MUY, a cloud-kitchen startup with a Colombian DNA, has a clear-cut low-cost meals market to explore in Latin America. The food tech’s chain has just arrived in Brazil with an ambitious plan to invest more than $150 million throughout five years, becoming a reference in cloud kitchens focused on day-to-day affordable homemade meals.
The starting point in the country is São Paulo, where MUY began its operations last month through a delivery-first cloud kitchen with an initial capacity to produce 20,000 meals, partnering, at first, with delivery platforms such as the leading Brazilian app iFood. Afterward, MUY wants to be a Domino’s-like platform, but for day-to-day affordable food, with their own delivery service.
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“We started in Colombia two and a half years ago, and in Mexico one year ago. We have a business model that is based on a cloud kitchen where we have several brands to serve through delivery to different users. In Brazil, we are going step-by-step, starting with delivery,” said MUY’s co-founder and CEO, José Guillermo Calderón, in an interview with LABS. After a few months focused on delivery, MUY will open its doors for physical customer service.
This is what RobinFood (owner of anchored brand MUY) calls the “hybrid model”, that is, in the same physical space, there’s a MUY restaurant to serve customers and, in the kitchen, the production of meals for MUY and other brands. As each one focuses on consumption moment (lunch, dinner, weekend food) they do not compete with each other and optimize resources.
In Brazil, MUY will probably open brick-and-mortar stores by April 2021, as it already does in Bogotá and Mexico City, where it works with the main delivery platforms in 41 units. “We have others under construction, the number changes every time,” he added. So far, MUY has had more than 400,000 people who have used its services.
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“It is going to take at least three months but we expect to open our first physical location in April. We will start working with iFood and then we will start launching our channels and opening our first location. We expect to continue growing with cloud kitchens, with more than 10 or 20 locations in São Paulo by the end of next year, depending on how fast will be the recovery from COVID-19,” explained Calderón.
Calderón decided not to open 20 physical locations in Brazil at first because the first physical units in Colombia and Mexico didn’t work and eventually closed. The CEO said he is taking it easy in Brazil, first getting to know the country’s consumer profile.
In Colombia and Mexico, MUY does not leave free time slots in its kitchens’ agenda. On business days, the locations serve in-person diners and delivery orders during the day and at night. And on weekends they become delivery-first.
For each country, dishes and prices that fit the local culture
Each country has its food routine. Brazilians are keen on the so-called ‘Prato Feito’ (a ready-made dish that usually has rice, beans, salad, and meat) and MUY is also in trials for the ‘strogonoff’ and ‘feijoada’. In Bogotá typical dishes are based on rice with red beans, ground beef, plantains, and pork rinds. In Mexico, there is pulled pork.
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In Brazil, plates will range from BRL 12,90 to BRL 14,90 depending on the dish. But it will be lower than BRL 20. According to Calderón, at the beginning it will cost MUY about BRL 10, BRL 11 to produce the dishes. “When we scale up (the operation) we will be able to produce it by BRL 6. But in the beginning, we will have to invest.”
As a startup thinker, RobinFood and MUY’s co-founder gauges big: he wants to open around 1,000 MUY units across Brazil and with that, create more than 10,000 jobs, with an investment of nearly $150 million until 2025. “Next year is super clear. We should account for 150 to 250 people in the country. In two years we should have 1,000 people in Brazil if there are vaccines and normal opening of restaurants,” he said.
With the pandemic, MUY does not have offices anymore. Overall, the company currently has 700 employees and should end next year with 1,500. By the end of 2022, it should reach 3,500.
Driven by technology, MUY innovates with a contactless restaurant
MUY’s operation is driven by technology. The company invests in the development of 100% proprietary technology and has artificial intelligence that predicts a demand forecasting model and order recognition patterns, allowing the company to have a low food and money waste rate.
In Colombia, MUY’s ‘3.0 restaurant’, launched this year, saw demand soar. It is an automat restaurant with touch screens on which customers order their food. It is completely contactless, as the screen tells consumers when the order is ready and guides them on where to pick up the meal. Payment is done through machines with cards or cash.
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RobinFood, for which Calderón is also co-founder and CEO, has a portfolio of brands. One of them is the FoodCoins loyalty program that the company will implement in March 2021. “When you become a loyal customer, you will start gaining food coins and you’re able to redeem these food coins in our ecosystem of brands. We are starting with the MUY brand, but five years from now we should have five brands to tailor the local taste and local need,” he said.
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The past, present, and future of MUY
Calderón founded MUY in 2018 with Miguel McAllister. The two well-known Latin American entrepreneurs are also founders of Domicilios.com and Merqueo, both companies valued at more than $100 million.
Calderón co-founded Domicilios in 2007. But he had a problem with growing and expanding it to popular neighborhoods and people who work in corporations, with the need for day-to-day lunches, such as iFood now offers with Loop (diary affordable meal prices for the lunch hour).
“We were looking for a way to unleash that part of the market. We wanted to scale and we couldn’t find partners to do that. We wanted to scale with pizza, I called the CEO of Papa John’s, but they are super fragmented, they have different menus every day. It is hard to maintain a good service level. And when I talked to iFood, Uber Eats, Rappi guys, they had the same problem. They cannot go and be affordable for what we need in Latin America,” recalled the former CEO of Domicilios.com.
That is when he thought of creating a new player, and MUY came up with the idea to offer what Calderón called a “10 times better for the Latin America foodservice market” platform, for those who are in the emerging middle class.” That is how we started, having a problem on the delivery platform side of the equation,” explained Calderón.
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Domicilios turned out to be successfully acquired by the German holding Delivery Hero, that this year joined forces with iFood (former Domicilios’ rival) in Colombia.
MUY raised a $15 million Series B round in 2019 to finance its expansion in the region. Among its investors, there are American and Spanish venture capital funds Seaya Ventures, ALLVP, Palm Drive, 14W, Endeavor Catalyst. “We do rounds globally. We are planning to raise our Series C. It should be around $16 million. We don’t have Brazilian investors yet, but we will seek them with our Series C now that we have local operations.”
Even with the pandemic, the startup managed to end the first half of 2020 with revenues of $4 million. “We failed the first weeks of COVID and then we recovered. We learned how to operate during a pandemic and now we are much bigger than what we were before.” MUY also recently raised $16 million in debt funding.
“This will let us be able to grow faster. With the debt we can leverage our expansion to open the cloud-restaurants we will have next year in São Paulo. We now have our financing plans covered for the next 18, 20 months.”
Giant plans for Latin America
Calderón’s goal is to be in most locations as possible but not only in the main cities. In the long-term, he wants MUY to be suitable for people who live in small cities with 10,000 to 15,000 inhabitants in Latin America, “but this will take us 10 years, maybe.”
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His initial plan was to go to the six main economies in Latin America. Peru and Chile, from one year to two years from now. Argentina was also included, but now the expansion to the country is on hold. “The hyperinflation in Argentina tends to be a difficult task, currently, with their economy, we think it is not the best step. When I was a CEO at Domicilios we bought a company that was Buenos Aires’ delivery biggest player. We love Argentinian users but the supply chain is a concern now.”
For MUY’s future ahead, founders believe the company will be selling more than $1 billion by 2026 and, in the aftermath, they will have enough size to be able to public-list the company in the US.