#Asia With fresh funding, Grain wants to be the next McDonald’s, but healthier

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When your brand is associated with health and fitness, that can’t be bad thing, right? Yet it can turn into an unexpected albatross, as Singapore’s Grain discovered.

“People describe us as a healthy food startup,” co-founder and head of product Yi Sung Yong tells Tech in Asia. We’re in Grain’s headquarters, a cavernous office that could easily double for a hip cooking show set.

“And there’s a tendency to think of healthy as not tasty, so it’s an association we’re trying to shake off.”

That doesn’t mean Grain is going to suddenly start advertising fried chicken dishes swimming in molten cheese or four-digit calorie counts. Rather, the startup wants to continue offering meals that are good for you but also hearty and tasty.

Grain recently redesigned its logo and wiped any references to “healthy” food from the website. Now the visitor is greeted with a tagline that reads, “Food that delights,” which is a major part of the food delivery startup’s new branding.

Part of Grain’s mission is inspired by the unlikeliest of rivals. “We want to be the next McDonald’s that’s healthy,” Sung says. I can’t help but raise an eyebrow as he explains.

“We thought, how often do you go back to your favorite restaurant? Even for a huge global brand like McDonald’s, it’s maybe two or three times a month. According to the data we have right now, for every 10 Grain customers that walk in, seven come back for a second time. If seven of these people come back two times every month, that’s a huge business.”

For the love of food

Grain competes in Singapore’s crowded online food delivery market with companies like Foodpanda, Deliveroo, and UberEats – all of them international players with significant brand capital (not to mention actual capital).

Grain is different in its full-stack approach: rather than partnering with restaurants that make the food, it prepares its own dishes.

Sung walks me through the startup’s still fresh home, where an industrial kitchen sits between walk-in refrigerators and fully stocked pantries. Full-time staff sources the ingredients and cooks the food.

The company’s delivery people work part-time but even they are chosen through a careful process that ensures quality of service and culture fit.

“We thought very hard about food delivery as a space,” says Sung. “Food has to be good, and good means tasty, healthy, affordable, and fast.”

Grain’s revenue has doubled since its last round.

Grain made its new headquarters happen with the US$1.7 million series A funding it raised in the beginning of 2016. “We wanted to build our kitchen from scratch,” Sung says. “It literally took us half a year to build up the capability. The renovation took three to four months.”

The process allowed Grain to streamline its offering. Sung compares the thinking to Apple’s philosophy: tight control over all stages of the process to ensure a consistent customer experience. That means everything the user sees – from the website to the menu to the delivered meal – as well as everything behind the scenes, including preparation and delivery time.

For example, the company has a feedback system in place that allows everyone, from the kitchen staff to the delivery people, to track how they’re doing and act accordingly, whether it’s about delivery time or how much salt to use in a dish.

The startup offers an on-demand consumer-facing service and a business-oriented one. It has been rewarded for its efforts with the trust of several clients, including Netflix, Twitter, Airbnb, and, ironically enough, Uber.

Fresh funds

Grain has now closed a pre-series B round of funding. Sung doesn’t reveal the amount, although Tech in Asia understands it’s somewhere around the region of the previous investment.

The round is led by existing investors NSI Ventures. DMP and Thai Express founder Ivan Lee once again participated, joined by new investor Wee Teng Wen – co-founder and managing director of Singapore-based food and beverage group Lo & Behold. The group manages popular and prestigious Singaporean establishments, like eateries The Black Swan and The White Rabbit and rooftop bar Loof.

Grain also raised an undisclosed amount in venture debt from Singapore’s DBS Bank. Venture debt is a type of debt financing for VC-backed companies, used as growth capital or for purchasing equipment.

Sung says this is a good time for the company to raise new funding as it’s on an upward trajectory. He doesn’t disclose any numbers but says Grain’s revenue has doubled since its last round – and that was after a period of six months or so where it stagnated.

“We were moving to the new kitchen,” he says. The startup’s facilities at the time were stretched to the max, which put a cap to how many meals it could deliver. As of September 2016, things were back on track.

This round will help Grain increase its mobile distribution hubs – food-carrying vans that can deliver meals within a particular area where there’s usually more demand.

The startup will also explore new markets outside of Singapore in 2017, starting with Hong Kong. It originally intended to expand by the end of 2016, but setting up its new facilities and streamlining its processes put those plans temporarily on hold. “Our priority was getting the fundamentals right in Singapore,” Sung says.

For its expansion, the company hopes to have created a playbook it can repeat in other markets. While it’s not going to be setting up new kitchens of its own, it plans to partner with existing businesses and logistics partners to cook and deliver food to its own specifications.

Ultimately, Grain has to prove that food delivery can succeed without a race to the bottom of the price well. “We are controlling the whole food experience,” Sung says. “The value proposition we are making is that most people do want good food and that’s our basic motivation.”

This post With fresh funding, Grain wants to be the next McDonald’s, but healthier appeared first on Tech in Asia.

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