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The Spoon

Daily news and analysis about the food tech revolution

Cloud Kitchens

iKcon Raises $20M to Expand Its Ghost Kitchen Network

Ghost kitchen provider iKcon announced over the weekend that it has raised $20 million in Series A funding. The round was led by Mohamed Yousuf Naghi Group, AlTouq Group, Derayah Ventures, B&Y Venture Partners, AbdulMohsin Al Houkair Holding Group, and Nazer Group. and brings iKcon’s total funding to date to $32 million.

Dubai-based iKcon, which was founded in 2019, says it will use the new funds to expand the company’s ghost-kitchen-as-a-service model to new markets, starting with Saudi Arabia. Currently, iKcon operates 15 cloud kitchens across the United Arab Emirates; it plans to grow that number to 50.

The iKcon model differs a little bit from many ghost kitchen operations in that it handles everything for restaurants, from staffing to cooking to actually delivering the food. In the company’s own words, it “acts as a franchisee” on behalf of the restaurant, and provides services for both brick-and-mortar brands as well as virtual ones. (Kitopi is another notable example of a ghost kitchen network using this model.)

Its proprietary tech stack is another important selling point of iKcon’s business. Part of the company’s funding will go towards further building out the technology side of the ghost kitchen, focusing specifically on those tools that can automate more processes and in doing so ensure better quality and consistency of the food as well as faster speed of order times.

Those elements are important for a ghost kitchen that’s acting as a franchisee for the restaurant. Under this model, restaurants part with a lot of control over their food and brand, since they’re not the ones actually cooking and fulfilling the orders. Being able to assure those restaurants that a high-quality, consistently good product will arrive to customers on time will be an important point for iKcon to get right as it expands into new markets.

Ghost Kitchens! Fee Caps! Igloos! Tracking the Restaurant Biz’s Changes Over the Last 12 Months

For the majority of restaurants around the U.S., last week marked the one-year anniversary since stay-at-home mandates initially forced dining rooms to close down. What’s followed has been 12 months of great uncertainty, loss, and struggle. But it’s also been a time of astounding resilience and creativity, with restaurants and restaurant tech companies alike have pivoted and shape-shifted to survive the times. 

We’ve been checking in with individuals from both spheres to see where these businesses are now and what’s most useful in terms of tools and tactics as dining rooms slowly reopen and the world goes back to some version of “normal.” 

But to better appreciate how far we’ve come and how much work has gone into this industry’s survival over the last year, I’d like to pause and take a brief look back in time at some of the major stories from these last 12 months.  

March 2020

  • States across the U.S. mandate dining room shutdowns. Restaurants large and small scramble to make the overnight shift to delivery and takeout formats.
  • Restaurant tech companies start offering software and services free of charge to restaurants. Third-party delivery services like Uber Eats and Postmates waive some fees — though not without some controversies.
  • Restaurants like Canter’s Deli, Wahoo’s Fish Tacos, and Torchy’s Tacos discuss strategies for going off-premises. Some include paring down menus, prioritizing takeout meals, and going DIY when it comes to the drive-thru.

April 2020

May 2020

June 2020

  • Some restaurant chains, including Panda Express, start to launch their own in-house delivery services.
  • Restaurants get really creative with their ideas on how to safely reopen dining rooms.
  • This Latin American startup teaches us how to run a restaurant from a mobile phone. (Hint: everyone will do this in the future.)

July

August

September

October

  • The in-house delivery versus third-party delivery debate further heats up, with many encouraging restaurants to take back control of their digital orders.
  • Crave Collective and others put a fine-dining spin on the ghost kitchen and virtual restaurant concepts.

November

  • California passes Proposition 22, which lets third-party delivery services classify their couriers and drivers as independent contractors and keeps these companies from having to pay workers comp, health insurance, and other benefits.
  • Investment in back-of-house technology grows as both restaurants and restaurant tech investors realize the foreseeable future of the industry is in the kitchen, not the dining room.

January 2021

Feburary

March

Obviously this brief timeline isn’t comprehensive, since there’s no way to really capture the true scope of the last 12 months in a single newsletter. It is meant to be a snapshot only of the change and turns the industry took over the last year.

Which is where you, readers, come in. Whether you’re part of an eating establishment, tech company, or an avid foodie, we would love to hear your restaurant experiences over the last year. Drop us a line at tips@thespoon.tech.

Restaurant Tech ‘Round the Web

Nation’s Restaurant News has a new gallery showcasing stories “from the front lines” of the restaurant industry — that is, the restaurants themselves. NRN has compiled first-hand accounts of owners, managers, brand executives and others about their experiences from the last year.

Restaurant Dive has an ongoing analysis of the state of restaurants one year later across a number of U.S. cities. Available so far are in-depth looks at Los Angeles, New York City, and Seattle. More to come.

Grubstreet looks at lessons the New York City restaurant scene has learned over the last 12 months, and what comes next.

Video: Alex Canter on the Evolution of Restaurant Tech Before, During, and After the Pandemic

Among the things in the restaurant industry COVID-19 changed forever, businesses’ relationship to technology is a big one.

Historically, many restaurants have been slow to adopt much, if any, technology for their day-to-day operations. That worked so long as the bulk meals served were going out to dining rooms. When the pandemic shut those down, businesses were suddenly scrambling to accommodate the sudden demand for takeout and delivery formats as well as the industry-wide shift towards digital ordering. 

Of restaurant tech’s evolution over the last year, Ordermark cofounder and CEO Alex Canter says, “10 years of progress maybe happened in a couple of months, not out desire, but really out of necessity.” 

I recently got the opportunity to chat with Canter over Zoom. A longtime restaurant industry veteran (his family owns Los Angeles’ famous Canter’s Deli), he’s no stranger to the concept of either running a restaurant or improving its operations and margins through technology. Ordermark, meanwhile, was helping restaurants manage their delivery orders long before Covid-19 hit, and NextBite, the newest entrant to the family, assists businesses with launching virtual restaurant concepts.

All of which is to say, if you want a glimpse into the concepts and technologies that will matter moving forward for restaurants, Cater’s brain is a good one to pick. Below you can watch our full conversation, and also read along with the transcript.

The Spoon Interview: Alex Canter of Ordermark from The Spoon on Vimeo.

Jenn Marston
Hi, everybody, I’m Jenn Marston with The Spoon. I’m here today with Alex Cantor from Ordermark and NextBite, and we’re going to talk some restaurant tech today.

About the middle of March in 2020, restaurants had to close because of state regulations and health and safety concerns. Over the last year, we’ve seen the most incredible shift towards new technologies towards new dining formats. Alex and I are going to have a conversation about that evolution and specifically, what’s the technology driving these changes? What can we really expect to be around for the long term? So, Alex, thanks for joining me today. And before we get into all that, why don’t you give us a little bit of what happened and what it’s like now for you and your companies.

Alex Canter:
Yeah, well, first of all, thank you for having me. I’m happy to share my thoughts here. And I think everything is moving so quickly that, you know, it just feels like we’re in this the fastest changing market we’ve been in as a restaurant industry. And I want to start by just saying this has been a devastating year for restaurants. There’s no denying how challenging this has been for restaurants, from mom and pops to large chains and everything in between. We’ve already seen over 120,000 restaurants go out of business in the last 12 months, which is a crazy large number.

There are a lot of predictions around what was coming over the next 10 years in terms of technology and advancements shifted digital ordering. And COVID really accelerated a lot of that shift forward. I think, you know, 10 years of progress maybe happened in a couple of months, not out desire, but really out of necessity. And it was because restaurants had to really scramble to figure out, How am I going to keep up? How am I going to have to change my business to accommodate this new reality where dining rooms are shut down, and cities are going into lockdown. There are a lot of restaurants that were set up well for [that]. Think the Wingstop world that already had so much of their digital tech stack figured out and already had a very solid plan in motion and team members dedicated to the digital experience.

But for the majority of the industry and particularly most of the mom and pops, it feels like it was an all-out scramble to try to very quickly get creative, figure out new ways to reach customers rethink menus, rethink technology in general. And that has been a very fascinating thing to watch happen in such a short amount of time because there’s so much to learn for a lot of these restaurants that were newer to this experience.

We started Ordermark four years ago to help provide technology solutions to restaurants to be able to adapt to this new digital off-premise diamond world that we live in. And Ordermark has worked with thousands of restaurants to aggregate all of their incoming online orders, giving restaurants the single device in their kitchen to power orders from Doordash and Postmates and all the channels that they’re utilizing.

But since Day One, Ordermark has always been in the business of helping restaurants drive incremental orders into their underutilized kitchen. And we at the end of 2019 we started developing and bringing to market a newer product offering that we launched called NextBite, which is our portfolio of delivery-only turnkey brains, virtual restaurant brands. So we’ve basically created [the platform] from scratch based on you know data of what’s performing well in which markets and what time of day. We’ve really built these menus that are designed for an off-premise experience and we’ve been working with restaurants to to basically train them on how to become a facility partner for for additional menus and drive an extra 10, 20, 30 orders a day. [Many of] these kitchens are underutilized. They have extra capacity [and] fixed costs already running. Like, the rent is fixed, the lights are already on, the staff is already in the kitchen of these hundreds of thousands of restaurants across the U.S. Why not do more out of one kitchen by launching three to five additional virtual restaurant brands.

That was really the premise for NextBite. We built it with a with a in a pre-COVID world with full dining rooms in mind. And the operational complexity of running the restaurant is already very challenging that we knew when we were building these concepts and these menus, we didn’t want to build anything that was going to come in and disrupt the restaurants existing operation. But rather, you know, be incremental and additional in a way that that’s lighter for the restaurant to adopt.

In a post-COVID world, there’s been a massive adoption of restaurants who need these additional orders more than ever. And as a company, we’ve been able to make a very big impact for these restaurants when we come in and layer on top of their existing business a couple extra $100,000 a year in annualized gross sales. So we you know, we’ve been really focused as a company on what can we be doing right now to help make sure that our restaurant customers and partners that we’re working with can make it through and come out even stronger. And you know, we have gotten love letters, restaurants saying these orders really [make the difference of] keeping the doors open or not. And I think that’s really been motivating for our team specifically. And it’s helped bring a lot of business into our company and attract a lot of investor attention, which is why we at the end of last year, we ended up raising a Series C led by SoftBank, which was $120 million financing to do what we’re doing on a much bigger scale. I’m trying to really advance more restaurants forward into this new digital era.

So it’s been a roller coaster of a year, we’re incredibly grateful that as a business, we ended up on the right side of all of this, to be in a position to really help these restaurants. Because I know that there, there are a lot of restaurant technology companies that, you know, unfortunately ended up on the wrong side of this as well. And a lot of what was happening from you know, in-store applications like reservations and catering businesses that that just became irrelevant overnight in such a short amount of time with no notice. It’s really hard when things are moving so fast. But we did see a lot of new technologies emerge such as the QR code making a massive comeback in the restaurant industry. Just just a lot of experimentation with curbside and restaurants turning their menus into grocery shops, which are like restaurants that offer groceries and obviously the old versions of virtual restaurants. It’s been a really crazy last 12 months. So there’s so much to talk about. I have a lot of ideas for where things are headed as well. But but that’s that’s basically an overview of what what we’ve seen happen over the last 12 months.

Jenn Marston: I’ll echo that it’s been really devastating for a lot of restaurants out there. To me, one of the really attractive things about what you all are doing with NextBite is it, it seems like you’re in some way showing restaurants that there can be digital options, there can be strategies for doing delivery, and takeout and virtual restaurants without them having to go off and invest a bunch of upfront capital or sign, you know, really long leases with traditional commissary kitchens. But this seems like a, for lack of a better word, a more frictionless way for your average restaurant to be able to introduce another revenue stream without having to really overhaul what they’re already doing.

Alex Canter: I think you’re thinking about it correctly. When I think about what’s happening right now I see these vacant dining rooms that are that are way too large. You think about fine dining restaurants, full service restaurants. I felt this way even pre-COVID, but I felt like the restaurant market in general was already very oversaturated and very difficult to even be successful. First place because there are so many options. And as more and more people enjoy the convenience of delivery, the need for those large seating capacity diminishes over time. And the need for larger kitchen spaces actually is even more in demand than ever.

In order to produce food for both in-store and takeout, you need to have the means to have more kitchen space to have more staff to be able to produce work in the back of the house from the front of the house. And so I think over time, we’re going to see dining rooms getting smaller with a bigger emphasis on the size of the kitchen, which I think we’re starting to see a little bit with these new ghost kitchen facilities and commissary kitchens that are designed specifically for an off-premise and delivery and takeout experience.

But the desire to dine out at restaurants will never go away. People will always want to enjoy restaurants and hospitality, in the experience of celebrating a birthday going on a date, going out to eat with friends, that’s something that will never go away. But it’s tough for restaurants to even hit three to 5 percent margins on an annual basis. And that’s why a lot of restaurants fail in their first or second year. Even in a pre-COVID world, there was there were too many options. And now, you know, I’m hoping that this, this is somewhat of a market correction that’s happening, we’re coming out of this, the restaurants that do survive and make it out will be stronger. And, you know, it’s hard to know how long that’s going to take. But there’s still a very exciting restaurant market ahead of us that, you know, is gonna just be a little bit more advanced for from a tech perspective, from a digital family perspective. We saw a lot of restaurants, resisting off-premise and delivery for a long time. And now, you know, it’s their lifeline. It’s where more than 50 percent of their orders are happening. And even as they open up their dining rooms and make shift back a little bit, [off-premises] will be a strong part of the off the experience. I don’t see there being many restaurants who don’t have some sort of off-premises experience coming out of this.

Jenn Marston: Yeah, I would I would agree with that. Let’s talk for a minute about those big dining rooms that are currently sitting empty, because we were seeing some, there is some trickling back to the dining rooms, I mean, different states have different relax different regulations. At the same time, obviously, vaccines are slowly but surely getting distributed. So at some point in the near(ish) future, the option to go out and eat at a restaurant is going to be less less scary for folks, basically. But where do you see? And you could you kind of already alluded to this, but you don’t see this need for delivery, and takeout and curbside, and all these other formats going away.

Alex Canter: You know, I think I think the ordering demographic has really shifted over the last year. It used to be a lot of 18- to 34-year olds who were using these apps and placing orders on Doordash. That has really expanded to all generations, from teenagers to you know, my grandparents [use] Doordash because they can’t go out and don’t feel safe going to restaurants anymore. But now that they’ve gotten used to this platform, they have the Dashpass they have their address saved on file, their favorite order restaurants are order history. This is a convenience that’s not going away anytime soon.

That larger demographic is naturally going to mean that a larger percentage of orders volumes can happen [off-premises]. Also with business travel changing. You know, many offices have committed to hiring remotely and not going back to centralized workplaces. And therefore I think, you know, opportunities with catering are going to permanently shift. And I foresee more of the happening through delivery and takeout. Restaurants have to adjust and get used to that. There were so many restaurants that were that were largely dependent on big catering orders. I think the event spaces will return your weddings, large parties, stuff like that will start to open back up again, but probably not the same levels that we’ve seen in the past.

Depending on what type of business you are, you’re probably coming out of this a little bit different. You have to rethink the consumer experience. And you see companies like Sweetgreen implementing drive-thru [and] examples of restaurants understanding that their customer base wants to interact with them differently than maybe before. And that that’s where it’s really hard to adjust and make those changes, I think, you know, many, many SMB operators and mom-and-pop restaurants don’t have digital teams. People have marketing teams, traditionally, sometimes maybe the owners do need some of the marketing themselves. But there’s so much technology that’s available now. And it’s up to the restaurants to figure out, to experiment and figure out what works and what doesn’t work in a very quick way. And we’ve seen some really, really impressive restaurants, you know, very quickly understand that they can’t just sit around and wait for things to get better and change. But they have to go out and make the really hard adjustments. So their business models to their staffing to their to their tech stack to really embrace what’s happening rather than sitting idly by hoping that things are gonna get better.

Jenn Marston: I know you and your family obviously are in the restaurant industry. I don’t think we’ve mentioned that yet. But, and I know Canter’s was already pretty savvy before the pandemic, you all were doing the ghost kitchens and the off-premise and things like that. But just from your own personal experience and your family’s experience, you know, what is Cantor has had to kind of deal with in terms of this adjustment you’re talking about?

Alex Canter: Yeah, so Canter’s is one of the largest and oldest restaurants in Los Angeles. And we had a very devastating start to this whole COVID experience where we had to lay off almost 90 full-time employees, from from waiters, the busboys, dishwashers, some that have been working in the restaurant for 30, 40, 50 years. It was, you know, incredibly challenging to make that that common decision and we as a, as a restaurant, we knew that this was not going to be a sustainable operation in a delivery-only format. Until, you know, until we start to get more creative. Luckily, funding definitely helped, we probably would not be open today without it. But that’s kind of a short-lived solution.

We ended up having to rethink many reasons pricing rethink the the entire physical experience when you walk in, to cater to an off-premise-only demographic and, and you know, we luckily were able to make those pivots and changes very quickly. LA did allow outdoor dining, but we decided not to invest in converting our space to accommodate that because it was quite an investment for so much uncertainty of like, how long is this gonna last? And luckily, we didn’t because shortly after outdoor dining became that thing, they actually pulled it back again. And it’s it’s been an emotional roller coaster for all these restaurants trying to figure out how to make this work.

Especially in the beginning, there was so little notice [around when] these changes were going to go into effect. From an inventory standpoint, we prepared for full dine in service and then we’d get a notification tonight at midnight [about closing].

Luckily, you know, Canter’s is a very big name that has a big following in LA. And so we’ve done very well on a delivery only capacity. But it’s because we’re getting a couple 100 orders a day through these third party marketplaces. Not every restaurant has that kind of volume to be able to generate enough through these platforms to sustain a delivery-only operation. And I think, the sooner that more of these cities will open up person, even if it’s just for outdoor dining, 25 percent capacity, the more likely restaurants will come out of this. But I think there’s also something to be said for, you know, the staff and feeling safe. And I’m glad that I think as of today, people who work in the food industry, at least in LA County, can now get the vaccine, which I’m sure is happening more and more cities. And I’m, I’m hopeful that that will happen. That rollout will happen faster than anticipated. Because, you know, if if these restaurant employees were showing up every day and putting themselves at risk, aren’t feeling safe at work, it’s a very hard situation to navigate for an owner to try to, you know, keep the doors open. Restaurant staff is like family, and you don’t want to put anyone at risk or expose anyone to any dangerous situation. So even even in the beginning, when we wanted to stay open for delivery and takeout, there was some hesitation.

It’s been a journey to get to this point. But for my family’s restaurant, I think we’ll come out stronger again, just like we have for the last nine years, we’ve survived wars and recessions. It’s all because of this mentality of like, we have to adapt or die, we’ll have to make changes, embrace change, embrace new technology. And, you know, I think that’s been the key to our success over the years.

Jenn Marston: I think that’s a great point. What would you say to restaurants out there in terms of what are some of the most important things that they can do for themselves right now, to continue adapting, or if they haven’t done that much to get the ball rolling?

Alex Canter: First and foremost, if you have extra capacity in your kitchen, you should absolutely be experimenting with creating virtual brands, licensing other people’s virtual brands, but really trying to maximize the output of your kitchen. That’s a very low-hanging fruit in my opinion, which we’re seeing a lot of the chains starting to embrace now. We’ve seen announcements from everyone from Chili’s to Bloomin’ Brands to Applebee’s. Denny’s have experimented with luxury, several different menus, several different concepts running out of their kitchens, and those incremental orders are so critical right now. And you know, whether you try to do a virtual restaurant brand yourself or you partner with a company like NextBite or any others in the space, I think that is that is such an obvious way to to drive more orders into your restaurant every single day. So if you’re not doing that, or you’re hesitant for any reason, I highly suggest you try it and just see what happens. You know that there is a big learning curve to understanding how to get it right. And how to, you know, create the right menu and price it and promote it and optimize the placement within the platforms. It’s not as simple as just lighting up a menu on these platforms. But you know, start that process of understanding what works and what doesn’t work, because there’s a lot of opportunity just sitting there. And if you’re not, if you’re only running one, your own restaurant, every kitchen, I think you’re probably you probably have a lot more need for growth, unless you’re in and out of alignment your door every moment of every hour of every day. I think virtual restaurants can benefit everyone who doesn’t have that situation.

Jenn Marston: Any any thing else in terms of I know, we’ve talked in the past about? Also, it’s not a matter of just taking your existing menu and plunking it online, right? It’s, you know, maybe thinking about scaling it back or thinking about which foods might be best suited to this, these kind of newer formats and things like that.

Alex Canter: Yeah, well, you know, one, one strategy that I think every restaurant should be focusing on is shifting as much of your order volume from off-premise from third-party delivery to your own website or your own app. It’s easier said than done, for sure. But at a baseline, you should have an ordering button link on your website, whether it’s powered by ChowNow or Lunchbox or any of these companies that that allow restaurants to take orders directly. It is, you know, every order that’s happening on those platforms, you don’t have to give up as much of a percentage is it’s better. But the reality of the situation is that a disproportionate amount of the volume will still happen on third-party marketplaces. But there are a lot of companies focusing on restaurants creating their own digital strategy to get people to convert through their own service platform. So that’s something that everyone should be looking into as well.

Jenn Marston: I wanted to end just by asking a question, you put it really well, at the beginning of this conversation, we you talked about the just the sheer pace of acceleration and how we’ve, you know, in, what did you say we basically did 10 years in two months, in terms of just adoption and these changes. So as we move away from these widespread lockdowns and dining room closures and things like that, do you see this pace of tech adoption and delivery and takeout adoption slowing down significantly in the near future? Do you think we’ll kind of continue quickly for some time?

Alex Canter: Well, from pace perspective, I don’t think the percentages will remain the same. Look at the third-party marketplaces, all the ordering channels, they grew their businesses in some situations three to 5x last year. I don’t think any of those companies will experience the same kind of growth in 2021, just because so many restaurants were scrambling to implement delivery last year. But I see all of these these companies continuing their growth, just not the same pieces as maybe what happened last year.

You think back maybe 15 years ago, most restaurants didn’t even have a point of sale system. There was like maybe a credit card terminal and a cash register. And, you know, the, the evolution of this space has historically been slow. But now, it’s not a choice anymore. It’s something you have to really embrace and take on and and experiment with. And luckily, there are hundreds of great restaurant-tech companies out there that are helping businesses in different ways. And I think it’s really important right now to be experimenting with, with as much as we can handle from a bandwidth perspective. Because there’s a lot [of technology], as a restaurant owner, I probably was pitched by over 500 different restaurant tech companies trying to bring in new services. And some some of those technologies were game changing for us way back in the early days of Groupon or Yelp, or even a third party marketplaces themselves, these were companies that really carried a lot of volume for us. And, you know, without them, I don’t know if we would have made it this far. So it’s really, really hard to navigate this space, because there’s so much happening. It’s like drinking from a firehose and when you think about your tech stack and your strategy, especially as it’s moving so quickly, but I definitely am encouraging as many restaurants to embrace that experimentation.

Jenn Marston: Excellent. Well, thank you for chatting with me, Alex. And for those of you watching and listening, hope this has been helpful and we’ll be running quite a few of these videos and pieces over the next couple of weeks on the spoon. So thanks again, Alex. And Take care everybody.

Raydiant Teams Up With Toast to Make Menu Management Easier for Restaurants

Digital signage platform Raydiant announced today it has joined Toast’s Partner network and will now integrate with the latter’s digital menu app. The main goal of the partnership is to provide restaurants with an easier, faster way to keep menus updated across every single channel through which orders arrive.

Nowadays, restaurants juggle an increasing number of order channels compared to even one year ago — delivery (third-party and in-house), curbside, pickup, and drive-thru, to name a few. The task of updating the menu across all these different digital properties is an obvious candidate for automation, considering the time it would take to manually change each individual menu (not to mention, the risk of human error).

Raydiant’s SaaS tool syncs a restaurant’s menu with Toast’s POS system so that any changes — pricing, promos, 86’d items — will automatically change across all a restaurant’s different digital channels. For restaurants with multiple units, the changes apply across all locations.

Via the same interface, restaurants can also create QR codes for ordering and payments in the restaurant or at the drive-thru.

This automated, all-in-one approach to menu management became something of a “must-have” last year thanks to the ever-changing dining room restrictions related to the pandemic and the addition of new sales channels. When front-of-house-focused restaurant tech companies started releasing their so-called “contactless” tech bundles for the dining room, automated menu management started to become more commonplace. Sevenrooms, Paytronix, and several other companies in Toast’s partner network also offer similar functionality. In other words, there is a lot of competition in this particular area right now.   

Raydiant raised a $13 million Series A round in January of this year. The company said it more than tripled its revenue in 2020, and increased its customer base by 60 percent.

Cloud Software for Cloud Kitchens: Grubtech Raises $3.4M

Dubai-based Grubtech announced today it has raised $3.4 million in pre-Series A funding for its software platform that powers ghost kitchens and delivery-only restaurants. Investors in the round are unnamed but include “large regional family offices, a U.S.-based venture capital firm as well as reputable angel investors.” 

Grubtech says its cloud-based software platform is built specifically for cloud kitchen operations or restaurants running multiple brands, virtual or otherwise, out of a single kitchen. There are plenty of both nowadays, the pandemic having forced many restaurants to serve the bulk of their meals as delivery or pickup orders. The resulting uptick in both ghost kitchen spaces and virtual restaurants run from underutilized kitchens mean restaurants must now juggle even more order channels than before the pandemic. 

Grubtech’s product promises to simplify operations by centralizing important tasks and information on a single dashboard in the restaurant. For example, instead of a restaurant staffer having to manually input different orders from different virtual brands into the main system, Grubtech automates that process. If a restaurant needs to update a menu item, they can do so via Grubtech, which will ensure every copy of the menu across every order channel gets the same update. Restaurants can also view all sales, integrate with some third-party delivery providers, and, for an additional cost, add things like a branded website or “contactless” dining room app. The company says its software reduces the “click-to-doorbell” time for an order by 20 percent and saves “approximately” 25 percent on labor costs.  

Current customers include a number of companies in the Middle East-North Africa region, such as Delivery Hero’s kitchen in Abu Dhabi and Dubai-based iKcon.

If 2020 was the year ghost kitchens became a mainstream concept, 2021 will be about making them more efficient, and simplifying the tech stack is one way to do that. Centralizing restaurant order channels and data isn’t a new phenomenon (see Ordermark, Lunchbox, and others), but it will get fine-tuned for ghost kitchens and virtual restaurants as more restaurants adopt those channels.

Grubtech said today it will use the new funds to further develop its product and expand farther across the Middle East-North Africa region as well as Europe and the Americas.

The Big-Box Ghost Kitchen Is Here

A couple weeks ago, college was the latest potential growth market for ghost kitchens. Today, it’s big-box retailers like Walmart.

Recently an Ontario, Canada-based company called Ghost Kitchens launched its first-ever location inside a Walmart store in the city of St. Catherine’s. It’s not the first-ever ghost kitchen concept from the company, but it is Ghost Kitchens’ first time to operate from within the four walls of a major retailer. And it further blurs the lines between the restaurant, the grocery store, and the convenience mart. 

Ghost Kitchens’ facilities carry a variety of items, all of which are relatively easy to prep and transport to customers. Those include CPG goods like Ben&Jerry’s ice creams, meals from QSRs like Salad Works, and shopping mall standards like Cinnabon. Customers can order these items through certain third-party delivery platforms or pick them up inside at the Walmart in which the facility is located. Additionally, customers can bundle different items from different brands into a single ticket.

And speaking of bundling, the Ghost Kitchens-Walmart deal is another example of a trend brought on by the pandemic but likely to stick around for the long haul: giving customers the option to digitally order multiple different food formats from a single place.

The idea got popular by necessity in 2020, after the pandemic forced restaurants to close dining rooms and businesses resorted to selling their food inventory as groceries to customers as a means of making extra money. 

Since that time, ghost kitchens have become a kind of norm in the restaurant biz, digital ordering has increased (and will continue to), food producers everywhere have launched direct-to-consumer e-commerce stores, online grocery shopping has grown, and convenience stores have inked deals with delivery companies. All of those factors have converged to underscore a single point: consumers ideally want to find the majority of their food items, whether it’s a burrito or a bunch of kale, in a single place, literally and digitally speaking.

Ghost Kitchens’ Walmart concept is a bit like a real-life illustration of the above factors coming together, but it’s not the only company helping to blur the lines between the restaurant, the convenience store, and the grocery market. ClusterTruck, a virtual-only restaurant company, operates ghost kitchens inside Kroger stores. H-E-B has a food hall for delivery meals. DoorDash has its own “ghost convenience stores” that are basically like 7-Eleven without the storefront.

Sticking a ghost kitchen inside a Walmart makes sense because Walmart does big grocery business, in addition to selling every other physical object imaginable. It seems like only a matter of time before retailers like Target, Sam’s Club, and others follow suite. 

To be clear, this won’t be the territory of high-end, or even sort of high-end meals crafted by chefs. Rather, it’s another example of the ghost kitchen’s ever-evolving role, which will eventually serve much more than the restaurant biz.

Restaurant Tech ‘Round the Web

There are drive-thru lanes, and then there are bike-thru lanes. Dunkin’ unveiled its first-ever version of the latter in Quezon City, Philippines, and has reportedly gotten rave reviews for it. The QSR says it will expand the concept to other Dunkin’ locations in the Philippines.

Yum Brands, parent company of KFC, Taco Bell, and Pizza Hut, acquired AI firm Kvantum for an undisclosed sum. Yum said in a statement the acquisition will allow it to improve its marketing campaigns and data analytics around consumer behaviors.

Many restaurant operators don’t expect to return to “normal business conditions” any time soon, according to new survey data from the National Restaurant Association. Thirty-two percent of operators think it will be 7-12 months, and 29 percent say it will be more than a year. Ten percent say business conditions “will never return to normal for their restaurant.”

Walmart in Canada Is Getting a Virtual Food Court Thanks to Ghost Kitchens

Ghost Kitchens, a Canadian company that operates, uh, ghost kitchens, this morning announced a new partnership to bring its concept to Walmart stores in Canada. The first location, in St. Catherines, Ontario, is open now. Additional locations are slated to open across Ontario and Quebec “in the coming months.”

Ghost Kitchens’ concept is part grocery store, part QSR, part mall food court in terms of what it offers. The company carries a variety of items from well-known QSRs and CPGs, among them Ben&Jerry’s, Saladworks The Cheesecake Factory’s Bakery chain, Cinnabon, Beyond Meat, and Jamba Juice. All items are prepped and fulfilled at Ghost Kitchens’ facilities.

Customers can bundle items from any of these brands into a single order, which can be placed either in-person or via a third-party delivery service. (Ghost Kitchens lists partnerships with Uber Eats, DoorDash, and Skip the Dishes on its website.) The company operates several of these facilities in Canada, with some standalone locations and some inside malls and big-box retailers like Walmart.

Speed appears to be the motivating force here. Ghost Kitchens’ food offerings are all simple, easy-to-fulfill items that don’t require Michelin-star chefs to create or special packaging to transport. “Our goal is to open a Ghost Kitchen every 12 kms across Canada, and be able to reach every Canadian, in every urban market within 30 minutes, 24/7,” said company President Marc Choy, President. That seems entirely possible when cheesecake, salad, and ice cream are the main staples on your menu.

It’s yet-another take on the ever-evolving concept of the ghost kitchen, which continues to evolve both as a format and with the types of food served. Nowadays, there seems to be a ghost kitchen for everything, from  burgers and cocktails to caviar and stoner food. 

Future Ghost Kitchens locations in Walmart stores are planned for 2021, including those in Woodstock, Lachenaie, Saint-Constant, and more in Toronto.

Survey: 91% of US Restaurants Will Invest in Kitchen Automation in 2021

The majority of U.S. restaurants have made or plan to make investments in kitchen automation technology in the future, according to new survey data from payments company Square. 

The company just released its “Future of Retail” and “Future of Restaurants” reports to offer an overview of what businesses are investing in from a technology standpoint and how processes and operations are changing.

Notable among the many pieces of data: Ninety-one percent of restaurants surveyed will implement some kind of automation technology into their kitchens if they haven’t done so already. 

It should be noted that Square has some skin in this game, since the company has some technology in the restaurant back of house. Therefore, automation in this context is more about software that runs in restaurants than it is about articulating robot arms making food.

Why the rush to digitize the back of house? “In order to take advantage of opportunities like multiple revenue streams and creative dining experiences, the back of house needs to be buttoned up,” notes the report. Restaurants certainly grappled with things like multiple order streams (e.g., delivery, takeout, etc.) prior to COVID-19. But few would deny the pandemic accelerated the widespread adoption of these off-premises formats, and up to now restaurant tech has only had time to react to the changes, not get ahead of them.

Hence more investment in back-of-house tech. Bruce Bell, Head of Square for Restaurants, said in the report he sees more of a “hub-and-spoke” model these days, where the kitchen sits at the center of a growing number of sales channels. “One channel might be the dining room, one channel might be first-party delivery, one channel might be meal kits, and so on,” adds Bell. “Having the kitchen run as efficiently as possible extends that efficiency into all of those channels,” he said. 

The hub-and-spoke model is already popular with some ghost kitchen setups. For larger restaurant chains, many of which are decreasing the sizes of their dining rooms or eliminating them altogether, this model could become the norm, too.

As far as those formats go, Square’s report found that restaurants plan to offer the following in 2021: curbside pickup (66 percent); drive-thru service (52 percent); drive-in service (48 percent); and drive-through dining (46 percent).

Loyalty programs, digital menus, in-house delivery, and digital ordering and payments are all technologies we can expect to drive these formats as well as the dining room experience in the future.

If you are interested in kitchen automation and robotics, make sure to attend the second food robotics summit on May 18th!

College: the Next Big Frontier for Ghost Kitchens

New bits over the last couple weeks have sent my brain right back to college — specifically to the college dining hall, where myself and others (everyone) used to steal food to take back to our dorms to eat between meals.

OK, I’m not sure that actually classified as stealing, since we were all on prepaid meal plans. But you weren’t allowed to take food out of the dining room, so the act of sneaking, say, a couple oranges and a jumbo ziploc bag of cereal out the door was practically an art form among the student body population.

Gen Z will likely not have to jump through that particular hoop when it comes to getting fed in between regular mealtimes. I was recently reminded of this possibility when news dropped that foodservice provider Chartwells plans to launch a ghost kitchen program across the colleges and universities it supplies.   

Chartwells has already piloted the program at a few schools, including the University of Utah and Seattle University. The idea is to find underutilized kitchen spaces on campus and turn them into ghost kitchens that serve students delivery and pickup meals ordered via the Chartwell’s mobile app.

While the long-term relevance of ghost kitchens is still a hotly debated topic in the the wider restaurant industry, the format seems to be a no-brainer for school campuses. 

As my food-theft story above anecdotally illustrates, students eat at all hours of the day and night, and often those weird hours are out of necessity (e.g., studying late, extracurricular commitments, etc.) Campus dining halls rarely accommodate those hours. Nowadays that leaves students at the mercy of DoorDash or Uber Eats, which, particularly with the newly hiked fees, gets expensive quickly. There’s always, of course, the option to hop in the car and hit the drive-thru, but that takes time and, depending on the restaurant, costs a fair amount of money, too.

Instead of leaving students to the mercy of surrounding restaurants, schools have an opportunity to work with their foodservice providers and offer meals in a wider variety of formats at more times throughout the day and night. The kitchen infrastructure already exists, most notably at dining halls that only operate at specific hours. Those spaces could easily double as kitchens that fulfill pickup and/or delivery orders in the off hours. Schools might even make money off such an operation. 

Meals, meanwhile, could count towards a student’s overall meal plan, and adding a mobile app component, as Chartwells has done, would simplify the entire process. Another approach would be for a school foodservice provider to partner with a third-party mobile app company, as Aramark did with Good Uncle in 2019. Via the Good Uncle app, students at participating schools can browse meals and order them for delivery. The app’s “Flexcash” system is a declining balance that can be re-upped by the student (or their parent) at any time. From there, it functions just as a meal card for the dining hall would.

Food robots, of the small, six-wheeled variety, could also prove themselves a valuable part of the campus ghost kitchen operation. Companies like Starship and Kiwibot can already be found roving about multiple university campuses. In fact, both companies have existing partnerships with yet-another foodservice provider, Sodexo. One can easily imagine one of these roving bots carrying food from an on-campus ghost kitchen to the student’s dormitory or to a centralized pickup point on campus.

A final point in favor of ghost kitchens on campus. We hear often that delivery and takeout can’t replace the restaurant experience, which is true, because eating soggy fries from a cardboard box is decidedly not an experience. But campus dining halls aren’t exactly known for five-star meals, and much of the food served up in these places is already well-suited to travel. There may even be room for improvements in menu offerings, something Chartwells appears to be looking at through its program.

Does all this potential for ghost kitchens, tech, and the like spell the death of the campus dining room? Not likely. In fact, this particular on-premises format is ripe for its own digital reinvention, from automat-style lockers to robot vending machines and even tools in the back of house that can better monitor food safety and food waste. All said and done, there’s arguably enough room for innovation within format as there is beyond it.

Food Tech ‘Round the Web

Meanwhile, over in the regular restaurant world, ghost kitchens are not the future, according to this thoughtful analysis from Grubstreet writer Rachel Sugar.

Also, forget Guy Fieri. White Castle is opening a delivery-only kitchen in downtown Orlando, Florida, which will be in operation next week.

And if you read nothing else in this newsletter, check Eater’s comprehensive coverage on how to help feed those impacted by the Texas winter storms.

Campus Foodservice Giant Chartwells Brings Ghost Kitchens to Colleges and Universities

Chartwells Higher Education, a foodservice management company, announced today it has launched its ghost kitchen program for college and university campuses. Chartwells has already piloted the program at a handful of schools, including Seattle University, SUNY Buffalo State College, the University of Utah, the University of Texas at Dallas, and San Jose State University.

Working with these schools, Chartwells developed several new meal concepts appropriate for delivery. For example, the company worked with Seattle University to open a ghost kitchen that tested 12 rotating entrees and desserts, which students could order via the existing Chartwells mobile app. Since most of Seattle University’s physical campus was closed during Fall semester 2020, the ghost kitchen pilot also served as a test for how colleges and universities can provide students with food even when dining halls are shuttered. Meals were available for both delivery and contactless pickup.

Chartwells said more than 24,000 orders were placed via its mobile app within the first month of the Seattle University test. Terry Conaty, Resident District Manager at Seattle University, said in a press release that the partnership was a “win-win” because it provided students with “lots of new menu options without having to add additional personnel resources or compromise our social distancing guidelines.”

Chartwells serves more than 300 campuses. The company says this ghost kitchen program will add to rather than replace existing dining options. The idea is to take advantage of any underutilized kitchen space on campuses that can be turned into ghost kitchens.

Historically, few would have called college and university campuses hotbeds for food tech innovation. That has slowly started to change over the last few years with the rise of apps like MealMe and Good Uncle (the latter of which was acquired by foodservice giant Aramark), the presence of delivery bots on campus, and Gen Z’s inherent familiarity with a more tech-driven eating experience. 

Nor is Chartwells the only company bringing ghost kitchens to campus. Last month, hospitality platform C3 joined forces with Graduate Hotels to put more ghost kitchens in college towns. 

The ghost kitchen format is an obvious fit for the college and university market. Students eat meals at all hours of the day and night, a schedule the traditional dining room’s hours don’t typically accommodate. And on the note of dining rooms, there’s no telling whether the traditional cafeteria-style setup will exist once classes shift back to the physical campus. Social distancing will have to be considered when it comes to those spaces, and some students may not feel safe eating in a dining room. Colleges and universities will have to provide alternative options, including pickup and delivery.

Schools, too, are brimming with underutilized kitchen space. For smaller campuses, a few would suffice when it comes to serving the entire student body. For larger schools, one can imagine a network of ghost kitchens placed strategically around the campus, each serving different sets of dormitories and apartment blocks. Meals ordered from campus ghost kitchens could even count as part of a student’s meal plan, which would be considerably cheaper than someone having to order from DoorDash every night.

When schools go back in session very much depends on each individual institution. Many are doing hybrid online-offline sessions right now. The many new food options for students seem geared towards both accommodating these fluctuating schedules and a bid by schools to keep pace with the changing times for foodservice. 

Rise of the Plant-Based QSR

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Those of us of a certain age will remember a time when eating “vegan” at a QSR meant the Wendy’s salad bar. 

Fast forward to 2021, and advances in both food technology and the restaurant biz have made the concept of eating vegan (which we now call “plant based”) much more palatable to the mainstream. The names “Beyond” and “Impossible” are on most major QSR’s menus today. Eat Just’s plant-based egg products are in a growing number of fast-food breakfast items. And recently, two more announcements from major QSRs dropped that indicate we’re at fast approaching a major turning point for menus in the QSR realm.

On its most recent earnings call, Starbucks said it had turned one of its Seattle, Washington locations into a test area for a “100% plant-based food menu.” Starbucks CEO Kevin Johnson suggested that this test site is in response to what he sees as “the most dominant shift in consumer behavior,” which is the move to plant-based foods. The shift, said Johnson, is evident in both food and beverages. 

The move to offer plant-based meals to customers isn’t entirely new for Starbucks. The chain debuted Beyond Meat products in China last year and carries Impossible sausage sandwiches at its stores in the U.S. It also offers a number of plant-based milk alternatives. 

But this new test store in Seattle is the first time the chain has gone full-tilt on a plant-based menus. All food items on the Starbucks menu will be vegan, with animal-based proteins being replaced by plant-based counterparts. 

Also recently, McDonald’s announced it’s finally testing its McPlant burger, a vegan offering the mega-QSR developed with Beyond Meat. While this is less of a monumental change than overhauling an entire menu, McDonald’s has up to now has made few moves when it comes to introducing plant-based foods to its menus. (A brief trial in Canada is the exception.) Though this McPlant pilot is pretty limited right now — Denmark and two cities in Sweden — it is also likely also in response to a growing consumer demand for plant-based proteins.

All that said, demand shows up differently in different parts of the world. Sweden and Seattle are obvious choices to test plant-based wares, given the demographics that reside in those areas. In the U.S., at least, seven in 10 people classify themselves as “meat eaters,” according to recent data, and there are undoubtedly parts of the country where a plant-based Starbucks would fail harder than the Wendy’s salad bar expansion did in the ‘90s. 

For now, that is. As more tests like that of Starbucks are conducted, and major chains like McDonald’s introduce more plant-based items, the concept of a full-vegan fast-food meal will grow less foreign to more customers. I doubt it’s long before we see plant-based QSR locations popping up in certain markets like, NYC, San Francisco, and even newly popular cities like Austin and Denver. How the plant-based QSR fares in these markets will tell us a lot about when it will head to other parts of the country.

The Restaurant Robots Are Coming

Of course we’ll know we’ve really hit a turning point when vegan Starbucks locations start delivering our plant-based breakfast sandwiches via robot.

I just made that up, but as The Spoon’s Editor in Chief Chris Albrecht points out in his new Spoon Plus report, we will soon see these delivery bots rolling about our sidewalks, college campuses, and city streets.

Chris’ report breaks down the different companies currently leading the space, including Starship, Kiwi, Nuro, and Refraction, and where these players’ opportunities lie in making robot delivery more common for the average consumer.

In the restaurant realm, there are a few advantages to robot delivery. It’s first and foremost a more contactless delivery method, which is an obvious plus at a time when COVID-19 vaccines aren’t widespread. Robots can also work continuously without the need for a break and could potentially be cheaper for restaurants. The flip, of course, is that widespread robot deployments would take jobs away, a point that cannot be ignored in any discussion about restaurant robots.

Chris delves into all of this and much more in his report, which you can access by becoming a Spoon Plus member. Spoon Plus members get access to all of our market reports, maps and deep dives that give you an advanced understanding of where the food tech industry is headed. Get the goods right here.

Restaurant Tech From Around The Web

Luckin Coffee, one of China’s largest coffee chains and Starbucks’ main competitor in that market, is filing for bankruptcy. The company is still dealing with the fallout from a fraud scandal from 2020. Luckin said that stores would remain open for business.

The California Supreme Court has declined to hear a lawsuit filed this week seeking to overturn Proposition 22, the controversial ballot measure that passed in November and exempts companies like DoorDash and Uber from classifying workers as employees. the Court suggested plaintiffs refile the case in a lower court. 

If it feels a little off to you that third-party delivery services like DoorDash and Uber Eats are spending millions on themed Super Bowl ads (Cookie Monster and Wayne’s World, respectively) while restaurants and restaurant workers continue to struggle, check this quick read from the folks at Eater Chicago. In the words of Eater writer Ashok Selvam, “can you imagine Wayne and Garth using a third-party service to order from Stan Mikita’s Donuts? Game off.”