Auto analysts and other industry observers keep a very close watch on developments at Tesla. No surprise there, as the company is the leading manufacturer of electric vehicles, makes high quality and innovative products, and its sales are growing rapidly around the world. But even they were taken aback by an announcement the company made on June 1.
That’s when Tesla said it was filing for a patent to use its name and logo in restaurants. Many people interpreted this as a sign the company will soon launch a chain of restaurants and cafeterias.
But why do this? After all, Tesla is primarily an auto maker, and restaurants and autos are two different worlds. Why would they get involved in a completely different industry - particularly one that is very competitive and in which it has no experience?
The answer is that they overlap, and restaurants could in fact fit very well with Tesla’s long-term growth strategy. Looking back at an event in the middle of 2017 makes this easier to understand.
That’s when Tesla opened what at the time was the largest supercharger station in Kettleman City, Calif. Conventional gasoline-powered cars take just a few minutes to fill. Charging EVs, however, takes much longer. The company decided to offer owners a comfortable lounge where they could wait, relax, eat, and purchase small items while their vehicles charged.
For example, a cold-brew coffee costs $3.75, a Tesla T-shirt $35, and a Tesla baseball hat $25. They can play a variety of games, use the restrooms (which are kept very clean), or use diaper-changing stations. Patrons say the sandwiches are tasty and the service friendly. Reviews of the lounges posted on Google are very favorable.
Is Tesla simply making lounges available to owners as a pleasant way to pass time while their vehicles charge or are they much more than that - an opportunity for the company to learn basics about the retail and food industries, determine the best way to mix food, entertainment and atmosphere, and essentially learn how to keep customers satisfied?
In theory, the lessons the company learns could be very valuable if it decides to open a new chain of restaurants, and Tesla strongly hinted at this possibility on June 1, when it filed a new patent. It stated that the “Tesla trademark registration is intended to cover the categories of restaurant services, pop-up restaurant services, self-service restaurant services and take-out restaurant services.”
The idea of branching into a very different industry is not as far-fetched as it may seem. Tesla’s primary focus is on electric vehicles and will remain so, but over the years it has diversified into both related and completely unrelated businesses, including solar panels, energy storage systems, battery production, tunneling, brain chips, and AI, among others.
Moreover, owning a chain of restaurants probably is an alluring idea given the size of the market. Consider this: The global software market is estimated at approximately $400 billion. The global seafood market is also $400 billion. But even when combined, the global food market dwarfs both of them; it is estimated at $4.8 trillion, and by some measures $6.2 trillion.
Tesla owners are not only happy with their vehicles but are fiercely loyal to the brand. According to Casgains Academy, the company regularly tops the Consumer Reports list of satisfied customers and “a staggering 98% of Model 3 owners say they would buy the car again. Whatever Tesla puts down its loyal customers tend to pick up, meaning they could be all-in on the restaurant plan.”
This suggests that if Tesla would launch a company-branded restaurant chain, it would have a ready base of patrons. In fact, it may already have a foot in that door.
One long-time member of the Board at both Tesla and SpaceX used to be on the Board of Chipotle, a Mexican grill firm. He has been in the food industry for 15 years and owns a chain of restaurants in the Midwest that provides fresh food grown by local farmers. Some speculate that he may use his influence to push the company into the food industry and tap into its enormous size and potential.
The name of that Board member is Kimbal Musk, and he is Elon’s younger brother.
They believe Kimbal wants to change the food industry by making it focus on healthful, unprocessed foods, and that it will use the Kettleman City station as a model. Starbucks leveraged its name to profits and high-priced drinks through a similar business model. Will Tesla merge this strategy with the basic concept of gas stations?
In March 2021, Tesla filed patents and related documents with the government that show it is working on the concept of drive-in restaurants with solar canopies. According to Casgains Academy, “We are witnessing Tesla open up a major entertainment business that will be built around its existing super-charging network of more than 2,700 superchargers. This is literally the awakening of a major restaurant chain that has the potential to make billions of dollars in profits and even incentivize customers to purchase Tesla vehicles.”
Kimbal Musk once stated that the food industry is so inefficient and unhealthy that it needs to be disrupted.
“The problem is not food; it’s industrial food,” said Kimbal. “Industrial food is the kind of food that makes you both fat and hungry at the same time. It malnourishes the farming communities that produce them, the people that eat them, and what it’s doing to the planet is a travesty.”
Apparently, many ordinary people have reached the same conclusion, as hundreds of McDonald’s stores in the US have closed, microwave sales are shrinking, frozen food sales are plateauing, and sales of soda have declined for ten consecutive years.
“Real food is the opportunity of our generation,” he said. “What we need are real entrepreneurs to take on that opportunity.”
Is anyone wondering if Tesla is up to this challenge?
Sources: eenews.net; forbes.com; YouTube: Tesla is quietly Charging Up A Trillion Dollar Weapon: The Ultimate Food Chain