After job cuts this week at food tech startup City Storage Systems, an executive discussed challenges and rallied staff with bullish comments about a relatively under-the-radar part of the sprawling business.
CSS is the latest company run by Travis Kalanick. It’s a multifaceted effort to reinvent food production, just as he upended the taxi industry by founding Uber. The CloudKitchens unit provides ghost kitchen facilities, while the Otter division sells restaurant software.
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After raising $850 million at a $15 billion valuation in 2021, business has been tougher for the startup lately. Tech and real-estate businesses like CSS are facing challenges including inflation and higher interest rates.
In a meeting on Wednesday following the latest job cuts, Otter general manager Guido Gabrielli addressed his staff, according to audio obtained by Insider.
He said days like Wednesday are not fun for anyone, and added that the cuts were the responsibility of managers and the result of market headwinds. Gabrielli also discussed how higher interest rates impact startups generally.
He had several positive messages, too. A particular focus was an Otter business called Future Foods. This operation licenses virtual food brands, such as “Saint Pita” and “Don’t Grill My Cheese,” to ghost kitchens and restaurants, which helps them sell a wider range of items beyond their exist menus via DoorDash and other delivery platforms.
Gabrielli highlighted that in the past, Future Foods’ business was uncertain. “We asked a lot of questions for a very long time in terms of do we want to be there? Is that sustainable? Would it ever be a real business?” he said during the meeting.
But now, Future Foods is generating healthy revenue, relative to the cost of customer acquisition.”In terms of profitability versus growth targets, it’s probably the most-performing business of the entire Otter portfolio,” Gabrielli said.
He did not disclose revenue for Future Foods or other businesses on the call. A CSS spokesperson did not respond to a request for comment.
Gabrielli did admit there’s a “healthy tension” with the Future Foods team, saying that they “tend to sandbag a little bit their capabilities.” But he also highlighted that Future Foods has helped Otter build better relationships with delivery platforms like UberEats.
The praise comes amidst a more difficult market for virtual brands across the industry. Order delivery platforms including DoorDash and Uber Eats have cracked down on virtual brands to decrease clutter and increase accountability for fly-by-night brands.
Insider previously reported that in July, Uber Eats cut 8,000 virtual brands from its app. The company now requires a virtual restaurant’s menu to be at least 60% different from the “parent” restaurant where the food is prepared.
Future Foods also asks would-be customers if they maintain at least a four-star rating on one delivery app.
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