A hefty dose of magical realism has been applied to the Bogota food scene in the past twelve months, as an explosion of fine dining restaurants and a massive influx of venture capital to food tech companies seems to defy the grim reality of the local and global macroeconomic backdrop facing Colombian restaurant owners.
Recently the top 50 restaurants in Latin America were announced according to the “World’s 50 Best” list, and there were 10 Colombian restaurants in the top 100, including 5 within a 10 minute walk of my apartment. But these lists obviously have a time lag and it is the explosion of new restaurants in the capital over the past few months that have really left me both excited about Bogota’s trajectory as a food destination to rival Mexico City / Lima, but also question if I am the crazy one, because the economics for restaurants right now are not pretty and Bogota only has so many wealthy residents and tourists who can afford to eat at these places
Oda, Ideal, Ukiyo, Cascajal, Fiero, Malva, Pepina Bogota, and Frenessi are just a few of the places that have opened recently to complement last years cohort of Contracorriente, Humo Negro, La Pinta, Tierra etc… and there are more places near me in Chapinero Alto opening in the near future that have invested the money in design to at least put them in the same category.
Simultaneously, Bogota seems to be experiencing a boom in VC investment in food tech (primarily cloud restaurants / dark kitchens) on the back of Rappi’s success. I occasionally search my VC-deal newsletters for Bogota-based companies and in the past year or so I have seen three Bogota-based food companies raise serious amounts of money to scale and expand beyond Bogota/Colombia:
- Nov 9 2022 – Muncher, a Bogotá-based dark kitchen foodtech platform, raised $27 million in Series B funding led by Glisco Partners.
- Oct 10 2022 – Colombia’s Foodology Raises $50M in debt and equity with funds from Maluma, Abu Dhabi’s Chimera
- May 4 2022 – RobinFood, a Bogotá-based cloud-based restaurant company in Latin America, raised $32 million in funding led by Blue Like an Orange Sustainable Capital, Palm Drive Capital, and Minerva Capital.
- Oct 4 2021 – Foodology, a Bogotá-based cloud kitchen startup, raised $15 million in Series A funding. Andreessen Horowitz and Base Partners co-led, and were joined by Kayyak Ventures and Jaguar Ventures.
These raises for Latam-based startups are eye-opening, especially in a sector with large capital requirements to scale that are direct to consumer and have little to no form of recurring revenue / assurance of high customer LTV. And to see a firm like A16Z involved makes it all the more noteworthy. I have enjoyed the food from Muncher brands Franco and Nimis that have been heavily discounted on Rappi, presumably subsidized by this VC money, but I have no intention of rebuying when they are not discounted. RobinFood runs a chain of highly automated restaurants called MUY with plates available from as little as $1.50, and Foodology runs a few cloud-brands of which I’ve only tried one and did not enjoy at all (Crunch Pizza).
I’m not a VC (yet), but if I were these are not the businesses I’d be making large bets on. It feels exactly like the 15 minute grocery delivery companies or the scooter companies before them – businesses that only grow thanks to VC money subsidizing the end consumer, but no fundamental unit economics/competitive advantages to build sustainable businesses.
Meanwhile, I’m running two restaurants that have suffered in the second half of 2022 as inflation has eroded the small but positive margins we were enjoying in the first half of the year. My public is wealthy by Colombian standards but remains price sensitive, and the increases in prices to the menus throughout the year have caused small but notable declines in volume. Key ingredients like bread/eggs/milk/butter/onions/tomatoes/coffee and more have seen price increases of 25%+ this year, and I just can’t pass on those increases to the customers without facing a backlash.
I do believe there is something to be said about new places opening in this environment and being able to set new anchor prices in the public’s eye, cognizant of the inflationary backdrop. If Mesa Salvaje and Pizza Paraiso were starting today we’d surely be able to set higher menu price points and not receive a backlash. But I remain skeptical that all of these new places, presumably with financial investors or debtors expecting a return on investment, will find enough business between rich Colombians and tourists to stay afloat, despite expected growth in tourism. For now, though, it’s a great time to visit Bogota and enjoy its gastronomic boom.
Let’s see if Colombian magical realism is a real phenomenon or whether it is confined to the realms of fiction.
Ross Rambles 