IPO Corner: The Drive Through As A Service

We’ve heard about software as a service, infrastructure as a service, storage as a service. Say hello to the unbundled system that runs grocery drive-through operations . . . drive-through as service.

When’s the last time someone tried to convince you that, in our culture, smaller is better? Today… the answer is today. It’s no secret that the last few years have pretty much turned our world upside down. Everything we’ve known has been, and continues to be, challenged… and rapidly. And it’s that change that we think sets the stage perfectly for what we see as a shift in larger consumer behavior.

To put things simply: when human animals experience chaos in their environment, they adapt their behaviors to seek out authentic relationships. The reason for this is simple. In times of calm, we’re free to wear masks and play more social games because it’s safe. However, when society is less safe, we need to trust our circle again for survival, and this shifts behavior. It’s important to know, because of grocery shopping.

We can guarantee that as soon as you read that, you could think of a million reasons why you hate grocery shopping now… and that’s exactly what we mean. Maybe, once upon a time, it was fun. Now, things are different, and the market is reflecting that. What we’re seeing pick up steam is the idea of the independent grocery drive-thru, which seems to be gaining popularity with workers, consumers, owners, and investors alike.

We’ll let you in on a secret, we sometimes think that financial material can leave out the human element… and we think it’s a shame. Evolving human behavior is the underlying driver for all choices, and we think this trend is reflective of that. And, what’s interesting about this is, it’s not just being asked for by the customer or owners. It even benefits workers for a change, so we mean everyone seems excited.

See, business owners conceptualized the idea of the independent grocery drive-thru as a way to compete with the big box stores. And let’s be honest, aren’t we all a bit sick of them? Impersonal, increasingly dangerous, and never a cashier in sight. The smart business owner is going to look for what humans crave, not what they say they want… right now, we’re craving a smaller, safer experiences.

To see how this works, we can look at drive-thru grocery concept Addie’s, which opened its first location in Norwood, Massachusetts in January of this year. This drive-in model allows the business to pay workers starting at $20 an hour, which helps them attract and retain talent in a tough market. Basically, you order your groceries on their app, choose a pickup time, then drive right up and get them.

It sounds like heaven to us, and we like the idea of supporting a business that fairly compensates workers. We especially appreciate that this model can accommodate accessibility needs and the needs of those who might struggle to grocery shop. The 22,000-square-foot store carries a curated selection of local and well-known national brands. The very nature of the business model allows them to cater to customer tastes in a way that big chain stores are restricted from.

Addie’s is really early in the space (which we like) and raised just over $10 million in seed funding in January led by the Disruptive Innovation Fund, which focuses on these little companies that they consider disruptive to traditional industries. And boy is it brand spanking new… it was founded just last year, and they already have a store up and running. The funding is going toward their expansion in the Boston area.

Beyond what we’ve mentioned, there are many reasons for this trend. Contactless everything is more in demand every day, and that includes grocery shopping. The ones who win here are the ones who just go ahead and jump into the fight, because it will be one. We can see this in microcosm as we’ve seen grocery pickup at a smaller scale becoming more popular at the big chain stores, like Kroger. Stay ahead to keep up… or get lost, that’s what we say.

That said, we have to tackle the cost of even starting one of these independent stores, which is certainly a barrier to entry at the moment. Also, the grocery business is cutthroat, so there’s that to consider when thinking about if these guys cropping up will survive. If we had to guess, we’d say the spoils will go to those who anticipate what humans crave, and work to give it to them before they ask… come back next week, we’ll have more from the IPO space.