency, and supporting the management of large, rotating menus.
• 😀 While Cravers' tech is specific to their business, it helps solve a key operational problem of providing variety in meal plans while maintaining efficiency, especially for corporate or canteen-style services.
• 😀 Expanding too quickly without careful financial management can lead to cash burn. Cravers emphasizes responsible growth and prioritizing profitability, especially after the initial pandemic-driven boom in the ghost kitchen space.
• 😀 While other startups (e.g., Uber) can scale quickly with replicable tech, food businesses like Cravers require a different approach, balancing scalability with the reality of operational costs and physical labor.
• 😀 Cravers’ board consists of eight industry experts, including figures from Grab, Zalora, and other major companies. This diverse range of expertise is helpful for decision-making but requires careful management of differing opinions.
• 😀 Managing investor expectations involves building individual relationships with board members to understand their perspectives and get tailored advice, rather than relying on group meetings where opinions may be more general or restrained.
• 😀 For Cravers, managing multiple powerful voices on the board is challenging, but the ultimate responsibility lies with the CEO, who must integrate these inputs and make decisions that are in the best interest of the business.
• 😀 The focus on profitability and prudent financial management has become more critical for Cravers, as they transition from rapid growth fueled by external investment to a more sustainable, self-sufficient business model post-pandemic.

Q & A

What was the main reason Cravers decided to shift from an on-demand service to a meal plan and corporate canteen model?

Cravers wanted to reduce its dependency on third-party aggregators like Grab and Food Panda, which took a significant portion of their revenue. By focusing on meal plans and corporate canteens, they aimed to build a more sustainable business model with higher customer retention and lower variable costs.

How does Cravers' tech solution help streamline kitchen operations?

Cravers' tech solution automates the rotation of meal menus, ensuring variety for customers while simplifying the kitchen's daily operations. It converts customer orders into detailed instructions for kitchen teams, reducing manual effort and improving efficiency.

What are the key risks associated with Cravers' new focus on meal plans and corporate canteens?

The main risks include catering to a smaller, more niche audience, which can limit scalability. Additionally, the lead time required for meal plan orders can be a barrier for some customers, who may not want to commit to advance orders.

How does focusing on meal plans provide a more sustainable growth path for Cravers?

Focusing on meal plans allows Cravers to build a smaller but highly loyal customer base, leading to higher retention rates. This approach is more sustainable than attracting a large number of one-time customers, as it reduces reliance on fluctuating variable costs from third-party platforms.

What challenges does Cravers face with automating the food service industry, especially in meal plans and corporate canteens?

A major challenge is offering variety in meal plans while maintaining efficiency. For instance, offering a large menu in a traditional restaurant setting is inefficient, but Cravers’ tech addresses this by rotating the menu daily, ensuring variety without overwhelming the kitchen operations.

What financial advice did Victor Lim share regarding growth strategies?

Victor emphasized the importance of balancing growth with profitability. While aggressive growth may be suitable for certain industries like tech, food businesses must grow more responsibly, focusing on sustainable expansion rather than burning capital in the pursuit of market share.

How did the pandemic influence Cravers' growth strategy?

The pandemic created a unique opportunity for ghost kitchens, as the demand for food delivery surged. Cravers leveraged this moment to grow rapidly, expanding much faster than they would have in normal circumstances. However, with the market now stabilizing, they are focusing on more responsible, sustainable growth.

Why does Victor believe that Cravers' business model is not easily replicable by competitors like Uber or Grab?

Victor believes that food service businesses like Cravers require significant operational effort that cannot be easily replicated by technology alone. Unlike ride-sharing services, which can scale through tech, Cravers must manage physical kitchen operations and ensure consistent quality, making their business model more complex to replicate.

What role does investor relations play in Cravers' decision-making process?

Investor relations are crucial in gathering diverse perspectives. Victor maintains one-on-one relationships with investors to understand their viewpoints better. However, he stresses that the final decision-making authority rests with the CEO and the management team, as they are the ones running the business day-to-day.

How does Victor manage the differing interests of Cravers' large and diverse board of investors?

Victor manages the board by maintaining strong individual relationships with each investor. This allows him to gather feedback and advice in a more personalized way, rather than relying on large group discussions, where conflicts of opinion may arise. Ultimately, he makes decisions based on the business’s needs, while considering the input from all stakeholders.