Editor’s note: Manuel Gonzalez is a partner at AgFunder, which is AFN’s parent company. This article was first published in October 2021, a few months after AgFunder participated in Bite Ninja’s pre-seed round, which you can read more about here. On November 4, 2021, Bite Ninja announced it had closed a further $4 million in seed funding, led by Owl Ventures with participation from AgFunder, Manta Ray and TRAC Unicorn Fund. You can read more about that here.
Below, AgFunder’s Gonzalez explains why the VC invested in Bite Ninja.
There are about 1 million restaurants and 200,000 drive-thrus in the US. During the Covid-19 pandemic, about 110,000 of those restaurants closed. The effect on entrepreneurs and on their employees was devastating.
But there are additional effects when the restaurant space suffers like this. As well as being an important entrepreneurial outlet and driver of the local economy around the world, foodservice is also a key driver of local culture and community. In the US alone, restaurants employ more than 15 million people and generate over $560 billion in sales each year.
The seemingly impossible paradox of this industry is that labor, its key delivery channel of service, is a high expense – but the pay it offers is too low for the individual worker. Is there a way to improve service and increase job numbers and salaries, while decreasing costs at the same time?
Enter the dragon
We met Bite Ninja just as they were starting their program at Y-Combinator, and within the first minute of our first call with founders Will, Orin, and Ron, I was thinking: “Why isn’t everybody doing this?!” This was a simple, elegant solution to a staffing problem that could decrease costs and at the same time improve service and salaries.
Bite Ninja brings work-from-home to the gig economy, giving drive-thru restaurants a virtual, on-demand workforce for order taking.
Fast food restaurants face chronic labor shortages because it’s difficult to offer workers high pay and stimulating work. In a typical four-hour shift, restaurants will face a rush hour where everyone’s engaged and the restaurant is making money, but the rest of the time everyone’s sitting around bored and unproductive. Because restaurants can’t simply pay a high wage for a single productive hour of work, they amortize what they can afford to pay over a longer shift – usually paying minimum wage to employees because that’s all that they can afford.
Bite Ninja solves this problem by giving restaurants access to a pool of qualified, trained, and vetted freelancers – called ‘Ninjas’ – that take customer orders remotely. A team of these Ninjas can be spun up for the 45-minute lunch rush — or even just for 20 minutes if a tour bus suddenly shows up — allowing restaurants to pay only for the quantity of labor they need, when they need it.
But the benefits are even greater for workers who can engage in time zone arbitrage. Ninjas can plan their work schedules and choose from remote shifts across the country.
For example, a single stay-at-home mom in Tennessee can start her shift with the breakfast rush in a New York restaurant, then move to breakfast rush for an outlet in Chicago, then Arizona, then San Francisco – and start back again in New York for the lunch shift. She can work a productive and stimulating eight-hour day without ever leaving her home – and if she needs to drop the kids off for school for an hour in-between, no problem. She has that flexibility.
And because she’s working productive hours, she can earn more per hour than she would in the restaurant. All with no commute.
All in all, Ninjas can be paid better that a typical fast food restaurant worker, and have more fulfilling work – which gives restaurants a less transient workforce and better customer service.
Bite Ninja’s founding team is Will Clem and Orin Wilson, with Ron Shigeta as their key executive advisor. Will and Ron are well-known entities in the foodtech space; Will is a co-founder of cultivated meat startup Upside Foods (formerly Memphis Meats.) Ron is a co-founder of IndieBio, one of biotech’s most iconic accelerators. Orin was the CEO of business consultancy C3 Consolidated and is an expert on outsourced technical labor markets.
Their initial target market is the 200,000 drive-thru restaurants in the US, which had 6 billion annual drive-thru transactions and growing in 2019 – the year before Covid-19, when drive-thru customers increased by 39% year-on-year. During the pandemic, consumer demand for drive-thru service skyrocketed, amplifying urgency around labor cost controls, staffing reliability, and consistent quality of service. For added context, pre-pandemic drive-thru transactions amounted to 60-70% of some quick service restaurant (QSR) revenues, with around $100 billion coming from industry drive-thru lanes. Matching customer increases, drive-thru sales increased dramatically during Covid-19; up by 20% in some instances.
The ESG impact
Bite Ninja’s gig economy marketplace could reshape the QSR sector in the near term, followed by restaurants more generally – and ultimately, all of retail.
Equally attractive from an investment perspective, however, is the potential impact the startup will have on the US landscape in terms of environment, social, and governance (ESG) principles.
If Bite Ninja is successful, they could remove upwards of 400,000 vehicles from daily commutes, each of which on average emits the equivalent of 4.6 metric tons of carbon dioxide every year. When Bite Ninja expands its offering to other restaurant functions (around 15 million more employees) as well as to retail more generally (an additional 15 million or so,) then the number of US vehicle figures that could potentially be removed from daily commutes leaps to over 30 million.
Another element of Bite Ninja’s future impact is the community it could benefit the most from improved employment accessibility: rural America.
About 60 million Americans live in rural counties where job opportunities and promising salaries are increasingly difficult to secure. Bite Ninja is poised to change that status quo by democratizing access to quality labor and a quality paycheck without having to relocate. Add to that stay-at-home parents, freelancers, the elderly, the disabled, and many other prospective Ninjas.
Every once in a while, you find a simple solution to a seemingly impossible problem that impacts communities, the environment, and business – which also operates in an enormous market. Our view at AgFunder is that Bite Ninja is one of those rare cases and we cannot wait to see how it reshapes the future of restaurants and retail.