After raising $200 million in a Series H funding round last November, the culty salad chain Sweetgreen became the first-ever restaurant unicorn. Cold-pressed upstart Joe & the Juice is reportedly plotting a $1.5 billion IPO later this year. Now kale-scarfing, ginger-quaffing consumers have VCs salivating over salad.
A new batch of food-focused investment firms like the Kitchen Fund and Enlightened Hospitality Investments (run by Shake Shack titan Danny Meyer) are pumping hundreds of millions of dollars into fast-casual startups—or, as they say, “early-stage scalable restaurant concepts”—powered by AI and data-mining apps.
Why all the fuss over lunch? These food platforms incorporate technology as a base ingredient. Nearly half of Sweetgreen’s customer orders are placed through its app; that data is used to tweak menu offerings and make personalized recommendations. A proposed update would even use 23andMe results to create meals that are “customized” to your microbiome—a seemingly dubious goal, given our current understanding of genetics and gut science. Sweetgreen predicts its daily food needs and minimizes waste with the help of machine learning that crunches information like historical purchases, weather, and local events. IoT sensors at suppliers’ farms monitor growing conditions, and the company says it has started tracking produce from seed to store with logs built atop the blockchain.
“The next five years will be more disruptive to food service operators than the last 50,” says restaurant consultant Aaron Allen, pointing to the boom in online ordering, which is expected to grow nearly four times faster than the rest of the restaurant industry, and in delivery-only “ghost kitchens.” VCs are betting that diners are willing to trade physical restaurants—and personal data—for AI-extracted “content.” That’s Sweetgreen-speak for meals.