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Pizza Startup Shuts Down After Raising $445 Million (axios.com) 104

Posted by msmash from the thanks-for-all-the-pizza dept.
Zume, a Silicon Valley-based robotic pizza-making and delivery startup, has shut down and is liquidating its assets. From a report: The company had raised $445 million in venture capital funding, including $375 million from SoftBank in 2018 at a $2.25 billion valuation. That's a whole lotta pepperoni. And cheese, which Zume apparently couldn't stop from sliding off its pies.
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Pizza Startup Shuts Down After Raising $445 Million More

Pizza Startup Shuts Down After Raising $445 Million

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  • Cheese sliding problem... (Score:1)

    by Anonymous Coward

    ...solved centuries ago. Have a cornicon on the crust.

  • If you open a pizza-making store in Italy... (Score:5, Insightful)

    by LordHighExecutioner ( 4245243 ) on Monday June 12, 2023 @10:44AM (#63595428)
    ...30-50.000 USD of investment are enough, and no robots are needed!

  • Impressive. (Score:5, Funny)

    by phoenixwade ( 997892 ) on Monday June 12, 2023 @10:47AM (#63595434)
    It takes a lot of skill and talent to raise that much money and not be able to make it selling pizza around all those Technology Professionals - Like losing money selling RedBull at a Developers conference.....
    • would you buy pizza from a vending machine? To me - that experience would be on par with buying frozen crap pizza at the grocery store.

      • Re:Impressive. (Score:5, Insightful)

        by phoenixwade ( 997892 ) on Monday June 12, 2023 @11:40AM (#63595554)
        it would depend on the Pizza, but my understandiong of the concept was that it was substantiall more than 'cooked frozen pizza' or 'Vending Machine' - I gathered that it was a set up designed to automate the prep and cooking of a ;lie as the truck was en-route to the delivery location, so that it was as close to a 'Hot out of the oven' pie as you could get at your office... with only a couple of minutes from oven to your desk. I rememebr the first time I heard about it, and thought 'They are going to get sued by Neal Stephenson' since driving a truck like that was the job Hiro was doing in 'Snow Crash'

        • Re:Impressive. (Score:5, Insightful)

          by istartedi ( 132515 ) on Monday June 12, 2023 @01:20PM (#63596020) Journal

          Did the people who green-lit this idea ever eat pizza? Fresh out of the oven pie burns the roof of your mouth. It's infamous. You have to pit your desire to eat it against not getting burned. A few minutes in the insulated bag on the way bleeds off just enough heat to make it perfect, IMHO.

          Bringing scorching-hot pizza right to your door doesn't solve a problem, it negates a solution that was baked right in to delivery. Pun intended.

          • These are idiots who thought that there is plenty room and incentive at the bottom of the pizza market to put your oven on wheels.

            Is there even room for a stationary automated pizza machine? Probably not.
            Decades it would take to earn back the investment into an automated fast-food machine capable of a single task would be far better invested in expansion of talent, experience and reputation of the restaurant.
            Being "that old place with good/great pizza" beats "that new place with pizza machine" any day.

            • If they could somehow make it cheap enough, I think the value would have been to ultra-small business owners, who wouldn't even need a storefront as they could keep the pizza making machine in their car. Plus avoid the need to drive back and forth to a restaurant (or home restaurant). But there's the rub. Automation is *expensive*. Especially if you're trying to build commercial grade devices that would need to be running all day, every day.

          • I would rather have the problem of "oh my this thing is really hot and I need to wait 3 minutes before eating" than "wow, this pizza is fucking lukewarm and soggy, and you still want me to pay $30 for it."

            One is a problem of waiting a little bit, or blowing on it before taking a bite. The other is a problem of getting a ruined pizza delivered to you and still having to pay for it.

        • I used to deliver pizza as a teenager, and if it is extremely hot the cheese will run off the pizza when you go around corners.

          • Re: (Score:2)

            by Megane ( 129182 )
            Now imagine that the cheese hasn't been melted yet, and every pothole throws grated cheese (and toppings) all over the place.
        • The deliverator in Snow Crash received the pie in a locked box with a countdown timer on it. No cooking occurred in the car.

      • would you buy pizza from a vending machine? To me - that experience would be on par with buying frozen crap pizza at the grocery store.

        If vending machine pizza was as good as the best frozen stuff available at the grocery store, I'd bite. Some frozen pizzas are pure evil, but the best of them are as good as or better than some mid-grade pizza-chain pizzas.

        Getting really good pizza isn't practical in all circumstances, and 'just OK' pizza is often better than no pizza at all.

        • Re:Impressive. (Score:5, Funny)

          by Kiaser Zohsay ( 20134 ) on Monday June 12, 2023 @01:18PM (#63596004)

          Pizza is like sex. When it's good, it's very good. But even when it's bad, it's still pretty good.

          • I've heard that quote a lot, but I gotta be honest. I think the people saying it have not had truly bad pizza. To be fair, it's hard to mess up pizza. The vast majority of pizza I've ever had was good. But I did have pizza from a place once that was so bad I had to throw it out. The cheese had this weird staleness to it and it overall tasted quite bland.

          • Re: (Score:2)

            by catprog ( 849688 )

            I have had pizza that was so bad it actually was bad.

            Aussie pizza with the egg going on last instead of as part of the sauce.

      • Re: (Score:2)

        by ranton ( 36917 )

        Absolutely I would buy pizza from a vending machine. Why wouldn't I? If it sucks I wouldn't be a repeat customer, but what is the harm in trying?

        • Re: (Score:2)

          by OzPeter ( 195038 )

          Absolutely I would buy pizza from a vending machine. Why wouldn't I? If it sucks I wouldn't be a repeat customer, but what is the harm in trying?

          The harm in trying? Potential food poisoning for example?

          • Pizzas are necessarily cooked at a high temperature (600-900 degrees F depending on style) and use pre-cooked toppings, so something needs to go really wrong if you get food poisoning.

          • Re: (Score:2)

            by ranton ( 36917 )

            The harm in trying? Potential food poisoning for example?

            I have gotten food poisoning from traditional restaurants too, so it isn't like this is unique to a vending machine pizza. I think I would notice if the cheese is un-melted, and if it is melted then the temperature of the cook was good enough to kill off any bacteria.

            If I thought the vending machine was just microwaving an already cooked pizza, I would pass. I almost certainly wouldn't like it in that case.

      • Re: (Score:2)

        by tlhIngan ( 30335 )

        would you buy pizza from a vending machine? To me - that experience would be on par with buying frozen crap pizza at the grocery store.

        And yet, frozen pizzas are a big seller at the supermarket - that's why there's so many of them in so many varieties. In the right locations, a pizza vending machine makes a lot of sense. Like say a college or university campus. You're hungry, it's late, a pizza vending machine promising a pie in 5 minutes would be something that would take off. I mean, ordering from a pizza

    • it was a potential massive automation push. If it worked it would mean billions in labor savings and profits (and mass layoffs in the Pizza industry).

      Thing is, they didn't have any issues making the pizzas, the problem was they couldn't drive around and cook the pizzas at the same time, which they needed to do to make the whole scheme work. I suspect the tech will be repurposed for stores at some point. A little less profitable but not a complete waste of money.

    • Re: (Score:2, Funny)

      by smooth wombat ( 796938 )
      Like losing money selling RedBull at a Developers conference.....

      Or bankrupting three casinos.

    • They never intended to make pizza. Only a Dough Pull

  • Flawed business model (Score:4, Funny)

    by gosso920 ( 6330142 ) on Monday June 12, 2023 @10:50AM (#63595448)
    They must have heard the story of the kid who bought a pizza with Bitcoin. and thought, "Hey! Great idea!"

  • I've posted this before (Score:5, Informative)

    by Ecuador ( 740021 ) on Monday June 12, 2023 @10:51AM (#63595450) Homepage

    I've posted this before, but if you see Softbank investing in something, run away. They must be the worst ever at evaluating startups...

    • Part of this is because we worship at the altar of "success", and many times - especially in the tech industry - "success" is more "luck" and other factors not at all related to the rando who happened to take credit.

      We tend to focus on the one or two big wins and not their success rate. But since the tech industry is famous for early investors earning returns of 100x or even 1000x, you still have a net profit, and probably are able to use very favorable tax laws to write down paper losses.

      I'm still always a

    • You could argue that about most VC ventures. Softbank throws money in a lot of directions yet they still make money.

      • Re: (Score:2)

        by Ecuador ( 740021 )

        They don't actually make money, only one big bet (Coupang) has given them profits in the last 4 years - they've lost over $30 billion overall in this time.

        • Actually, they do according to their latest quarterly report. [group.softbank] They even posted a dividend. Now for the amount of money they have invested, they're not raking it in but I don't think there are large investment groups that are raking in double-digit returns given rising interest rates, falling bond yields and looming recession talk over every market.

    • Re:I've posted this before (Score:5, Insightful)

      by thegarbz ( 1787294 ) on Monday June 12, 2023 @01:05PM (#63595952)

      You're suffering from observer bias. You don't hear about successes in the news as much as failures because they simply aren't interesting. Softbank has stupid amounts of f-you money. You don't become so valuable without making good investment choices along side those which fail.

      Sure they shat the bed this quarter posting their largest ever loss. But it was only a year or so ago they were posting record profits, not just record from themselves, but largest ever profits of any Japanese company in history.

      • Yeah, and even when they reach the news, it's often low attention. Often local news only and unlikely to trend in social media. Failures are dramatic. It's appealing to get to feel superior ("I knew that wouldn't work!").

    • I was thinking... we keep hearing about how VCs are getting pickier regarding what they'll fund, and it's making it harder for startups to get funded. But then stories like this one remind us just what a low bar they are comparing it to.

  • They should have asked me... (Score:5, Interesting)

    by Shaitan ( 22585 ) on Monday June 12, 2023 @10:52AM (#63595452)

    My parents were a Pizza Hut management team back in the 80's/90's who travelled around to poor performing stores, took them over for a couple years to sort them out, then moved on. Since they both worked 80hr weeks and nobody could give the boss a hard time about it I spent a lot of time behind the scenes at Pizza places.

    There is a spiky roller you use to perforate the dough. You can get them at any restaurant supply so it is amazing to me that even most pizza places don't seem to know about it. Just roll it over the rolled out/tossed or otherwise thinned out dough and all those little holes give the sauce and toppings a kung fu grip. No more sliding cheese.

    • Re:They should have asked me... (Score:5, Funny)

      by sinij ( 911942 ) on Monday June 12, 2023 @11:01AM (#63595474)
      With a spiky roller you can't get 1B valuation. For that you need AI-vision blockchain enabled JiT production automation with drone delivery.

    • Re:They should have asked me... (Score:5, Informative)

      by Ichijo ( 607641 ) on Monday June 12, 2023 @11:24AM (#63595522) Journal

      The real purpose of that spiky roller [walmart.com] is to prevent huge bubbles from forming while cooking. When the holes get plugged by sauce, they don't provide any grip for the cheese.

      What keeps the cheese from sliding is spreading the cheese closer to the edge than the sauce so the cheese binds directly to the crust.

      Sauce: was once a cook/dough master/driver for PH.

      • Re: (Score:2)

        by Shaitan ( 22585 )

        I believe you because I've probably always done the sauce/cheese in exactly the same way I learned back in the day and that does indeed result in the cheese extending further than the sauce by a respectable margin. Though I do think avoiding those bubbles and an even coat of sauce probably provides suction, like applying a screen protector or window film. Also a second layer of cheese over the other toppings.

        All I know for sure is the result. I can take a piece and turn it vertical and shake without any top

      • What other morsels of knowledge are you able, or willing, to share about the making of Pizza Hut pizzas? (I loved PH - my area went from 5 or so, to just 1 :( )

        • Re: (Score:3)

          by Shaitan ( 22585 )

          I'm sure he has lots of tips to share but another I can pass on is instead of putting on cheese then toppings, sandwich your toppings between cheese layers. It all binds together so nothing comes off even when you have a heavy topping load.

          • Re: (Score:2)

            by martinX ( 672498 )

            I remember this in an Australian PH ad from the 80s. An Italian pizzeria owner was lamenting that all his customers were going to PH, so one of his sons bought a PH pizza back to the shop to compare it. A son said "It has cheese on the top cheese on the bottom and more of what you like in between, hey Papa!" That is stuck in my head, along with the ingredients on a Big Mac.

    • Re: (Score:3, Insightful)

      by perkypangolin ( 10295227 )
      The spiky roller is used to perforate the dough, often for bar style American pizza, when the dough hasn't really been proofed correctly. A perforated dough base yields a dry and crackery crust and prevents the gluten strands from baking properly and releasing their full texture and flavor. I think the issue with the Zume pizza was that they were trying to make the pizzas in moving vans, so everything was just sliding around. It seems like the story here is really about the excess of silicon valley invest

      • Re: (Score:2)

        by ranton ( 36917 )

        What kind of people invest in these things? It boggles the mind.

        There was so much free money being pumped into the economy that the wealthy were stretching to find places to invest it. They didn't want to just put it in a savings account making 0.1% interest. It isn't too surprising that companies automating tasks like making food were getting a significant amount of funding. This one just didn't work out.

        • Ok. What kind of pitiful bank are you dealing with that has savings accounts that only offer 0.1% interest? You might want to look into that.

          • Re: (Score:2)

            by ranton ( 36917 )

            From 2018 and 2021, national average savings rates fluctuated between 0.01% to 0.10% [forbes.com] Rates are higher at about 0.3% today. That of course is because major banks are keeping those rates artificially low, because you can easily go online today and get 4.25% from a number of FDIC insured online banks.

            My comment was mostly tongue in cheek because no wealthy investors were getting 0.1% on their money, but I was correct that this is what most people were getting in their savings accounts a few years ago.

    • Re: (Score:3, Informative)

      by Midnight_Falcon ( 2432802 )
      This might be true but the Pizza Hut style pizza is a bit of an abomination of fast food, marketed to children and people with lowbrow tastes. It's texture barely resembles a real Napoletan style pizza -- starting with the quick proofing process (instant yeast fails to produce the dough flavors and gluten as a slow-proof method using fresh or even active dry yeast), and extending to those "holes" which break the gluten layer on top of the pizza and change the baking entirely. Pizza places 'know' about it,

      • Neopolitan-style margherita pizza seems a lot less greasy. Something to do with the slices of cheese they use instead of grated stuff.

        • The traditional Napoli style of Margherita pizza uses only a drizzle of olive oil in a circle around the pie, because using more would make it not cook right at the high wood-fired temps of 900 degrees F or so. Most US pizzerias making "NY style" (which is a Neopolitan adaptation) will make it too greasy by using a ton of shredded full-fat mozzarella (Grande is the food service brand most popular) and then pouring on the olive oil. They could totally make it less greasy with just less cheese and olive oil

    • Have you actually tried baking the pizza at speeds of 30-40 mph though? With the perforated dough? Probably not.

      The issue here is they're probably trying to use greasy mozzarella, so as soon as you start to heat it up, it sheds a lot of grease and reduces the friction between the cheese and the underlying sauce/dough. Once the dough firms up and the cheese melts into a clump, it can slide as an entire unit.

      Even "proper" delivery pizza can feature cheese and toppings sliding off the pie if the driver is car

  • Who'd have thought that driving a massive truck with a robot kitchen in the back and having to drive it around all night would be a terrible idea?

    • You forgot the 100kW diesel generator to power the oven

      • It doesn't take nearly that much.. there are a lot of pizza trucks in my area and they are all propane or wood fired. I have a propane-fired Ooni and it's fucking awesome.

    • I feel like there's a movie starring Kurt Russell somewhere in that sentence that desperately needs to be made.

  • Pizza SEEMS like one of those things that would be well suited to a robot. The process of making a pizza is pretty straight forward.

    • Re: (Score:2)

      by kmahan ( 80459 )

      As does making sub sandwiches (subway/jimmy johns). Of course it comes down to how to keep the machines sanitary and make them fast enough. Though that is also easily solvable - just don't let humans near the prep area.

    • I was thinking the same thing. The only hard part that would be hard for a machine would be stretching the dough. If you assume a pre-formed (frozen?) dough, then you'd just need a machine to deposit sauce, deposit cheese, deposit toppings, then insert in the oven. Another machine would pull the pizza off the oven and put it in the box. You could even have an automated pickup process where the pizza boxes are put in little lockers, as is often done nowadays for online order pickup (e.g. Home Depot).

      I ha

    • Pizzas are easily automated: https://i.imgur.com/Pbf25fU.mp... [imgur.com]

      This doesn't get you a $2.5B valuation from VC bros though.

    • https://www.businessinsider.com/costco-pizza-sauce-robot-2018-4 [businessinsider.com]Costco's not totally robotic, but they've had machines to stretch the dough & apply the sauce for years.

      It's not the best pizza you've ever had in your life, but it's pretty decent for $2/slice.

  • Uhhh (Score:5, Informative)

    by paul_engr ( 6280294 ) on Monday June 12, 2023 @10:59AM (#63595464)
    Zume was notoriously bad at pizza and quit trying years ago. They had pivoted to compostable food packaging. Their pizza was terrible and the automation was designed to impress the investors, not do automation well.

    • Zume was notoriously bad at pizza and quit trying years ago. They had pivoted to compostable food packaging.

      Their pizza was terrible and the automation was designed to impress the investors, not do automation well.

      From pizza to compostable food packaging you say - well, not surprised the pizza was terrible then.

    • So they pivoted from making cardboard pizza to ... cardboard?

    • Re: (Score:2)

      by necro81 ( 917438 )

      Zume was notoriously bad at pizza and quit trying years ago. They had pivoted to compostable food packaging. Their pizza was terrible and the automation was designed to impress the investors, not do automation well.

      Next they should pivot to edible packaging, then to compostable pizza!

  • Sliding cheese was due to parbaked crusts (Score:1)

    by Anonymous Coward
    Crusts were prebaked, meaning the tops were partially cooked before putting the cheese on. Cheese won't slide off if you make pizza the right way.

  • Had they only used AI to generate individual pizza recipes for each customer they could have made it. Perhapes they should have used blockchain to certify that each customer was getting a fresh slice.

    In the end I think migrating their code from Python to Rust and moving the infra to Kubernetes running on the Cloud is what brought them down. I mean 445 mill ? That's what like a few months on AWS ?

  • Now my pizzas will stay the way they are for the forseeable future - imperfect, slightly misshappen, with crusty, uneven bits around the sides, and with toppings poking through the cheese at random place because the layering is uneven.

    How terrible.

  • $half a billion and they can't get a pizza startup off the ground. Hilarious.

    FWIW I thought the whole robo delivery thing was pretty stupid, wasteful, expensive, etc until I saw this Mark Rober video about it, which I found pretty compelling.

    https://www.youtube.com/watch?... [youtube.com]

    I feel a lot less like it's a boutique solution, just more of a different one for specific circumstances.

  • When was breakeven? (Score:4, Informative)

    by Petersko ( 564140 ) on Monday June 12, 2023 @11:58AM (#63595610)

    What was the revenue prediction model that led to them getting $445 million? Assuming they could make one unit and sell it at $50,000 with 15% markup, they'd have to sell... 60,000 of them.

    I mean, dream big. But good lord...

    • It gets stupider than that.
      If this had all worked they would have been something like Hunt Brothers Pizza.
      Hunt Brothers annual revenue is around $30 million.
      At $445 million this early they were expecting to have at least half of the sales that Dominos has in california.

  • For the busy Tech professional who has no time for chewing or holding pizza, The Pizza Shake!

    From a comment above, " I think the issue with the Zume pizza was that they were trying to make the pizzas in moving vans, so everything was just sliding around.".

    Necessity is the Mother of Invention, so let the moving vans do part of the work of blending your Pizza Shakes.

  • Way south of Silicon Valley (Score:3)

    by smap77 ( 1022907 ) on Monday June 12, 2023 @12:08PM (#63595640)

    Zume HQ in Camarillo, CA is between LA and Santa Barbara and hundreds of miles south of Silicon Valley.

    It's a packaging company, not a robot pizza company, and not from Silicon Valley. Seems like Axios got all the main points wrong except for the bankrupt part.

  • Considering costs of a pizza (Score:4, Interesting)

    by Virtucon ( 127420 ) on Monday June 12, 2023 @01:11PM (#63595974)

    I just ordered two pizzas from a local storefront.

    With Delivery, Tip, Tax, etc. Two Large (15") pizzas were over $45

    They couldn't make this model work? really? There are pizza vending machines now popping up and they couldn't make this work?

    Strange.

    • pizza vending machiness with real fresh made? or just heating up frozen pizza?

    • Delivery and tip? Here in the northeast, we're over $35 for a large pizza just for dining in. Papa Gino's is my favorite, but I don't eat there anymore (of my own choice) because it's gotten crazy expensive.

      Of all restaurants, pizza places have had among the greatest price spikes since the pandemic. It's stupid.

  • WHY (Score:3)

    by peterww ( 6558522 ) on Monday June 12, 2023 @01:43PM (#63596136)

    SoftBank gave 375 MILLION dollars to a pizza startup? You could hire 187 people at a million dollars each and still have 187 million dollars left. Jesus christ. Now I really wish I had just started a start-up for, like, a sneaker management service, back when they were just doling out millions. Could've retired by now.

  • I bet they found their way on the Springfield lot of failed food trucks (this time a robo-food truck) next to separately baked pizza slices instead of cutting the whole pizza, maybe the idea worthy the cartoon, but at least the circa half billion $ is real.

  • Startups like this remind me of the Mel Brooks movie. Fail so spectacularly that your investors walk away without even asking where their money went.

  • This was always an obvious scam. That SoftBank fell for it to the tune of 9 significant figures tells you everything you should need to know about the quality of analysis coming out of SoftBank. Your average Middle Schooler should have been able to figure out why this inherently wouldn't work. My bet is on ~11 trillion dollars in "wealth" disappearing before the overvaluation in this sector finishes unwinding.

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