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The Spoon

Daily news and analysis about the food tech revolution

Coronavirus

The Spoon team is working hard to bring you the latest on the impact of COVID-19. Bookmark this page for our full archive on the pandemic and how the food industry is embracing innovation to fight back.

On April 6th, The Spoon had a full day virtual summit on COVID-19 strategies for food & restaurants. You can watch all the sessions from our virtual strategy summit here.

You can also check out this COVID-19 resource page for food and restaurant industry.

Kitchen United Plans a Massive Expansion for Its Ghost Kitchen Network

Kitchen United will expand its ghost kitchen network significantly in 2021, the company said during a talk at this week’s ICR conference (h/t Restaurant Dive). Michael Montagano, KU’s CEO, said he expects the company to grow its number of locations from its current four to 20 by the end of the year, which would equal 500 percent growth for KU in total units.

The company currently operates ghost kitchen facilities in Pasadena, California and Chicago, Illinois, as well as in Scottsdale, Arizona and Austin, Texas. According to Montagano’s ICR presentation, Kitchen United’s 2021 expansion will include new facilities in those existing “high-volume” markets as well as kitchen facilities in completely new locations, like New York City and the San Francisco Bay Area.

Plans for this massive expansion come as restaurants continue to struggle with closures and capacity restrictions brought about by the pandemic and the industry continues shifting en masse to off-premises formats like ghost kitchens and virtual restaurants. And even when those limitations are lifted, general consensus is that meal formats like takeout and delivery are here to stay, which means more restaurants will continue seeking kitchen space in which to fulfill those orders.

Underscoring the demand for more kitchen space, Montagano said during ICR that Kitchen United’s existing facilities are full, and that existing customers want to continue growing with the KU platform. To date, Kitchen United’s facilities have served most known brand names, including The Halal Guys, Dog Haus, and Wetzel’s Pretzels. A move to more and different parts of the country may allow more regional chains to take advantage of the company’s kitchen infrastructure, too.

In larger cities like New York and San Francisco, Kitchen United will have plenty of competition. Zuul is already an established player in New York City, with plans for expansion around the five boroughs. San Francisco has the super-secretive CloudKitchens, Reef, which raised a whopping $700 million last year, and, in the Peninsula area, DoorDash Kitchens.  

Yelp Now Displays Feedback on Restaurants’ COVID-19 Safety Measures

Yelp users will now be able to provide feedback on restaurants’ COVID-19-related health and safety practices, according to a company blog post from this week. 

Effective now, Yelp will display if users observed — or did not observe — practices like social distancing and the wearing of masks at restaurants and other businesses. The information will be posted on the business’s Yelp page under a “Health and Safety Measures” heading in the COVID-19 section (see image above).

Yelp says that to ensure the feedback is fair and accurate, several different criteria must be met before COVID-19 safety information can be listed on its page, including:

  • Multiple user responses “with consensus from multiple users” on social distancing and mask-wearing
  • Responses received within the last 28 days
  • Responses from users logged into their Yelp account

For businesses with multiple locations, the user feedback will only be relevant for the location which the reviewing users visited.

To provide feedback, users can either answer survey questions, much as they would when contributing feedback on other aspects of a restaurant, or they can use the “edit” button on the restaurant’s COVID-19 updates section. Yelp will also notify users via push notification when a relevant restaurant has updated its COVID-19 information. 

For restaurants and other businesses that want to be a little more proactive and display their COVID-19 safety efforts, Yelp will also now allow them to list whether they have the following services: staff checked for symptoms, contactless and/or disposable menus, heated outdoor seating, covered outdoor seating, indoor dining, private dining, and DIY meal kits.

One of the major points we discussed at last October’s Smart Kitchen Summit was that visualizing cleanliness and safety in restaurants is now “table stakes” for restaurants. Even after a vaccine is widely available, consumers are likely to demand more visual cues about a business’s health and safety practices. So while Yelp’s new feature is a response to a (hopefully) short-term situation, user-generated feedback on these areas will be a standard feature moving forward for most restaurant review platforms. 

NPD: QSRs Outpace Full-Service Restaurants in Terms of Transaction Improvements

The restaurant industry closed 2020 by “moving its way out of the steepest declines the industry has experienced since the Great Recession,” according to a new update from The NPD Group. 

Restaurant transactions in December 2020 were down 10 percent compared to the same period one year ago. However, that figure is a 27-point improvement from restaurant transactions in April 2020 — at the height of shelter-in-place mandates in the U.S. — when transactions were down 37 percent from the previous year.

NPD’s numbers suggest some much-needed improvement for the restaurant industry overall, after nearly a year of lockdowns, capacity restrictions, and consumer fears around eating out.

That improvement doesn’t look equal across all sectors in the restaurant biz, though. NPD notes in its recent report that full-service restaurants, which typically did not have much in the way of to-go strategies in place at the start of 2020, “bore the brunt of transaction declines throughout the pandemic.” In April, full-service transactions declined by -70 percent compared to a year ago; they improved to -30 percent in December.

Individual state restrictions also have something to do with the numbers around full-service restaurants. NPD noted that In more restrictive states, full service restaurant chain transactions are down 60 percent to 70 percent. In less restrictive states, “there isn’t as much of a gap between quick service and full service restaurants.” 

Most major QSRs were already better prepared to shift to off-premises operations when the pandemic struck in full force last year. Some, like Chipotle and Starbucks, had existing strategies in place around digital, drive-thru, and express store formats. Others, like McDonald’s, had the deep pockets and technical expertise to pivot quickly — a luxury most smaller chains and independent restaurants cannot afford.

According to NPD, major QSRs’ takeout, drive-thru, and delivery orders “soared” over the last several months, despite restrictions across the overall restaurant industry: “Quick service customer transaction declines bottomed out in April with a decline of -35% versus year ago, but quickly improved as shelter-at-home orders were lifted. In December, quick service restaurant chain customer transaction declines were down -8% versus last year.”

With things like speed of service, simpler menus, and more-efficient kitchens remaining top priorities for restaurants in 2021, improvements to the overall industry is likely to remain divided between the quick-service chains and their full-service counterparts for some time to come.

Female-Founded Commerical Kitchen Nimbus to Open in NYC

Nimbus, a commercial kitchen space for food businesses of all types, is set to officially open on January 11 in New York City. With it, the company’s founders, entrepreneurs Camilla Opperman and Samantha Slager, aim to provide a space for restaurants struggling from both the pandemic and high cost of rent in NYC.

To learn more about Nimbus and its upcoming launch, I spoke with Opperman and Slager this week. The two said they were inspired to provide an “on-demand” kitchen space to support restaurants and start-ups in their city, but also wanted to go above and beyond the standard ghost kitchen concept.

Nimbus offers a variety of flexible lease and rental options that allow food businesses to control how much they are spending on rent per month. A restaurant or food entrepreneur can rent space at Nimbus for a range of different time periods, from a few months to just a few hours. They can also choose a longer-term lease if desired. Space in the facility costs $20/hour for the prep-only kitchen and $35/hour for the shift-kitchens with a 20-hour minimum per month for both. The Nimbus model also allows businesses to use a convenient online dashboard to book kitchen time, rent storage space, pay invoices, and store permit and insurance information. The kitchen spaces are fully stocked with appliances, saving the food businesses money in start-up costs.

Since ghost kitchens are very much a “back-of-house” operation, what goes on inside them is never really witnessed by customers. To deviate from this and provide more transparency into its operations, the Nimbus facility will also include a front-of-house community space and show-kitchen. These spaces can be used for cooking demonstrations, community events, and workshops, Nimbus said.

The first Nimbus location will host a variety of both existing restaurants and food startups. Roberta’s Pizza (wood-fired pizza), Quinn (a meal delivery service), Alchemista (offers catering and food locker services), Brooklyn Batched Cocktails (pre-made batch cocktails), and Munch Hours Inc (a catering company) are just a few of the businesses that will start using the commercial kitchen space on January 11. Businesses using the space will partner will existing food delivery companies such as DoorDash and Caviar.

As ghost kitchens become more popular — Euromonitor predicted last year the market could be worth $1 trillion by 2030 — different types are emerging that deviate from the traditional commissary a la Kitchen United or Zuul. Nimbus’ concept provides not just an opportunity for restaurants looking for shorter-term leases, but also a way for non-restaurant food businesses to take advantage of the growing ghost kitchen concept.

Nimbus’ cofounders said they are currently looking into opening two new locations in different areas of New York City. The company also has plans to expand nationwide in the next five years, starting in major cities such as Los Angeles and Miami.

C3 Acquires Shuttered Specialty’s Locations to Launch Virtual Restaurants

One thing the restaurant industry has in abundance right now is underutilized kitchen space. A lot of that extra space unfortunately exists because of widespread restaurant closures that are permanent. The small silver lining here is that some of that space is actually getting repurposed for the restaurant biz as ghost kitchens and virtual brands continue to grow in popularity.

Case in point: the Specialty’s Café & Bakery chain shuttered permanently in May of 2020 because of “current market conditions attributed to COVID-19 and shelter-in-place policies.” Today, digital kitchen platform C3 (Creating Culinary Communities) announced it has acquired 22 former Specialty’s locations and will use the spaces to launch a new digital brand, EllaMia.

The locations will also house other C3 brands, which include Unami Burger, Krispy Rice, and Sam’s Crispy Chicken. The idea is to house multiple virtual restaurant concepts under one roof, essentially turning each of those shuttered Specialty’s locations into a mini food hall. Users can bundle items from all of the different concepts at a particular location into a single order, which is placed and paid for via the C3 app. Orders will also be available for pickup.

The draw of repurposing underutilized kitchen space, rather than renting infrastructure from a more traditional commissary, is that it is potentially much cheaper for digital restaurant companies like C3. Existing kitchen spaces usually come with a good amount of the physical kitchen infrastructure built in. Many other companies are also taking advantage of the concept, including Ordermark/NextBite, which pairs restaurants with unused kitchen spaces, and Fat Brands.

C3 founder and CEO Sam Nazarian said in today’s press release that underutilized kitchen space is “key to the C3 model” and that this new endeavor means “operating 100 distinct dining concepts in a third of the space required by a traditional restaurant.”

The EllaMia concept, meanwhile, has two existing locations, in Dubai and London. The first of these new U.S. locations will open in February at former Specialty’s in Chicago, Seattle, San Diego, the San Francisco Bay Area, and Orange County.

Pepsi Launches “Dig In” Platform + Consultancy Program to Support Black-Owned Restaurants

PepsiCo recently announced the launch of “Dig In“, a consumer-facing platform aimed to highlight the importance of supporting Black-owned restaurants throughout the U.S. The platform will offer increased visibility, business support, training, and mentorship to restaurants.

Over the next five years, Pepsi aims to raise $100 million for local restaurants through these different support channels. The platform was formally introduced with a commercial on the NFL Network Media during playoffs, with the four restaurants 7th + Grove, Off the Bone Barbeque, The Breakfast Klub, and Kitchen Cray being highlighted.

Part of the platform that is especially relevant to restaurants’ success during the pandemic is Black Restaurants Deliver. The eight-week consultancy program is free of charge and offers assistance in developing online ordering and delivery for restaurants. A pilot of 40 restaurants in Washington D.C. was recently trialed and was enough of a success that the program will now assist 400 restaurants with these services during the next five years.

One of the first restaurants to undergo this program was Off the Bone Barbeque. Pepsi assisted the Dallas-based restaurant in increasing its online presence through an updated website, improved online ordering through the Toast TakeOut app, and marketing support. It is currently unclear if all restaurants participating in the program will go through the same exact process.

With restaurants having an incredibly challenging year in 2020 and the systematic barriers that Black-owned businesses face coming to light, restaurant accelerators and assistance programs such as this can help provide support and guidance to keep restaurants afloat. A study from the National Bureau of Economic Research showed that there was a 41% decline of black business owners from February to April in 2020, which is disproportionate compared to the 17% decrease of white-owned businesses during this same period.

Elsewhere, the Melon Kitchen Food Entrepreneurship Accelerator is opening a culinary program in mid-January for Black and Latinx entrepreneurs. This particular program aims to build “pandemic proof” restaurants through the use of ghost kitchens and DoorDash delivery. The National Urban League actually partnered with PepsiCo in October 2020 to form the Black Restaurant Accelerator Program. PepsiCo provided a $10 million grant to the program in order to provide training, mentorship, capital, and other services to 500 Black-owned businesses over the next five years.

Food Tech News: Virtual Restaurant Accelerator Progam Launch, Mycelium-Based Adidas Shoes

Welcome to our weekend wrap-up of food tech news from around the web.

Happy New Year! I am excited to both say goodbye to the most bizarre year of my life and share some Food Tech News with you. This week, some news pieces that stood out to us included a new accelerator program for virtual restaurants, Adidas shoes made from mycelium, a vegan-friendly Subway sub, and how you can support New York restaurants with a T-shirt.

An accelerator program for “pandemic-proof” virtual restaurants

The Melon Kitchen Food Entrepreneurship Accelerator will be opening a culinary program to Black and Latinx entrepreneurs to assist in the launch of new virtual restaurants. The program will begin in mid-January and take place at AMP (Artisinal Marketplace) in the tech district of Indianapolis. It is a free three-month program that will accept several cohorts consisting of five to seven participants. Through the use of ghost kitchens and delivery through DoorDash, the program aims to build “pandemic-proof” virtual restaurants. The marketplace will open to the public March 2021, and participants are eligible for start-up funding after the completion of the program.

Photo from Bolt Threads’ website

Adidas shoes made from mushroom leather

Adidas announced that they will be launching vegan-friendly shoes made from mycelium-based leather; mycelium is essentially the root system of mushrooms. To produce this new shoe, the company partnered with sustainable materials producer Bolt Threads, which created a mycelium-based leather called “Mylo“. It is currently unclear when the new Adidas shoes will be available for purchase.

Vegan chicken subs at Subway

Now available at Subways in the UK and Ireland, the T.L.C (tastes like chicken) Sub uses soy protein chicken strips to mimic the company’s classic roast chicken breast strips. The new sub will be fully vegan and will also use Violife vegan cheese. The new menu item was added on December 30th, and it is not yet determined if it will be a permanent menu item. Subways located in the UK permanently added a Beyond Meatball Marinara Sub this year, and last year the same sandwich was trialed in the US and Canada.

Morning News clothing company launches T-shirt to support NY restaurants

Clothing company Morning News launched a T-shirt to help struggling local restaurants in New York. The back of the 100 percent cotton T-shirt reads “Support Your Local Restaurants” in hopes of encouraging residents of the state to remember to do so. Additionally, 40 percent of the proceeds from T-shirts will be donated to restaurant owners and employees through ROAR (Relief Opportunities for All Restaurants). Big cities like NYC have experienced a greater number of closures due to the high cost of rent, and over 1,000 restaurants have permanently closed here since March 2020.

2020: The Year the Ghost Kitchen Got Complicated

As an old saying goes, “Anything can happen, and most usually does.”

And it sure did happen in 2020 for the restaurant industry. Pandemic. Dining room shutdowns. Permanent closures at alarming rates. A seismic shift to takeout and delivery formats. More shutdowns. Complete uncertainty over the state of indoor dining coupled with growing panic over the state of the independent restaurant. 

Personally, I think it’s foolhardy to try and meaningfully condense what happened to restaurants in 2020 into a few hundred words. So as we close out this dumpster-fire of a year and head to 2021, I’ll pinpoint one part of the biz that’s been talked of constantly these last several months: ghost kitchens.

Right around the end of 2019, we were already fixated on the ghost kitchen. In a predictions piece I wrote at the time, I said, “This is part of the restaurant industry that will change rapidly over the next year as it becomes more commonplace among both restaurants and consumers.”

All that wound up being true in 2020, not because I’m some predictions wizard but because a global health crisis forced the restaurant industry into off-premises formats like takeout, delivery, and drive-thru. Because these formats don’t require a dining room to function, they are inherently suited to the ghost kitchen setting. Ghost kitchens, after all, were designed to serve to-go customers, typically those ordering through mobile apps and other digital properties. 

But one thing that was made clear in 2020: ghost kitchens are not the end-all, be-all savior of the restaurant industry. In fact, throughout the year, multiple restaurant industry figures raised questions about the commissary model in particular.  

Back in March, when COVID numbers were initially rising, former Kitchen United CEO Jim Collins cautioned restaurants to think hard about whether their business generated enough demand to justify the cost of a ghost kitchen operation. Similarly, Andy Wiederhorn CEO of Fat Brands, said in July that ghost kitchens “simply work better for brands that have existing fanbases” (a point he repeated at our ghost kitchen event earlier this month).

I bring up these reservations not to further cast a cynical shadow but to illustrate another important takeaway from 2020: that because there are still so many uncertainties for restaurants over the traditional commissary model, other forms of the ghost kitchen concept have emerged that make running an off-premises business more feasible for more types of restaurants. 

Over the last year, we saw the growing popularity of the so-called “dark kitchens.” These are underutilized kitchen spaces restaurants are using to fulfill their delivery and off-premises orders. Fat Brands is one notable example of a company using its own restaurants as dark kitchens for sister brands. Ordermark/NextBite, meanwhile, built out its business this year of pairing restaurants with unused kitchen space in order to deliver (literally and metaphorically) more meals from virtual restaurant concepts. Another great example is Hi Neighbor, a San Francisco restaurant group that had to close because of the pandemic. Its response was to use one of its shuttered kitchens to accept and fulfill delivery orders for its own virtual concepts. Hi Neighbor is just one local example of a trend happening nationwide.

In the second half of 2020 (right after Euromonitor predicted the ghost kitchen market would be worth $1 trillion by 2030), we saw massive amounts of investment dollars flow into the space, from Zuul’s $9 million fundraise to a $120 million investment in the aforementioned Ordermark to the $700 million raised by Reef. There were plenty of other financial milestones in between those figures.

Alongside those investments, even more formats emerged of what a ghost kitchen might look like and how it could become more efficient. ClusterTruck, which has operated a vertically integrated delivery business for years, teamed up with Kroger to turn the latter’s deli counters into a kind of ghost kitchen. More recently, Crave Collective opened in Boise, Idaho to show us what a fine-dining take on a ghost kitchen looks like. And the QSRs, finally got onboard, with everyone from Chipotle to McDonald’s unveiling new store formats that minimize or eradicate the dining room and are in effect their own version of a ghost kitchen.

The most unanimous takeaway of the year was this: the ghost kitchen, in its various forms, is here to stay. We may be inching closer to a widespread vaccine for COVID, but the restaurant industry has already completed the shift to off-premises-centric businesses. There’s no going back at this point.

Even so, we leave 2020 and enter 2021 with plenty more questions when it comes to how one best runs a ghost kitchen. What is the role of the chef — an artist, by rights — in this off-premise-centric new world? How long will ghost kitchen operations be tied to third-party delivery services increasingly bent on calling the shots for restaurants? What about the mounds and mounds of packaging waste being generated by all this innovation?

If 2020 was a year about making the ghost kitchen more efficient, 2021 should be about the role the ghost kitchen plays when it comes to the restaurants, chefs, drivers, and other people whose livelihoods are now tied to it.

Toast Launches a Winter Recovery Fund for Restaurants

Restaurant tech company Toast today announced a $35 million relief plan for restaurants as winter begins and the pandemic continues to disrupt normal operations. 

The Boston, Massachusetts-based company said today this “relief package” is in response to the status of the RESTAURANTS act, which is part of a larger stimulus plan and therefore currently stalled in Congress. Were it to pass, a $120 billion grant program would be available for those in the restaurant industry impacted by the pandemic. The point, however, is that it hasn’t passed yet, winter is here, and many restaurants are on the brink of permanent closure if they don’t receive assistance.

Toast’s Winter Restaurant Recovery Fund is not near the size of the $120 billion figure of the aforementioned legislation, but it could provide a temporary boost to restaurants in some areas. 

The fund is available to Toast’s current customers. Through it, restaurants can access funding they can put towards winterization (aka, making outdoor dining feasible in cold weather) and working capital needs. They will also receive a one-month software credit for their current Toast tech stack and complementary access to the company’s online ordering, payroll, and marketing products. Finally, restaurant customers will also be allowed to pass their one-month software credit on to another restaurant (that doesn’t have to be a Toast customer) facing greater hardships. 

According to the Toast website, restaurants do not have to take any extra steps in order to activate their one-month credit. For the funding portion of this relief package, restaurants will need to apply.

Toast has been quick to respond to restaurant industry needs brought on by the pandemic. In March, just as COVID numbers were rising and businesses closing, the company launched an initial relief plan and, like others, eliminated software fees for restaurant customers. Over the last several months, it has also released a slew of new products and features geared towards native delivery and contactless order/payments. 

The restaurant industry in all likelihood stills need major assistance from Congress. (Honestly, it probably just needs a bailout.) In the meantime, assistance packages like those from Toast and other restaurant tech companies are able to provide some breathing room and help businesses keep the lights on one more week.

‘Just Do What Domino’s Did’ – Takeaways From The Spoon’s Ghost Kitchen Deep Dive

It’s our weekend restaurant tech news wrapup. You can subscribe to our newsletter here to get this delivered to your inbox.

And now for some final thoughts on The Spoon’s ghost kitchen event, which we held this past Wednesday.

For the (virtual) event, we gathered restaurant operators, tech companies, ghost kitchen infrastructure providers, and thought leaders together to discuss not just the promise ghost kitchens hold for restaurants, but also the realities those businesses must face when using this model.

Last week, I covered a couple of the major points made at the event around building a virtual restaurant brand and the risks of relying on a 100-percent delivery-only operation. 

To top that off, here are a few more noteworthy points raised by event panelists and attendees throughout the day:

Ghost kitchens and virtual restaurants are here to stay. Many of the developments in recent months have been in reaction to the pandemic, but the ensuing focus on ghost kitchens, delivery, and virtual restaurants will stay long after vaccines have been administered. Huge numbers of consumers have found new ways to interact with food via online channels. Even when it’s safe to dine inside a restaurant again , those new behaviors will continue driving the industry towards the off-premises model.

There is a lot of under-utilized kitchen space out there. From extra space in existing restaurant kitchens to hotel facilities to coffeeshops not open during dinner time, plenty of kitchen infrastructure already exists for restaurants to turn into a ghost or dark kitchen operation. The benefit of this route, versus renting space for a commissary, is that restaurants can leverage fixed costs that are already there. For example, if you are running a virtual brand out of an unused part of your own kitchen, you’re not paying for additional electricity, staff, or equipment. As restaurants plan for off-premises orders and virtual brands, they should consider the infrastructure assets they already have as an important factor in determining how to approach the ghost kitchen question. 

Third-party delivery: Love it or hate it, we still need it. More than one panelist felt that, despite high commission fees, restaurants need third-party delivery services right now. Some went as far as to say the industry would have been decimated over the last nine months without them. Others said restaurants need third-party delivery services in the initial stages of an off-premises/ghost kitchen strategy because of the visibility these services are able to provide via their online marketplaces. 

However, restaurants absolutely must invest in their own native delivery platforms. After a restaurant has attracted an initial following on a third-party marketplace, the big challenge is converting repeat customers to one’s own website and getting them to place orders there. A good deal of marketing and communication has to go into this process, not to mention investing in actually building out that direct channel. Technologically speaking, this is very expensive, but numerous companies exist that help power the back end of native storefronts without demanding 30 percent of each transaction.

Just do what Domino’s did. Quote of the day goes to Lunchbox’s Nabeel Alamgir, who said, “The best thing you can ever do is just do what Domino’s did—invest in it 20 or 30 years before everyone else did.” Of course, he quickly followed up with some actionable advice about delivery and ghost kitchens. But his half-joking, half-serious comment also serves as a reminder and a call to action to the entire industry to keep on innovating, even — nay, especially — amid the uncertainty that has defined the restaurant biz in 2020.

Data :Full-Service Restaurants Are Still Flailing When It Comes to Sales

Apparently it was the week for new data on just how badly the restaurant industry is struggling right now, especially when it comes to full-service restaurants. Payments company TableSafe just released data that found transaction volumes at full-service restaurants declined to 50 percent of pre-pandemic levels in November after recovering 60 percent of pre-pandemic levels in October. 

These numbers follow those from Black Box Intelligence, which found same-store sales growth at restaurants at -10.3 percent, a 3.8 percentage drop from October’s year-over-year sales growth rate. Black Box Intelligence called November “the worst month for the industry since August based on year-over-year losses in sales and traffic.” Sales may continue their decline in the coming months, too.

Both those reports coincide with the National Restaurant Association’s recent letter to Congressional leadership that detailed the rapid economic decline of the restaurant industry and more or less pled for restaurant relief from Congress. 

All this data is also coming at a time when cities around the country are operating under indoor dining restrictions and cold weather has made outdoor seating a non-option for many. 

We’ve said many times before that continued focus on off-premises channels — takeout, delivery, drive-thru (where applicable) — should be a priority for restaurants, both as a short-term response to the pandemic and as a longer-term play. Off-premises channels won’t provide the same level of assistance as, say, stimulus relief or a bailout, but they can provide an avenue to extra revenue that, judging from the above data, is badly needed right now.

Restaurant Tech ‘Round the Web

Hand-hygiene system PathSpot this week announced an ongoing partnership with Opus, which makes a text-based training tool for employees. Together, the two companies will provide a more comprehensive onboarding and training program for restaurants using PathSpot’s device in their stores. 

Can’t go out for a holiday steak? Restaurant chain Ted’s Montana Grill will deliver it to you via its new Butcher Shoppe service. Customers can buy bison and premium beef as individual steaks, fresh grind, and specialty boxes via the new e-commerce site. All orders arrive fresh the next day.

Guardian writer Oliver Holmes got a chance to head over to The Chicken, a restaurant in Israel that happens to be the world’s first location for testing cell-based meat in a restaurant setting. Check Holmes’ review of his experience and the food here for a meaty (sorry, not sorry) weekend read.

Survey: Restaurant Industry in ‘Free Fall,’ 10,000 Closures in Three Months

The National Restaurant Association sent a letter to Congressional leadership this week sharing new survey findings on the state of the restaurant industry as it continues to navigate the pandemic. The Association’s letter didn’t mince words: “What these findings make clear is that more than 500,000 restaurants of every business type—franchise, chain, and independent—are in an economic free fall.”

The Association conducted a survey of 6,000 restaurant operators and 250 supply chain businesses from Nov. 17-30 of this year. Among its findings are:

  • Eighty-seven percent of full-service restaurants, including chains and independents, reported an average drop of 36 percent in sales revenue. Equally disconcerting is that 83 percent of full-service operators expect sales over the next three months to be worse.
  • Costs have not fallen, despite declining sales. Over half, or 59 percent, of operators said their total labor costs (as a percentage of sales) are higher now than before the pandemic. 
  • At the same time, 58 percent of chain and independent full-service restaurants expect more furloughs and layoffs “at least the next three months.”

The letter topped off this bleak serving of news with some numbers on the state of closures around the restaurant industry. As of right now, more than 110,000 restaurants in the U.S. have closed permanently or are closed for the long term. The majority of those were established businesses that, on average, had been open at least 16 years. Others had been open at least 30 years.

“For nearly nine months, restaurants—our nation’s second-largest private sector employer—have been in an economic free fall as a result of mandated closures and capacity limits due to the coronavirus pandemic,” states the letter, which was written by Sean Kennedy, the Executive Vice President of Public Affairs for The Association.

Further down in the letter he adds that, “for every month that passes without a solution from Congress, thousands more restaurants across the country will close their doors for good.” 

As The Association’s letter suggests, the restaurant industry faces a bleak few months as more cities face restrictions and outright bans around indoor dining and cold weather makes patio seating unfeasible. The letter urges lawmakers to “reach agreement on a compromise coronavirus relief package for our industry and employees, our suppliers, and the communities that rely on the strength of the industry.” 

Congress is trying to pass a stimulus compromise before the end of the year that would pump an additional $300 billion into the Paycheck Protection Program for small businesses. The bipartisan $908 billion proposal is something of a last-ditch effort to get more aid and unemployment benefits to restaurants and other small businesses. 

Moving away from the dining room and to more off-premises channels, such as takeout, has added incremental revenue for restaurants (with varying levels of success). However, The Association’s letter more or less states that without a large-scale measure like a relief package from Congress, the situation will get worse, not better, in coming months, with more restaurants will closing their doors forever. 

Requiem for the Dining Room

Welcome to our weekly restaurant tech newsletter. Sign up today to get updates on the rapidly changing nature of the food tech industry.

At one point most figured it would take about five to 10 years for off-premises to become the industry-wide norm in the restaurant biz and for QSRs to change their store formats accordingly. Instead, those changes around restaurant store formats have unfolded in a matter of months and are soon to be everyday realities.

Ever since Burger King unveiled a new store design with space-saver kitchens suspended over drive-thru lanes and conveyor belts handing food to customers, we’ve seen a non-stop stream of announcements from fast-casual and QSR restaurant with similar plans. Two more chains joined the list this week — El Pollo Loco and La Madeleine. But rather than simply list the new features slated for those brands’ revamped store formats, it’s now worth our while to comb through all the major announcements in this realm and find the common denominators driving these new store formats. There may be a lot of unknowns in the restaurant industry right now (aka everything), but the following developments give us a pretty good hint at some certainties for the future.

With the biz going virtual at a blinding clip, it’s only natural that future store designs will have a smaller physical footprint. From the aforementioned Burger King to El Pollo Loco, more brands are significantly reducing the size of their dining rooms or getting rid of them altogether. The fast rise of ghost kitchens, which cater to takeout and delivery orders only, is partly responsible for this trend. The pandemic and ongoing lockdowns across the country are an even bigger driver, and one that’s accelerated the timeline of these smaller store formats.

But of all the concepts fast becoming the norm for QSRs, it’s the multiple-drive-thru-lane scenario — that is, stores are being designed with double and triple lanes (or more) to accommodate the uptick in customers. KFC, McDonald’s, Chipotle, El Pollo Loco, and Shake Shack are some of the top names on the list of restaurant chains literally expanding their drive-thrus. La Madeline is actually adding drive-thru for the first time, and Dunkin’ was doing the whole multi-lane concept long before the pandemic. There’s a good reason for the widespread emphasis on this particular format: with the pandemic keeping us out of dining rooms and in our cars, the length of time one spends waiting in the drive-thru is getting longer.

Anecdotally speaking, I’ve visited three drive-thru lanes in the last week where the wait time was longer than 20 minutes. (Joke’s on me for staying in line that long.) More lanes, some of them dedicated to mobile order customers, will go some way to alleviate this problem. More commonly used developments, like extra parking spaces for curbside pickup and geofencing technologies, could also reduce some of the drive-thru congestion.

Meanwhile, predictive selling technologies aren’t widespread at the moment, but they will be. McDonald’s was first to put this concept — which involves using AI, machine learning, and other tech to analyze customer preferences and upsell relevant items — on the industry’s radar when it acquired Dynamic Yield. Over the last few months, Restaurant Brands International, which owns BK, Tim Horton’s, and Popeye’s, announced plans to use something similar in its drive-thrus, and KFC has hinted at using AI as well.

While predictive selling tech doesn’t directly alter store formats, it expedites channels like pickup and the drive-thru, which are integral parts of the QSR of the (near) future. It’s also a good example of how technology will influence the physical restaurant going forward. Tech that makes off-premises channels faster and more efficient will help drive more sales through those channels. That in turn will make those off-premises channels more valuable than their dining room counterparts, both now, during lockdowns, and long into the next decade. That makes these new developments in store formats less of a trend than a really big step into the restaurant industry’s next version of normalcy.

Upcoming Event: The Ghost Kitchen Deep Dive

Is now the right time to adopt a ghost kitchen strategy? The epic fallout of the restaurant industry suggest yes, but before you take the plunge, there are many things to consider. How much will it cost? What kind of set up do you need? How do you scale a virtual restaurant business?

Join The Spoon on Dec. 9 to discuss these things and more at our latest virtual event, The Ghost Kitchen Deep Dive. Throughout the day, we’ll be joined by Reef, Kitchen United, Ordermark, Fat Brands, Wow Bao, and many other companies enabling big changes in the ghost kitchen space.

General admission is free. Register for a Gold Ticket and get special networking opportunities, a month of free access to Spoon Plus content, and exclusive live tours of some real-life ghost kitchen operations. 

Restaurant Tech ‘Round the Web

California imposed new stay-at-home orders for certain regions in the state late this week. Looks like it’s back to takeout- and delivery-only meals for Golden State restaurants for the foreseeable future.

Uber completed its $2.65 billion acquisition of Postmates this week, and the two companies have started to integrate their U.S. operations.

Restaurant tech platform Allset this week launched a new feature, Dietary Preferences, to its takeout and contactless dining app. Customers can add their dietary needs and preferences as well as any food allergies to their search to further refine results on the app.