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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.

Bbot Raises $4M for Its Contactless Dining Room Tech

Restaurant tech startup Bbot announced today it has closed a $4 million seed extension funding round, bringing its total funding to $7.3 million. The seed extension round was led by Rally Ventures with participation from existing investor Craft Ventures, according to a press release sent to The Spoon. 

The round follows Bbot’s $3 million fundraise from July 2020. The new funding will go towards hiring new talent and accelerating product development. Currently, Bbot makes a mobile order and payments platform restaurants can use to promote more “contactless” experiences in the dining room.

Of course, “contactless” was arguably the buzzword in the restaurant biz in 2020 as the COVID-19 pandemic pushed eating establishments all over the world to promote more social distancing for in-restaurant experiences. Bbot uses a common method, providing restaurant-goers with a QR code they can scan to browse a menu and order and pay for food. The Bbot system integrates directly into a restaurant’s existing tech setup. 

In today’s press release, the company said it plans to introduce a new feature in 2021 that “reinvents the traditional bar tab” by allowing customers and bartenders joint access to it. Bbot will also release its own API that will let hospitality businesses “build on the Bbot infrastructure,” though more specifics were not provided.

The release (and subsequent success) of the bar tab feature may hinge partly on the direction of the pandemic, since bars specifically remain shuttered in many places. For the restaurant/bar/hospitality sector in general, there is a lot of competition afoot at the moment, since pretty much every front-of-house focused restaurant tech company released some version of a contactless order/pay system over the last year. Activity in this space has plateued slightly after the initial rush to go contactless. However, as a COVID-19 vaccine becomes more widespread and dining room restrictions relaxed, we expect competition to fire up once more.

Top 3 Tech Trends for QSR Redesigns

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

The “next-generation” restaurant format isn’t new, as QSR brands like Dunkin’ and McDonald’s can attest. But the restaurant industry’s sudden and in many ways irrevocable shift to off-premises formats in 2020 certainly increased both the number of restaurants revamping their store formats and the speed at which they are doing so.

Those revamps come in many forms and features: BK’s floating kitchens, Applebee’s adding drive-thru lanes, everyone’s near lack of dining room space, to name a few.

And since everyone from Sonic to Del Taco seems to be announcing some kind of format revamp — physical, virtual, or both — these days, I thought it’d be worthwhile to round the top common denominators up to get a hint at which tactics will likely become widespread across the restaurant biz in the near future.

Herewith, are my top three QSR redesign trends:

More Curbside Pickup Spots

Digital order/payment capabilities are a must-have for restaurants now, and this technology coupled with curbside pickup is something we will see a lot more of in the near future. 

For many restaurants, offering curbside pickup options is cheaper than building out a drive-thru lane and window. Outside of the technology, all a restaurant needs is to dedicate a few parking spots close to the building, some signage, and a staff person to run the orders out. Bigger brands may have the money to retrofit their existing stores with drive-thru, but for many mid-size and smaller restaurants, curbside is a more realistic option when it comes to fulfilling more off-premises orders.

For customers, digitally enhanced curbside pickup is increasingly seen as a cheap, fast alternative to delivery, which is getting more expensive for customers. (More on that in the next section.) 

Curbside tech itself is getting some improvements to make the method faster and more efficient, Panera’s geofenced curbside initiative from 2020 being the obvious example. While efforts like these are the anomaly right now, more chains will adopt them and other curbside tech in the coming months.

Drive-thrus, Cruise-thrus, Chipotlanes

On the other hand, those that can swing the cost of adding a drive-thru should do so. 

Some chains, like Applebee’s, are testing out the drive-thru concept for the first time. Chipotle is another good example of a restaurant chain that never offered the format before and has now shifted its entire strategy to accommodate more “Chipotlanes.” Ditto for Sonic, a restaurant better known for drive-ins than drive-thrus, and Pokeworks forthcoming “cruise-thru.”

Others, like QSRs that have always offered drive-thru, are expanding the format. Literally. Double, and triple drive-thru lanes, with some dedicated solely to mobile orders. are becoming the norm at the KFCs, Dunkin’s, and BKs of the world.

The common denominator of this common denominator is that tech is integrated into most of these drive-thru concepts, whether that’s through accommodating more mobile app orders or uses of artificial intelligence to improve order accuracy and upselling.

Mobile-Only Zones and Dedicated Delivery Areas

As anyone who’s been in a drive-thru line lately knows, restaurants are struggling to fulfill the influx of off-premises orders quickly. Many restaurants are addressing this by dedicating certain drive-thru lanes to mobile orders and for delivery drivers picking up orders. Some, like Dunkin’, have done this for years. Others, like Shake Shack, are new to the concept. Still others, namely Pokeworks, have taken the concept one step further and do not accommodate onsite ordering in the drive-thru lane at all.

Meanwhile, to keep third-party delivery drivers waiting on orders from taking up all the curbside spots, many restaurants are also building dedicated areas for delivery pickups. Del Taco, for example has both dedicated drive-thru lanes and pickup shelves for delivery orders.

None of the redesigns discussed above have been widely deployed yet; we can expect more of that in 2021. At that point, new standards for store designs will start to trickle down from the major brands listed here to mid-sized and smaller ones, further cementing the role of off-premises across the restaurant industry.

Postmates: the Latest Delivery Service to Raise Its Prices Post-Prop 22

After saying prices would remain the same for customers following the successful passing of Proposition 22, Postmates has now raised those same prices as high as $2.50 per order.

Postmates’ about-face follows similar price increases from Uber and DoorDash, according to a report from Eater San Francisco. It’s also a contradictory to the tagline these companies were pitching in the ramp-up to the Nov. 3 election—that Prop. 22 passing would allow them to continue operating in California and that prices for customers would not increase.  

Prop. 22 passed in a 58 to 42 percent vote, which allows gig-economy the aforementioned companies to continue classifying their workers as independent contractors. Translation: Uber et al. do not have to pay worker benefits like healthcare, workers comp, and sick leave.

The delivery companies said that they would offer their own benefits package to workers that include a stipend for healthcare. The recent price hikes appear to be geared towards paying for those benefits. For example, the Postmates website calls it “the California Driver Benefits fee” and says that it “helps us fund the new benefits offered to drivers thanks to the passing of Prop 22.” 

All of this feels pretty inevitable, to be honest. After all, one could hardly expect companies that are now infamous for predatory and dishonest business practices to subsidize workers’ benefits out of their own pockets. It’s just a shame more voters didn’t reach that conclusion before clicking “Yes” on the Prop. 22 measure.

Restaurant Tech ‘Round the Web

Part of the plan President Joe Biden has issued to combat coronavirus includes providing clear, national guidelines for restaurants on how and when they can operate. Clear national guidelines would be developed around the safety of workers as well as things like restaurant capacity restrictions.

Olo partnered with customer feedback tech platform Tattle in order to improve the process of collecting restaurant guest feedback for off-premises orders. Tattle will integrate with the Olo platform to provide restaurant guests with a digital survey they can take after ordering from a restaurant.

Pathogen control tech company UV Angel has partnered with McDonald’s franchisees in Texas and Illinois to equip locations with proprietary ultraviolet light surface and air technology. UV Angel says its tech targets pathogens at the room level (as opposed to at the building level), which the company say is more effective in fighting airborne and surface-borne bacteria, viruses, and fungi.

Black Box Intelligence: December 2020 Restaurant Sales Were the Lowest Since July

The fourth quarter of 2020 was bad for restaurant sales, with December being “the worst month” since July, according to the latest data from Black Box Intelligence, which shared the information in its monthly Nation’s Restaurant News update.

By December, same-store sales growth fell to -13.3 percent year over year, while same-store traffic growth clocked in at -18.6 percent. In comparison, same-store sales in November were at -10.3 percent and same-store traffic growth at -16.3 percent.

Black Box noted that multiple factors contributed to poor sales numbers for restaurants in November and December. Those included a hike in COVID-19 cases and new dining room restrictions as a result of those rising case numbers. It being wintertime, colder weather limited or eradicated outdoor dining options in many parts of the country, further contributing to lagging sales numbers.

Despite the poor sales numbers, Black Box suggests that restaurants “were successful” in raising guest sentiment for their brands in December. 

Ambience, which in this case relates a lot to cleanliness and transparency around safety procedures, saw the largest improvement in terms of guest sentiment: “Meeting or exceeding [guests] expectations for safety is rewarded with positive feedback online.” 

Somewhat tricker is sentiment around the actual food. Food sentiment “dropped considerably” from November to December. This occurred simultaneously alongside a rise in off-premises orders and a slowdown in dining room sales due to the aforementioned restrictions. As Black Box states in this latest report, sentiment around food has “always been significantly lower” than food in the dining room. 

Restaurants have grappled with the challenge of maintaining quality food in a takeout environment since the pandemic first shut down dining rooms nearly a year ago. Tactics for better to-go food include things like paring down menus to the basics and completely redesigning menus to feature delivery-friendly fare.

Off-premises orders are now the major money-maker in the restaurant biz, and will likely continue to be for some time. The simultaneous rise of ghost kitchens only adds to this focus on delivery and takeout formats. All of which is to say that restaurants must continue to improve their to-go food, regardless of what happens to same-store sales over the next few months.

Deliveroo Raises $180M, Nabs $7B Valuation

Deliveroo announced this week it has raised over $180 million in Series H funding from existing investors. The round was led by Durable Capital Partners LP and Fidelity Management and Research Company LLC. With it, Deliveroo is now valued at over $7 billion, according to an official company statement. 

The new funds come ahead of Deliveroo’s initial public offering, which is expected to happen in the next few months.

The London, U.K.-based company said it would use the new funds to “further drive growth and enhancements to its services for restaurants, riders and consumers.” Examples of those areas include expanding Editions, Deliveroo’s delivery-only kitchen sites, expanding its grocery delivery service, and expanding its Plus subscription service. The company also said it would offer more restaurants its Signature service, which lets customers order via a restaurant’s own website.

It’s a shift from several months ago, when Deliveroo had to cut 15 percent of its staff in response to the pandemic. Also around that time, U.K. regulatory watchdog the Competition and Markets Authority approved Amazon’s highly scrutinized investment into Deliveroo, saying the delivery business could collapse without the funds. 

But, like other third-party delivery services around the world, Deliveroo has wound up faring very well so far throughout the pandemic. Will Shu, Deliveroo’s founder, told The Guardian in December that COVID-19 had “accelerated consumer adoption of food delivery services by about two or three years,” and that order volumes for the service in the U.K. and Ireland were double those of 2019. In the same interview, Shu also said his company had been profitable “at the operating level” for about six months.  

Currently, Deliveroo operates in 12 countries, including a number of Western European nations as well as Singapore, Australia, and the United Arab Emirates. Its main competitor, Just Eat Takeaway.com, operates in many of the same markets.

Restaurants Hate Third-Party Delivery Services, Actually

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When it comes to talking about the year 2020, one of the things third-party delivery services like to say is that they were “a lifeline” for restaurants that might have otherwise had to shutter permanently due to dining room closures and restrictions. 

Plenty have disputed this over the last several months. But perhaps no one has lately been more to-the-point about the matter than Recode’s Kara Swisher, who hosted Uber CEO Dara Khosrowshahi on her Sway podcast this week.

“You’re not allowed to get away with saying you’ve been a lifeline to restaurants,” she told Khosrowshahi early on.

Swisher noted the oft-cited figure, that delivery services charge restaurants commission fees of up to 30 percent of a single transaction for use of their services. Khosrowshahi countered by saying Swisher’s math was “incomplete” and that the 30 percent is “untruthful” when it comes to representing what restaurants are actually on the hook to pay delivery services. According to his math, restaurants pay Uber Eats 13 percent per transaction “net of the courier.” If restaurants want to use their own couriers, the commission cost is “about 15 percent.”

But as Swisher suggested, even those lower numbers are harmful to restaurants, which typically operate off margins that are about 3 to 5 percent. That irreconcilable math is one of the reasons cities across the U.S. have introduced mandatory caps on commission fees, some as low as 10 percent.

Pre-pandemic, the argument was that if a restaurant took issue with high commission fees, they could simply opt out of doing delivery. That argument holds no water now, though, since the pandemic essentially forced restaurants into doing delivery and most do not have the money or expertise to build an in-house delivery business. Actually, most can’t even afford their own courier fleet.

It’s also worth pointing out that while Khosrowshahi called the 30 percent commission fee “untruthful,” he never actually offered a hard number around how high an Uber Eats commission fee reaches when a restaurant is using a courier, as most are. If anything, his cagey response of “13 percent net of the courier” seems to confirm the 30 percent commission fee’s existence.

Uber Eats had a big year in 2020. It more than doubled its revenues and even acquired a competitor, Postmates, towards the end of the year. Khosrowshahi himself said the service had a $40 billion-plus run rate and would be larger than the company’s mobility business in 2021.

Conversely, the restaurant industry has lost $240 billion in sales and is still 2.5 million jobs below pre-pandemic levels, according to the National Restaurant Association. A total of 110,000 restaurants in the U.S. have closed, which is about 17 percent of the nation’s restaurants total.

Khosrowshahi defended his company’s approach to restaurant commissions, using words like “reasonable” and “fair” to describe them. To which Swisher simply pointed out that most restaurants she speaks with disagree, and only use the Uber Eats and Caviars of the world because the pandemic has forced them to.

“They hate you,” she concluded, flatly, before using the phrase “menace economy” to describe the environment in which restaurants must now operate to stay in business.

Here’s How the Restaurant Biz Survived 2020

I know most of you would rather forget 2020 ever happened, but it never hurts to look back before going forward, which is just what the National Restaurant Association did this week. The trade group published a list of top trends it says kept many restaurants in business last year while the pandemic wreaked havoc on the industry.

The 10 trends that made the list were based on those found in a survey The Association did of more than 6,000 restaurants and 1,000 adults. The majority of the trends on the list are directly related to helping restaurants “keep their businesses open and employees on the payroll,” as The Association puts it.

The full research post is worth a read. This being The Spoon, I’ll highlight a few items that made the list that illustrate how tech-forward the pandemic has made the restaurant biz in recent months:

  • “Streamlined menus.” Part of this is related to the actual food: restaurants needed a way to reduce inventories and fulfill items faster, and “pare down your menu” became a mantra for many early on in the pandemic. However, streamlined menus also have to do with offering food that travels well, for pickup and delivery orders, and not overwhelming digital customers with choice paralysis as they view menus via their own mobile devices.
  • “Off-premises foodservice takes precedence.” The Association noted that before the pandemic, 80 percent of full-service restaurant traffic was on-premises. The change restaurants were forced to make to delivery and takeout formats in March, when shutdowns first started, rippled across the entire industry and is now more or less ingrained in operations. Which is to say, even when restaurants are operating at full dining room capacity once again, off-premises will be an important part of any restaurant’s strategy. 
  • “Selling groceries.” This started early in the pandemic when restaurants began selling inventory unused because of shutdowns, and doing so via off-premises channels like delivery and drive-thru. The Association’s survey found that “more than half of consumers” would consider buying grocery staples (produce, dairy, meat) from restaurants themselves if those items were offered. Little wonder, then, that third-party delivery services like DoorDash and Uber Eats added grocery delivery to their businesses in 2020.

Other trends in the restaurant industry — ghost kitchens, virtual restaurants, better back-of-house tech — are woven into the more general trends on The Association’s list. For example, a shift to off-premises foodservice will inevitably mean more ghost kitchens. Pull up a virtual restaurant menu from just about anyone these days and you’ll find it’s decidedly streamlined. 

“We now know that three things are certain: the pandemic tested the limits of operator creativity and knowhow, accelerated tech adoption and emerging trends, and confirmed that customers sorely miss their restaurant experiences,” says the report.

With a widespread vaccine still months away (at least) and restrictions still in place for the majority of dining rooms, these trends that helped us survive 2020 will also start to shape 2021 and beyond. 

Restaurant Tech ‘Round the Web

Panera is the latest major chain to announce plans to go all-in on ghost kitchens. The brand said this week it also has mobile kitchens, redesigned drive-thru lanes, and a virtual catering business in the works.

Fat Brands, meanwhile, is doubling-down on its existing ghost kitchen strategy. The company said at an ICR presentation this week that it plans to open a dozen ghost kitchens in 2021.

Restaurant tech provider Perfect Company raised $6 million for its solution that brings automation to the front of house, back of house, ghost kitchens, convenience stores, and other foodservice areas. 

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.