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The Spoon

Daily news and analysis about the food tech revolution

Jennifer Marston

The Brooklyn Councilman Who Wants to Ban Plastic Straws Is Now Going After Cutlery

There’s a new (plastic) target on the block for Brooklyn Councilman Rafael Espinal, otherwise known as the guy who introduced a ban on plastic straws in NYC last year. Today, Espinal introduced legislation that would lead to the eventual ban of disposable plastics like restaurant takeout cutlery.

The bill wouldn’t actually ban the cutlery itself. Rather, it would require the city to “review items made with single use plastics at least annually and ban those items for which reasonable alternatives are available.” That task would fall to the NYC department of Consumer Affairs, along with the department of Sanitation and the department of Environmental Protection.

From the legislation text:

The commissioner shall on February 1, 2020, and annually thereafter, report to the mayor and the speaker of the city council on single use plastic items considered, the evaluation including economic feasibility and environmental effectiveness, and the determinations.

Only after these areas are evaluated and a suitable replacement found would the ban on the actual plastic item, cutlery or otherwise, go into effect. Which sounds nice and orderly on paper but would in reality take a long time to go into effect — years, in fact.

Still, the proposed legislation continues the conversation around what to do about the amount of single-use plastic that goes into the trash. Investor Rob Kaplan of Circulate Capital, whose work is heavily involved in the environment, put it well last year when he told National Geographic: “There’s no silver bullet to stop plastic pollution. We’re not going to be able to recycle our way out of the problem, and we’re not going to be able to reduce our way out of the problem,” adding that we have to pursue both tracks while continuing to seek other solutions to make any sort of dent.

In the world of single-use plastics, particularly those at restaurants, Espinal’s legislation is aimed at finding those other solutions. How challenging that would be remains a question mark. Nix a plastic straw and your beverages are still drinkable; nix a plastic spoon, and you’ll have to get creative about how to eat that cup of mashed potatoes from the diner.

There’s also the question of what “reasonable alternative” would actually entail. The legislation discusses “economic feasibility” and “environmental feasibility,” but doesn’t point to specific materials that could replace plastic. There are a number of plastic alternatives when it comes to things like cutlery, from wood to vegetable starch and other plant-based materials. But again, there’s the economic factors to consider, and the proposed legislation text only says economic feasibility includes “direct and avoided costs such as whether the material is capable of being collected by the department in the same truck as source separated metal, glass and plastic recyclable material, and shall include consideration of markets for recycled material.”

We saw a number of private companies rally last year by banning plastic straws, or at least kickstarting the process to ban them. If Espinal’s new legislation were to be effective, it would need to happen in tandem with another massive effort on the part of companies like Starbucks, Alaska Airlines, and others to ban single-use items like cutlery, plastic bags, and other eating items. In this to-go-obsessed culture, that could be a huge ask.

So maybe it’s time for the delivery companies themselves to get involved. Ever the skeptic, I have my doubts this would ever happen. But companies like Grubhub, Uber Eats, and DoorDash are wielding a massive influence over U.S. culture at the moment. It would be nice to think they could use that influence (and money) to show the rest of us how to creatively counter the craze for single-use plastics.

Kitchen United Expands Into Atlanta and Columbus

Kitchen United announced today that it has signed lease agreements for spaces in Columbus, OH and Atlanta, GA. The expansions, slated for Spring 2019, will increase the virtual kitchen hub’s presence in markets that are fast becoming hotbeds for food-delivery competition.

Kitchen United, who bills itself as a “culinary on demand” startup, opened its first commissary kitchen space in May 2018 in Pasadena, CA. It followed that launch with a Chicago location that opened in November of the same year, following a $10 million funding round led by GV.

Kitchen United spaces are built specifically for delivery businesses, and can each hold between 10 and 20 different “concepts” (the company’s word for clients). The goal is to provide restaurants space to fulfill the influx of delivery orders without having to open another full restaurant and incur the expense and business risks that go along with an expansion of that magnitude. “Restaurants” rent space and share equipment, and Kitchen United has its own staff to handle dishwashing and packaging orders for delivery drivers.

As my colleague Chris Albrecht wrote last year:

Unlike other virtual or “ghost” kitchens, where restaurants can experiment with new cuisines, Kitchen United’s main mission is to help national and local restaurant chains keep up with demand for their existing menus. Restaurants that want to sign on with Kitchen United can either pay straight rent, or, if Kitchen United believes it can hit the right numbers, there is an option for revenue sharing.

According to the press release, the Columbus location is set to open near the city’s downtown and close to the Ohio State University. The Atlanta location will be housed in the fast-growing West Midtown area, with close access to Georgia Tech. Both locations are in areas that have undergone significant growth in recent years, and give us an idea of markets Kitchen United is targeting. While places like Los Angeles and New York City are part of the company’s future expansion, they also share a list with a number of slightly smaller U.S. cities, Phoenix, Seattle, and Denver are among them.

It makes sense, in many ways. Mega-cities like NYC and LA are important places to get a foothold, but they’re also extremely crowded — arguably saturated — markets for virtual kitchen concepts. But with people leaving top-tier cities in favor of places like Dallas, Nashville, Atlanta, and even Tampa, and with the food delivery market expanding at a blinding pace into those places, there’s both money and reputation to be made.

Kitchen United said in a press release it plans to open 15 new locations in the coming year, including those mentioned above.

DoorDash Is Reportedly Raising $500M in New Funding

DoorDash is in the process of raising a $500 million funding round, according to the Wall Street Journal. The new funding puts the third-party delivery service’s valuation at over $6 billion. Singapore investment firm Temasek Holdings is expected to lead the round.

Prior to this, DoorDash had closed almost $1 billion total in funding, including a $250 million round last August co-led by Coatue Management and DST Global. The new funding would raise DoorDash’s total funding amount to nearly $1.5 billion since its founding in 2013.

The announcement comes right on the heels of news from last week that food delivery competitor Postmates had confidentially filed for an initial public offering (IPO). Uber, which includes the Uber Eats delivery service, also filed confidentially for an IPO back in December. The company has received initial feedback from the SEC about the filing. Grubhub, meanwhile, has been king of the food delivery market for some time, though the company saw slowed revenue growth and sinking shares in Q4 of 2018.

While all of this news doesn’t completely level the playing field, it certainly ups the suspense over who will ultimately dominate the food delivery space. I doubt we’ll know the answer right away. Instead, I expect 2019 to be a year of one company trying to unseat another repeatedly over the next several months as they expand into new territories and test out new technologies that might give them more dominance in the market. (Cue obligatory Game of Thrones metaphor.)

DoorDash is certainly on board with adopting new technologies, and the new funding could very well help the company further develop things like its self-driving car initiative or even something like drone deployment (something Uber has reportedly been dabbling in.) DoorDash last year posted a job listing for someone to help build “10x ideas from the ground up e.g. robotics, drones, next-gen dispatch, ML-chatbots, strategic partnerships, etc.” So drones likely are a part of the future, for DoorDash and probably every other delivery service mentioned in this post.

The service has also been at the center of controversy, though. Along with Instacart and Amazon Flex, DoorDash is reportedly taking tips from delivery workers and putting them towards those workers’ base pay, in order to meet the promised minimum. Instacart has since reversed the policy for its workers. As of this writing, however, DoorDash, along with Amazon Flex, will maintain its current policy, despite outcry from workers and customers alike.

Applications Are Open to Join the World Food Programme’s Innovation Accelerator

As discussed in a recent podcast, more and more large organizations are turning to startup accelerators to solve challenges in the food industry. But it’s not just major CPGs. The World Food Programme (WFP) — the largest humanitarian organization on the planet — has been working closely with startups since it launched its Innovation Accelerator in 2016, and applications are once again open.

From the WFP website:
The Global Innovation Challenge for Zero Hunger is looking for proposals that could transform the lives of smallholder farmers and small-scale livestock producers, reach a step change in food systems or increase the effectiveness of emergency response. From mobile applications to artificial intelligence, post-harvest loss prevention and new cultivation techniques, the challenge is seeking low- and high-tech solutions, business model innovations and more.

Since WFP is devoted to fighting world hunger, it follows that startups who apply to the Innovation Accelerator should be building technology solutions attempting to do the same. For example, a project called H2Grow, supported by the Accelerator, helps those living in vulnerable food communities build their own hydroponic systems to grow fresh vegetables as well as fodder for animals.

The Innovation Accelerator program happens in a few different parts. From the initial pool of applications, WFP picks 15 startups to participate in a weeklong bootcamp in Munich, Germany, which ends with a pitch night. During the bootcamp, companies fine-tune their projects according to WFP’s approach to innovation, which is all about human-centered design and lean startup methodology. The pitch night helps to connect these companies with potential investors and other mentors and supporters.

From the bootcamp and pitch night, WFP then selects a few companies to take part in its Sprint Programme. The program runs three to six months, depending on the company, and offers each startup $100,000 in equity-free funding, mentorship, and field access.

WFP estimates that 821 million people go to bed hungry each day, and the UN Security Council recently recognized publicly the link between food insecurity and armed conflict around the world. Of the 13 current major food crises, 10 are directly linked to armed conflict, Afghanistan, South Sudan, and Yemen among them.

Applicants, then, should demonstrate not just things like proof of concept and financial stability, but also how their companies and products can help WFP as a whole in its mission to eradicate world hunger. You can read the full list of eligibility requirements here.

Cohort 1 is already underway. The application deadline for Cohort II is February 28, 2019. For Cohort III, set to take place in the second half of the year, the application deadline is slated for July 2019.

The Dunkin’-Grubhub Delivery Deal Is Great News for Consumers, Bad News for Starbucks

Dunkin’, the chain formerly known as Dunkin’ Donuts, announced today it will begin testing a delivery program with Grubhub in select cities, NRN reports.

The delivery rollout follows a year of moves by the Quincy, Massachusetts-based chain to shed its former image as a donut chain and compete with premium coffee retailers, namely Starbucks. In January 2018, Dunkin’ unveiled its “Next Gen” store, which offers a more modern design as well as a dedicated drive-thru lane for customers placing mobile orders. Dunkin’ made itself available for order via Alexa in 2018, too. And the chain dropped “Donuts” from its name, doubling down on its efforts to focus the brand on beverages and not on its signature treat, frowned upon by nutritionists everywhere nowadays. (Fun fact: Dunkin’ Donuts is largely responsible for changing our spelling of the word from “doughnut” to “donut.”)

The chain also did a massive product relaunch of its espresso, reformulating the recipe and proclaiming their espresso, in the words of CMO Tony Weisman, “is so good, you don’t have to go to Starbucks.”

The Grubhub deal is non-exclusive, as Dunkin’ also partners with DoorDash and will continue to do so.

But as delivery continues to become the norm rather than the exception, there may well be fewer folks who want to go to Starbucks anyway. The Seattle coffee giant expanded its Uber Eats delivery program in January in San Francisco, and will continue rolling it out to major U.S. cities over the next several months. It’s also worth noting that Starbucks has significantly more locations nationwide, though Dunkin’ is slowly but surely expanding out of its New England home turf.

Delivery may well become the ultimate battleground for these two companies. Post espresso relaunch, Dunkin’ is, in my caffeine-riddled opinion, on par with Starbucks in terms of quality (and better sometimes). Starbucks has nicer interiors, but Dunkin’ has better prices. Both offer things like streamlined drive-thrus and easy-to-use mobile apps. So whoever can master the most efficient, cost-effective way to deliver these premium drinks is likely the one who will come out on top, at least in the short term.

Dunkin’ hasn’t yet released information about which cities it will deliver in with Grubhub, or when that’s slated to begin. But one thing’s clear: Quincy and Seattle are in lockstep right now, and their race for dominance will only get more heated as 2019 goes on.

ClusterTruck Takes on Delivery By Taking Back Control of the Whole Stack

Despite it having the best company name we’ve heard in months, there are no actual trucks involved in ClusterTruck’s business.

Rather, the Indianapolis, IN-based delivery-only food service is making a name for itself because of the way it approaches the delivery business. ClusterTruck controls the entire process, from putting menus online to taking orders to getting the actual food to the customer’s door. They create the recipes, write the software that powers their operation, and pay their own set of gig-based drivers. Founder and CEO Chris Baggot believes this vertically integrated approach to food delivery is the most sustainable way to do business over the long term.

To use the service, customers go online and choose from the rather extensive menus ClusterTruck offers. You can order as many different types of food as you like, so long as they’re on the menu. So, for example, Sally across the office might want a cheeseburger, and Dan prefers a salad. You, on the other hand, want cold noodles. All those meals can be rolled up into a single order on ClusterTruck, and paid for together (the company doesn’t accept cash payments).

Behind the scenes, the company’s in-house software system is calling the shots. When an order comes in, kitchen workers wait to start cooking it until the system tells them exactly where the driver is. If food takes five minutes to cook, the time to start the order is when a driver is five minutes away. Because the software allows for more precise timing, the drivers don’t even have to get out of the car; food is ready as soon as they arrive.

And despite doing it all themselves, ClusterTruck service, from order to delivery, is about 20 minutes faster than the industry average.

Baggot, a prominent Indianapolis entrepreneur, founded ClusterTruck in 2015, but he’s a software guy through and through. Prior to ClusterTruck, he founded the companies Exact Target and Compendium, then sold them to Salesforce and Oracle, respectively. He also started Tyner Pond Farm, which raises livestock and sells it locally via an e-commerce site.

Baggot became interested in food delivery when he realized the current model, driven largely by third-party services such as Grubhub and Uber Eats, is actually quite ineffective for delivering food. “You have this system made up of three constituents: drivers, customers, restaurant,” he says. “And nobody is happy. At the same time, people are putting up with this because there’s no better alternative.”

According to Baggot, the major problem the industry faces right now is that restaurants and delivery services alike treat food delivery as incremental business. As such, it gets treated as an add-on, which only creates extra friction and complications for the restaurant. The software used to integrate delivery isn’t the main software the restaurant uses; it’s extra. Or, a classic case in point, workers contend with Tablet Hell, where multiple devices from multiple delivery services wreck havoc on restaurant operations and hog physical space.

But, as is proclaimed ad nauseam at this point, delivery is only going to become more prevalent. ClusterTruck isn’t the only business thinking of it as the business rather than a small part of business, but the company certainly has an aggressive approach.

As Baggot sees it, “everyone is sort of treating [delivery] like Sears as opposed to Amazon.” By that he means that Sears —an “everything you need” store — should have been one of the winners in the early days of internet commerce. But the department store instead treated the internet as incremental, a side dish to the main brick-and-mortar business. It was Amazon who proved internet shopping wasn’t just incremental revenue; it was the entire business model. And we all know the ending to that story.

However, Baggot doesn’t want his company to be the Amazon of delivery. His original inspiration came from Google’s cafeterias, whose assortment of food on offer is practically legendary. “A lot of that has to do with shared ingredients,” he says. The food in Google’s cafeteria, despite being quite varied, gets made in one kitchen, with one set of shared ingredients. ClusterTruck employs the same tactic, rather than splitting the different types of foods into different operations, as is common with ghost kitchens. Baggot believes the single-line approach to the kitchen is more efficient for the workers and makes better use of ingredients.

Delivery-only kitchens are certainly getting more popular. Just look at Kitchen United, who netted $10 million last year and Swiggy, a delivery-only business operating in India. As yet, though, no one else has pulled the entire delivery operation fully in-house, and this is something Baggot believes will be a major differentiator for ClusterTruck in the long term.

ClusterTruck operates right now in Indianapolis, Columbus, OH, Kansas City, and Denver. The company also has a couple more kitchens built but not yet open, in Cleveland and Minneapolis. The Minneapolis location is actually in a parking garage, which Baggot believes will make the operation even more efficient.

While the company isn’t targeting major places like San Francisco or NYC at the moment, it does plan on further expansion in future. “Anywhere that third party exists, we’ll be there,” says Baggot. “And we will win.”

Taco Bell Launches Nationwide Delivery With Grubhub

Today, Taco Bell announced an expanded partnership with Grubhub for nationwide delivery.

The news comes a year after Taco Bell parent company Yum! Brands bought $200 million of common stock in Grubhub and started testing delivery in a limited number of markets. With the nationwide expansion, delivery is now available at roughly 65 percent of Taco Bell locations (via Grubhub, of course).

For the nationwide rollout, the two companies reportedly worked for months to directly integrate Grubhub into Taco Bell’s POS system. An integration like that means (hopefully) fewer inaccuracies on delivery orders, since workers won’t have to take an order then manually rekey it into a Grubhub tablet, as is the usual process for restaurants. The integration is Grubhub’s largest to date.

It won’t hurt Grubhub’s ongoing expansion, which is currently stretching to second- and third-tier U.S. markets (aka smaller cities). Grubhub has reportedly increased its fleet of drivers to accommodate the Taco Bell deal, which will reach many of those smaller cities.

Taco Bell has some serious growth plans in the works. Besides expanding its delivery program, the Irvine, CA-based chain plans to grow to 9,000 stores worldwide by 2022. The company will also install self-service kiosks in every U.S. restaurant by the end of 2019. Two years ago, that might have seemed like a risky business decision. But kiosks are everywhere these days, it seems, from trendy food halls to McDonald’s.

Taco bell also plans to start testing vegan and vegetarian menus in 2019. While the chain already offers some vegetarian combos, this will be the first dedicated menu for meat-free and vegan options.

That will happen a little later in 2019. In the meantime, the chain will celebrate its nationwide delivery launch by dropping the delivery fee on orders of $12 or more for a limited time.

Applications Are Open for These 5 AgTech Accelerators

For agtech startups looking to advance their business, the options are, ahem, growing. With the market predicted to be worth $13.50 billion by 2023, more and more companies are surfacing who marry technological concepts with farming practices (traditional or otherwise) to tackle a growing number of issues in the agricultural industry: cleaner energy, healthier crops, and better harvesting tools.

Startup accelerators are an increasingly popular option for budding agtech companies, and these five specifically foster the agricultural sector:

The Yield Lab
The Yield Lab looks for early-stage agtech companies to participate in the four accelerators it holds throughout the year. Right now, it is taking applications for its Latin America and Asia-Pacific programs.

Both programs take place over the course of 12 months and are a combination of onsite and virtual participation. Seed-stage companies working in crop production, plant science, animal health, and precision agriculture (among other agtech areas) are encouraged to apply. All participants get $100,000, formal training, as well as ongoing mentorship.

The Yield Lab Latin America is taking applications until February 15; for the Asia-Pacific cohort, the deadline is March 31.

Hatch
Hatch is a 12-week aquaculture-only program, and looks for startups working up and down the industry, from rearing fish to growing ocean plants for food and making production more efficient through technology. While the location for the 2019 cohort is currently TBD, there will be visits to the Hatch offices in Singapore and Bergen, Norway throughout the duration of the program.

Typically, Hatch picks 12 companies for each cohort. Chosen companies get a €50,000 ($57,000) cash investment (with an 8 percent equity take), mentoring, office space, and support with prototyping and finding R&D partners. Seed or pre-seed aquaculture startups from all over the world are encouraged to apply, preferably via F6S. They haven’t yet announced an application deadline, but the program runs September through December, 2019.

Iowa AgriTech Accelerator
The state of Iowa is a hotbed of agtech startup activity, and the Iowa AgriTech Accelerator is an important part of that. Iowa AgriTech Accelerator alumni include Rabbit Tractors, maker of autonomous tractors, Phenomics Labs, whose platform does predictive phenotyping, and Birdpreneur, who helps small-scale poultry farmers in Africa scale up their business.

Participants get $40,000 in seed funding (in exchange for a 6 percent equity position for Iowa AgriTech), access to a mentorship network, office space in Des Moines, and housing for the duration of the 14-week program. Startups looking to solve a specific problem in the farming sector should apply here for the 2019 cohort.

Terra
Terra is a collaboration between financial services company RaboBank and startup-mentoring community RocketSpace. The bulk of Terra’s participants are companies that directly to agricultural production, from grain sorting (BoMill) to hyperspectral imaging (ImpactVision) to bird-repelling laser beam technology (Bird Control Group).

Terra doesn’t offer any financial investment for its cohorts. Rather it offers what it calls “a low-risk platform to validate technologies, strategies, products, and ideas.” Terra also has high standing and a solid reputation in the agtech industry, so it’s a resume boost, so to speak, for those who participate in the program.

The program can be done virtually or onsite at RocketSpace’s San Francisco campus. Workshops are done online. It runs four months (September through December), although specific dates within that period are determined on a case-by-case basis for participants. A demo day slated for January 2020 wraps the program. Applications for Cohort IV are open.

Ag Startup Engine
As I said, Iowa is a hotbed of agtech innovation. The Ag Startup Engine (ASE) works with Iowa State University’s Startup Factory program, and looks for companies specifically working in precision agriculture, animal health, livestock automation, clean energy, and robotics.

Funding for each company is determined on a case by case basis, and typically ranges from $20,000 to $50,000. Chosen participants also get mentorship and access to the Iowa agtech community. Unlike the other programs on this list, there’s no set beginning and end date for ASE. Rather, those interested are encouraged to schedule a 30-minute phone meeting to assess whether they’re a good fit for the program.

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It’s the start of the year, which means there are plenty more foodtech accelerator programs in the works. Stay tuned for more updates, coming soon.

How Should Papa John’s Spend Its New $200M Investment?

This morning Papa John’s announced a $200 million investment from hedge fund company Starboard Value. The company has also named Starboard Value CEO Jeffery Smith as Papa John’s new chairman. The investment is a bright spot after a well-documented year in hell for the struggling pizza company, including a drop in shares earlier this month after talks with other potential investors fell apart. And while a $200 million shot in the arm won’t single-handedly fix Papa John’s reputation, it could help the company once again compete more seriously with the likes of Pizza Hut and Domino’s.

A press release stated that half the $200 million investment will go towards repaying debt, and the remainder will be “providing financial flexibility that enables Papa John’s to invest capital to further advance its five strategic priorities.” Technology is one of them, and it should play big role in how Papa John’s allocates the new funds.

Since the chain’s struggles began around July 2012, other companies have released several noteworthy tech innovations that are changing the way they deliver pizza.

Some highlights are:

Pizza Hut took over as the official sponsor of the NFL. That’s not a tech development in and of itself, but it has allowed the Plano, TX-based company to push its digital rewards program to more people and try out new ways for customers to interact with the app. Pizza Hut also unveiled an autonomous pizza-making machine it’s calling a “mobile pizza factory” manned by a robotic arm that makes pizzas as a human drives to the delivery address.

Domino’s had already rolled out its Hotspots prior to the start of the Papa John’s saga. The company has since furthered its efforts in location-based technology by expanding its what3words partnership to the Middle East, which alleviates some of the friction and delays involved with delivering to regions with irregular and/or non-existent street address systems. The company also added an AI-powered loyalty campaign in 2018.

Even Little Caesar’s, who does not and may never deliver, has been hard at work on pizza innovation with the Pizza Portal, a self-service pickup station for mobile customers, and has a patent for a pizza-making robot.

Papa John’s hasn’t exactly been sitting around doing nothing. The company did revamp its rewards program at the end of 2018, making it easier and faster for customers to earn points and therefore free food. The move, however, seemed more a reaction to falling sales than a push for digital innovation.

That said, Papa John’s should continue to invest in its mobile ordering and rewards platform, fine-tuning the tech to make it as quick and effortless as possible for customers to order. CEO Steve Richie has stated in the past that millennials and Gen Z are an important audience to reach with new initiatives, so any revamping or new developments for mobile order should bear that in mind.

Drive-thru is another area Papa John’s could invest more in and differentiate itself. Dunkin’ set a standard last year with its tech-driven drive-thru, which offered a dedicated lane for pickup orders. Papa John’s could give its mobile rewards program a boost and get on the edge of a growing trend by incorporating a similar strategy at stores that have drive-thrus, and possibly even consider building more drive-thrus where space permits.

If space doesn’t permit (like the hole-in-the-wall location up the block here in Brooklyn), pizza lockers could do the trick. Imagine ordering and paying for a pizza via mobile app on your way home from work, swinging by Papa John’s after you climb out of the subway, and picking up a hot pie from a designated locker. I could see this working in a mega metropolis or even in the airport, where grabbing a slice you paid for on your app would be the fastest way to eat en route to a connecting flight.

Where do you think Papa John’s should spend its investment cash? Drop your thoughts into the comments below.

Dig Inn’s New Delivery Model Keeps the Food Cooking on the Way to Your Door

As food delivery’s popularity rises, so do the number of customer complaints. The market, projected to be worth $112 billion by 2023, won’t slow down anytime soon. But for all the technology that promises to make it faster and more efficient, we’ve yet to solve the issue of how to get food to customers’ doors on time and without sacrificing temperature, texture, and other quality elements.

Dig Inn might be close to the answer. The NYC-based fast-casual chain, which also has locations in Boston and Rye Brook, NY, is a veteran of delivery, having started services around a decade ago. Until now, they’ve used the usual formula: make the onsite business available online with a third party and start running the food to customers’ houses. But according to Dig Inn’s Director of Offsite, Scott Landers, that model needs not so much to be upgraded as dismantled.

That’s just what the chain has done with Room Service, a kind of delivery-only virtual kitchen that launched on Thursday to friends and family. The delivery service will run out of Dig Inn’s Lower Manhattan location, but will have entirely separate menu concepts and cooking techniques than its in-house counterpart. And that approach, as far as Landers sees it, is how to make delivery profitable.

Dig Inn approached the problem by turning it upside down. Most restaurant food, says Landers, was designed for onsite, walk-in restaurants. Dig Inn’s instead examined how they could cook the food so it doesn’t just sit well during delivery — which typically tacks a solid 30 minutes onto the process — but actually gets better because of it.

Landers calls it “an entirely different culinary experience.” And it’s more science than business in many ways.

Consider salmon. With an in-house restaurant experience, the kitchen cooks the salmon to medium rare, or roughly 115 degrees, and serves it immediately, for optimal taste and flavor. With delivery, salmon cooked to 115 degrees that’s then bagged up and put in a car will do one of two things: either it will keep cooking and resemble a dried-out dish sponge when it arrives, or the travel time will render it a cold, dead fish in a box.

The solution Dig Inn found was to plate the salmon rare (~105 degrees), then pair it with a “screaming hot” starchy potato puree that holds well in transit. As the food travels, the puree warms the salmon, and by the time the meal arrives at the customer’s door, the food is “perfectly set.”

“If you ate it right out of the kitchen it would be good,” says Landers. “But it gets better with delivery.”

The actual kitchen was the other big piece of the equation. As of now, Dig Inn serves four different channels: onsite customers, pick-up customers, catering, and delivery. Mash all those orders into a single kitchen, and it quickly becomes overwhelming for the entire staff.

So Dig Inn created what Landers calls a “dual kitchen” in its Lower Manhattan store. By turning unused basement space into another kitchen dedicated to delivery and catering, the chain can serve all four sales channels without running out of space or manpower. Both kitchens share infrastructure, like walk-in fridge space and food supplies. But each has its own dedicated layout, chef, and cooking methods. “It’s the same sweet potato, the same walk-in, but then on the culinary side, the offsite chef gets to start making different [cooking] decisions,” says Landers. He adds that Dig Inn can generate the same amount of revenue from a full restaurant but only pay 30 percent of its costs with these dual kitchens.

Both food and kitchen space address what Landers thinks are the three main challenges restaurants doing food delivery face: delivering food on time; getting it accurate; and maintaining quality. “Those are the three things that matter and those are the three things that are hardest to get right.”

Granted, you’d have to have the extra basement space to use this approach, which is another advantage Dig Inn has. But even those restaurants working with less real estate can consider a secondary operation through other types of ghost kitchens.

Why is it so challenging for restaurants to master those things right now? The reasons would fill another two posts here, but they all roll up into the fact that many, if not most, restaurants right now are approaching delivery with technology-focused solutions, rather than food-centric ones. But restaurants aren’t tech startups; they’re hospitality companies. And as Landers says, “At the end of the day, the guest isn’t going to come back to you because your technology is amazing, they’ll come back to you because the food is amazing.”

Room Service is currently in beta at Dig Inn’s Lower Manhattan location, available Tuesdays through Thursdays. Landers said its expansion will be slow and steady, with the goal of expanding to the rest of Manhattan over the course of 2019. Throughout the process, Dig Inn will be maintaining its food-first approach to every aspect of the delivery process. “How can we cook food that improves as it travels?” asks Landers. “When you ask that question, you unleash all this culinary innovation.”

Correction: This post was amended on February 1, 2019. An earlier version wrongfully attributed quotes to “Adam Eskin,” Dig Inn’s founder and CEO.

For McDonald’s Franchisees, Delivery Is Another Point of Friction In an Ongoing Battle

Despite a drop in guest counts, McDonald’s reported positive global and domestic same-store sales during its Q4 2018 earnings call, which took place this Wednesday, January 30.

Among the many numbers and initiatives discussed, delivery was highlighted during the call as a particularly lucrative area for McDonald’s moving forward. The mega-chain has been delivering since 2017, when it launched a partnership with Uber Eats. According to the call transcript, 19,000 McDonald’s restaurants globally offer delivery, making it a $3 billion business for both international and domestic stores. CEO Steve Easterbook noted the company will make delivery a “high priority” in 2019.

That’s great if you’re in corporate, or if you want a Big Mac delivered to your office or dorm room. For McDonald’s franchisees, however, delivery appears to be yet-another point of tension lumped on top of an already large pile of grievances.

The National Owners Association (NOA), formed in 2018 and representing about 400 McDonald’s franchisees, conducted a survey recently wherein the majority of 800 franchisees surveyed said they were not “satisfied with the economics” of delivery, and want McDonald’s to push for a better commission split with third parties. McDonald’s has a massive partnership with Uber Eats, who takes roughly 30 percent of each transaction.

“We need to have several vendors delivering for us, not just Uber,” on franchisee surveyed said. “Paying rent and service fees on Uber commission is not fair. Delivery is a necessary service these days, but we must be able to do it profitably.”

The other side of that coin, of course, is that multiple delivery services can become overwhelming very quickly because of the many disparate sales channels they add to a restaurant’s ticket stream, not to mention the extra devices. Loads of different software options to streamline these issues exist, but they cost money, and so McDonald’s franchise operators would have to factor in those costs to their idea of “profitability” were McDonald’s to ever welcome other delivery partners.

These recent comments from McDonald’s and franchisees follow on the heels of a year of aggressive initiatives around McDonald’s Experience of the Future store redesigns, which have sparked concern and frustration among franchisees. McDonald’s revamped 4,000 stores in 2018, bringing its total Experience of the Future stores close to 8,000. But the NOA has said these redesign elements don’t necessarily drive competitive sales, and that McDonald’s is launching too many expensive initiatives that don’t pay off.

Kiosks are one such effort. McDonald’s has self-order kiosks in roughly 17,000 McDonald’s restaurants worldwide. But some franchise operators cite them as another area that doesn’t pay off. “What good will new buildings be when we cannot deliver service because we are short-staffed. Employee turnover is at an all-time high for us. Our restaurants are way too stressful, and people do not want to work in them. Kiosks are not the answer,” one operator stated. But on the call, Easterbrook noted that previous trials show how guests adopt the technology over time, indicating they will become more comfortable with the kiosk process as we go along.

Shake Shack is a good example in action of Easterbrook’s statement. The company unveiled a cashless, kiosk-centric store in October 2017 and abandoned the concept less than a year later, due to an influx of customer complaints around those kiosks. But in August of 2018, Shake Shack made an about-face and announced it would expand its kiosk locations (with some adjustments based on customer feedback). The company received much more favorable feedback the second time around.

Meanwhile, McDonald’s has extended the deadline of its Experience of the Future stores, giving operators the option to complete them by 2022, rather than the original date of 2020. Roughly 2,000 stores are expected to be overhauled in 2019 and 2020.

Domino’s Just Made It Even Easier to Deliver Pizza — in Saudi Arabia

If you order Domino’s pizza, your days of relaying special delivery instructions to the driver could soon be over. The pizza chain-turned tech company just announced via a press release it has expanded its partnership with location-technology company what3words to Saudi Arabia.

Domino’s has already been delivering to geographic locations called Hotspots like parks and street corners. The partnership with what3words is a separate initiative (that doesn’t power the Hotspots), and brings a new level of precision to location services and food delivery.

What3words is a global addressing platform that divides the entire world up into a grid of 3m x 3m squares. Its algorithm converts GPS coordinates (the squares) into unique three-word addresses. For example, I typed in an old address of mine and got “fuzzy.data.news.” When I moved the map a few squares over, to be on the street outside, the address became “august.cones.wanted.” According to what3words’ site, every single 3×3 square on earth has a unique three-word name. The algorithm determines the words, so it’s not like a password where companies tell you to choose something you’ll be able to quickly remember. But I doubt I’ll be forgetting “august.cones.wanted” anytime soon.

Saudi Arabia makes sense as a testing ground for this partnership: home and street addresses have historically not been used there. The what3words app instead lets a driver locate the customer’s home by locating the three-word address on a map. This only applies to orders placed over the phone; it’s as-yet not applicable to the Domino’s app.

Domino’s already uses the technology in Sint Maarten, a Caribbean island with notoriously bad traffic and an equally confusing system for house addresses. Previously, Domino’s delivery drivers had to call the customer and ask for turn-by-turn instructions that used mango trees as landmarks.

On the upside, this kind of technology saves both driver and customer time. More time spent looking for an address means fewer deliveries, (h)angrier customers and, for the driver, less money in tips at the end of the day. And for the customer, it broadens the options in terms of where you can get a pizza delivered (park, beach, abandoned warehouse).

Saudi Arabia’s been using what3words for businesses, logistics, and taxis since last year. And what3words is also in London, with courier service Quiqup, and Mercedes-Benz built an in-car navigation system using the technology.

Stateside, Domino’s dropped another announcement on Wednesday: It will track how much pizza you eat and reward you for eating more. And it’s not just Domino’s pizza, it’s all pizza, including those from competitors. Customers download the latest Domino’s app and scan their pizza. Each scan earns 10 points; when a customer reaches 60 points, they get a free medium-sized pizza from Domino’s.

The program, which starts February 2, is an obvious ploy to sell pizzas during the Super Bowl (and collect more data on user preferences and behaviors).

Meanwhile, it seems like only a matter of time before Domino’s brings it what3words partnership to the U.S.