Venture capitalist Tom Loverro predicted an impending mass extinction event for early and mid-stage companies last year, forecasting that the years 2023 and 2024 would surpass the impact of the 2008 financial crisis on startups. According to PitchBook, over 3,200 startups worldwide closed last year, resulting in more than $27 billion in lost investment funds. Despite this global crisis, South Korean startups are garnering attention for their technological prowess, acknowledged by major domestic IT giants and honored with the CES Innovation Award. ChosunBiz conducted interviews with some of these startups to explore their distinguishing factors. [Editor’s Note]
The fast-food industry has a rich history of embracing technological advancements, with the latest trend being the integration of robotics. These automated systems are revolutionizing tasks from taking orders to food preparation, fundamentally reshaping the fast-food landscape. This shift has attracted significant investor interest, with venture capitalists pouring a staggering $364.5 million into kitchen robotics in 2022, according to PitchBook. By September 30, 2023, investments had already reached $153.7 million.
While there has been notable progress in food preparation robotics, challenges persist, especially in frying chicken. Miso Robotics, a prominent player, faced hurdles during testing of its Wingy robot at Buffalo Wild Wings and Wing Zone, primarily due to limitations in flexibility, mobility, and compactness.
Amid these challenges, however, a promising solution awaits recognition. Enter Robert-E, developed by South Korean startup Robo Arete. This innovative robot, which has been showcasing its technological prowess in the Korean market since 2020, is set to debut in New York this year.
Robert-E streamlines the entire process of frying chicken, from coating it in flour and frying powder to dropping it into the fry basket and shaking it throughout the cooking process to prevent sticking and overcooking. It even shakes the chicken before blending it with sauce to eliminate any excess oil. Impressively, the robot can fry up to 50 chickens in an hour, effectively replacing the workload of three part-time human employees. With the success of Robert-E, Robo Arete operates its own chicken franchise, Robert Chicken, with ten stores across Seoul and its first overseas store in Singapore.
Robo Arete is now gearing up for major expansion. The company plans to open a flagship store in Manhattan spanning approximately 250 square meters. In addition, Robo Arete will launch a Robert Chicken store in Long Island, further solidifying its regional presence. But the ambition doesn’t stop there. In Quezon City, Philippines, Robo Arete prepares to make a grand entrance at the OPUS Mall with a Robert Chicken store in collaboration with Hungry DAO and TFG, entities with a strong foothold in the Philippine food service industry.
The momentum extends to the B2B front. Recently, the company has forged partnerships to penetrate the U.S. market further, teaming up with 365Ho Holdings to distribute its robots across Oklahoma, Texas, and Arkansas. Robo Arete also supplies robots to renowned Korean brands like GS25, Nuri Chicken, BHC Chicken, and Hangry Joe’s Hot Chicken.
In a recent interview with ChosunBiz, Kang Ji-young, the founder and CEO of Robo Arete, shared plans for the year ahead. “We aim to expand our lineup of robots and distribution channels,” Kang said, highlighting the company’s goal to achieve global B2B sales of 100 units, with an annual revenue target of 10 billion won.
What motivated you to delve into franchise operations in addition to developing robots?
“I didn’t originally plan to start a franchise. My initial idea was to develop robots capable of handling repetitive tasks and sell them to existing businesses. However, I soon realized I couldn’t sell these robots without first testing them myself. So, I decided to open a chicken restaurant, and that’s how I ended up here.”
Experiencing every aspect of kitchen operations hands-on from the seller’s perspective could be advantageous for continually developing robots in a user-friendly direction.
“Indeed. Many companies often develop their products without a clear understanding of real kitchen environments. This lack of insight leads to impractical recommendations such as altering kitchen designs to accommodate robots. For instance, some companies suggest reinstalling gas pipes or ensuring extra space for robot installation, which invariably increases costs for users. However, robots are intended to enhance human convenience, so it seems counterintuitive to expect humans to adapt their kitchen environments to accommodate them.
Furthermore, considerations regarding cleaning cycles and methods are often overlooked. Take, for example, chicken frying robots; despite their efficiency, issues arise with oil splattering during operation. Some companies discourage daily cleaning due to perceived difficulties or even prohibit water cleaning, citing the risk of electric shock. Yet, in a space like a kitchen where hygiene is paramount, infrequent or challenging cleaning procedures undermine the purported benefits of such robots.
Robo Arete, on the other hand, operates under the principle of ‘not changing existing spaces.’ Our design philosophy revolves around compactness, as deploying robots as complete units is most practical. However, when this approach isn’t feasible, our products are modularized to allow on-site assembly tailored to the customer’s space. Additionally, we’ve minimized constraints related to wiring and optimized the robot’s operations for efficiency, thereby enabling customers to save on electricity costs.”
What efforts are being made for the most important aspect, ‘taste’?
“This year, our main focus is on expanding into international markets. So we’re dedicated to supplying Korean ingredients to foreign stores without compromising their original taste. Historically, our main approach to entering overseas markets was localization. However, with the rising popularity of Korean food culture, especially among younger generations influenced by dramas and other media, there’s an increased demand for authentic Korean cuisine. As part of our response, we recently obtained FDA approval for Robert Chicken’s powder and sauce. We’ve also developed new recipes that preserve the original taste while excluding meat from the ingredients, ensuring smooth export inspections.”
With your company running both a franchise business and a B2B venture focused on robot sales, how is the revenue divided between these two operations?
“The B2B business only started generating revenue last year. Up until then, revenue came solely from the franchise business. So, it’s a bit challenging to compare the two at the moment. (Laughs) Nonetheless, given the promising growth prospects, we initiated the B2B venture and aim to balance their contributions gradually. This year, our target distribution is 60% for the franchise business and 40% for the B2B business.”
Robo Arete has seen substantial investment previously. Can you share the purpose and target amount for your current fundraising efforts?
“We secured a Series A investment totaling 7.5 billion won in 2022 from leading entities such as Korea Investment Partners, GS Retail, Industrial Bank of Korea, Smart Study Ventures, Mega Investment, and Korea Credit Guarantee Fund. Prior rounds witnessed participation from Korean tech giants like Naver, as well as venture capital firms including We Ventures, Bluepoint Partners, and Korea Venture Investment, accumulating a total investment of approximately 11 billion won.
We plan to use the additional investment to make a significant push into international markets. This will involve hiring more staff and increasing our investment in development. To support these efforts, we’re looking to raise around 30 to 50 billion won.”
What are your plans for going public?
“We’re currently in the process of selecting an underwriter for our IPO. After finalizing this, we intend to make any necessary structural improvements before aiming for a listing by late 2026 or early 2027.”
