ClusterTruck, Kroger Partnership Aims to Fix 'Broken' Model
INDIANAPOLIS - The co-founder and president of ClusterTruck in Indianapolis says the recently-announced partnership with Cincinnati-based The Kroger Co. (NYSE: KR) seeks to address what he calls the shortcomings of the third-party food delivery industry. The software-driven food delivery company and grocery chain are partnering to create specialized delivery kitchens in Carmel and Indianapolis, among other locations. Chris Baggott says ClusterTruck has been looking for new partners for about a year and he thought grocery chains might be receptive to the idea of prepared food delivery.
In an interview with Inside INdiana Business, Baggott said the Kroger Delivery Kitchen seeks to fix the model used by third-party delivery services like Grubhub and DoorDash.
"They're third parties. There are a lot of moving pieces and the issue is that because of that, it's very difficult for anyone in that supply chain to make money. It's hard for the drivers to make money. It's hard for the customers, without having to pay large fees, get the service and it's hard for the third parties to make money without excessive fees. So we thought this is broken; nobody's really happy with it. And we thought if we could come up with a system that actually makes the customer happy and makes the driver happy, that will work."
The ClusterTruck model, Baggott says, uses software to streamline when the food is made and how quickly a driver can deliver it. The food is made in ClusterTruck's, and now Kroger's, own kitchens, which he says helps with that efficiency.
Baggott says the partnership with Kroger is just in the beginning phase, but he is hopeful to see growth in the near future.
"This is a 'crawl, walk, run' partnership," said Baggott. "The first thing we want to say is 'Can we work together? Do we like each other? Is this going to be compatible going forward? Will consumers buy from Kroger Delivery Kitchen?' You know, the idea would be, ultimately, that Kroger would open kitchens all over the country; Kroger would repurpose kitchens that already exist in stores. The sky's the limit."
Baggott says the new Kroger Delivery Kitchen in Carmel is seeing early success with volume doubling just one day after opening. He says it appears consumers don't have any qualms about ordering food through the Kroger chain, or its King Soopers brand in Denver.
"We want to grow the business. We want to own the market. We believe that the third-party delivery model is fundamentally broken and this is the early innings of prepared food delivery and we have every opportunity to win."