Zume Pizza, an automated pizza delivery firm backed by SoftBank, plans to cut 80 percent of its workforce, suspend its pizza-making business and focus instead on food packaging and supplying technological solutions.
Employing a range of robots in different stages of pizza production including making doughs, adding toppings, and baking, Zume has aimed to offer quality pizza at affordable prices.
The Silicon Valley startup claims it can replicate the taste of traditional Italian pizzas using AI technology.
Zume Pizza is priced between US$9.99 and US$17.99, which is quite reasonable.
Starting out with delivery service, the company moved to offer pizzas that are cooked en route in a van equipped with robotic arms, automated ovens and GPS systems. Pizzas are timed to be ready just before their arrival at the destination.
Zume’s unique idea attracted US$375 million of investment from SoftBank in November 2018, valuing the startup at US$4 billion.
At the time, Zume Pizza was extremely optimistic and planned to use the?automation model in other food products such as steak, salad and deserts.
However, Zume was burning cash too quickly, and SoftBank, scarred by a number of bad startup investments, was not willing to offer more funding, leaving Zume with no choice but to scale down.
A fundamental weakness of Zume’s business model lies in the high costs of its robots.
These pizza robots cost up to several hundred thousand dollars each. A full set of the automated equipment costs nearly US$1 million. That is roughly the cost of hiring one chef and one assistant for 11 years.
So unless Zume can drive down the costs of robots substantially, the business model is simply not cost-competitive at all.
Robot-made pizza may sound novel and intriguing, but once the initial excitement wears off, customers may actually prefer pizzas made by their favorite chefs, and in Silicon Valley, there is no lack of small restaurants specializing in pizza.
This article appeared in the Hong Kong Economic Journal on Jan 10
Translation by Julie Zhu
[Chinese version 中文版]
– Contact us at [email protected]