Nov 23, 2021

El Pollo Loco Those chicken wings you ordered could be delivered straight to your backyard sooner than you think. Flytrex, a drone delivery startup from Tel Aviv, just secured a $40 million investment to ramp up its operations across the U.S. This series C funding round brings the company’s total funding to date to $60 million. According to a release from the company, the funding will “pave the runway for a future where drone delivery is the rule rather than the exception.” The foundation is already in place, in fact. Flytrex first launched its drone delivery service in Iceland in 2017 and started testing deliveries in North Carolina in 2019. Flytrex has also tested the drone delivery waters in California through its partnership with El Pollo Loco . It’s not alone in the space, either. Virtual kitchen company C3 has tested drone delivery, also in California, while Uber Eats has experimented with McDonald’s deliveries via drone, for example. Since those tests began, the technology has become more sophisticated, while the need has become more critical thanks to the sharp rise in delivery demand during COVID-19, coupled with a crushing labor shortage in the restaurant industry. According to Flytrex, the company’s volume of orders across North Carolina has increased more than tenfold since February. "On-demand drone delivery has skyrocketed since the pandemic began and is becoming much more mainstream, much faster than expected,” Yariv Bash, CEO and co-founder, said in a release. “We’re excited to continue working with the FAA, the North Carolina Department of Transportation and others to bring swift, affordable and sustainable on-demand drone delivery to more partners, communities and consumers across the country.” MORE FOR YOU The FAA and Department of Transportation pieces are perhaps the final hurdles to clear for drone delivery to become somewhat commonplace throughout the country. For its part, Flytrex participated in the Federal Aviation Administration’s Unmanned Aircraft System Integration Pilot Program last year and continued with the FAA’s initiative, BEYOND, to solve for additional challenges of UAS integration. An inquiry as to whether or not Flytrex was working with other departments of transportation outside of North Carolina was unreturned, but the company’s ongoing work in the state will likely help create a blueprint for broader rollout in the space. So far it’s been baby steps and until the FAA fully clears the runway, that is likely to be the case. But Flytrex’s latest funding haul will certainly enable the company to be primed for takeoff whenever that green light is given. Automation is having quite a moment in the restaurant space in general, from delivery opportunities like drones and robots, to the back of the house fryers. Chipotle recently invested in Nuro, for example, while DoorDash launched a new team called DoorDash Labs to focus on robot delivery and recently acquired Chowbotics for automated meal preparation. Uber has taken a stake in Serve Robotics, while C3 founder Sam Nazarian is leading a seed capital round for Nommi to build a standalone robotic kitchen and White Castle is expanding the rollout of grilling and frying robot Flippy from Miso Robotics . There’s a reason investors are pouring money into automation companies right now. The pandemic has accelerated our collective comfort levels with such contactless technology, for starters. Operators have also grown more comfortable, as well as more desperate as labor shortages grip the industry. There are over 1 million fewer restaurant workers than there were in 2019, for instance, as well as an all-time-high quit rate. Automation can fill those labor gaps while also facilitating operational efficiencies–a big deal as operators juggle high volumes through multiple channels. The Nommi machine, for example, is able to hold 330 bowls and lids before needing a refill. In fact, about 50% of U.S. restaurant operators said they plan to use automation technology in the next couple of years to help with labor shortages. Where does drone delivery specifically fit into all of this? The potential is more intriguing than ever, as drones offer faster speed of service–a big deal as drive-thru bottlenecks grow. For context, Flytrex’s drones are automated to fly at 32 mph and can circumvent traffic. Further, automated drones require less labor to function, and therefore lower fees, which have become a major pain point with delivery providers charging up to 30%. A 2019 study found that automated delivery could reduce delivery costs by up to 90%. Most chains rolled high delivery costs into their menu prices, so drone delivery has the potential to excite not just investors, but also consumers who sustain the market.