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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.

Prop 22’s Success Has Unsettling Implications for Third-Party Delivery’s Power

One certainty we woke up to yesterday is that California had passed Prop. 22, the controversial ballot measure aimed at keeping California gig workers independent contractors.

The success of the measure means that app-based companies like Uber, Lyft, DoorDash, and Instacart will be exempt from California’s AB 5 law, which requires businesses to classify gig workers as employees. And while tech companies’ Prop 22 victory is limited to California, it could have wide-reaching effects on how companies do business in other states and how they treat their workers.

Quick recap: Prop 22 was created in the wake of California’s Assembly Bill 5, which went into effect on Jan. 1 of this year. Under AB 5, employers must classify independent contractors as employees based on certain criteria, putting those companies on the hook to pay minimum wage, paid sick leave, health insurance, and other benefits. While AB 5 included some exemptions, Uber, Lyft, DoorDash, and other app-based businesses were not among them.

Hence the fight. In the lead-up to Election Day, proponents of Prop. 22 — which was basically bankrolled by the aforementioned tech companies — argued that having to classify drivers as employees would reduce jobs, limit drivers’ ability to work for multiple companies and ultimately raise costs for consumers. Uber and other app-based businesses spent roughly $200 million on the ballot-measure, making it the most expensive in California history.

By contrast, Prop. 22 opponents spent less than $20 million. They have argued that Prop. 22 exploits workers and undermines job stability.

Had Prop. 22 been voted down, companies like Uber, DoorDash, Instacart, and others would have had to shift their business models, which have been essentially built on the backs of gig workers, or make good on their threats to leave certain states. Instead, Prop 22 passed, and now there’s concern of a ripple effect on laws in other states and on labor standards in general for delivery jobs. Contract workers save companies money, since employers aren’t having to shell out for benefits, so it’s an obviously attractive option for companies. But as EaterSF pointed out yesterday, there is concern that Prop 22 could “usher in a whole new era of businesses taking their labor disputes to voters, instead of resolving them with local or state agencies.”

In California, other industries may also see the successful passing of Prop. 22 as motivation to push for their own exemptions from AB 5. That would mean fewer protections for workers across more industries, and lower standards for labor and worker protections in general.

Speaking of those worker protections: As a concession, Prop 22 will grant some benefits, including a minimum earnings guarantee when a driver is engaged in a delivery or ride (not while they are waiting for a gig). However, Prop. 22 offers no protections to workers in terms of sick leave, unemployment, workers comp or the ability to unionize. 

This lack of protections was a major grief back in March, when the COVID-19 pandemic came Stateside. As one gig worker said at the time, “staying home won’t pay the bills,” even if making deliveries meant potentially spreading the virus or working while sick. That’s no less a catch-22 for gig workers now, with COVID-19 cases breaking record highs as we speak and many expecting the situation to worsen as we get closer to winter. 

Early in the pandemic, DoorDash, Grubhub, and Postmates set up financial assistance funds for workers diagnosed or quarantined because of COVID-19. However, those were short-term measures, and there is no guarantee these companies will offer a similar option if the situation around the pandemic worsens.

Looking ahead, does Prop. 22’s success this week embolden these third-party delivery services to continue their dominance over the future of food delivery? Will the deep pockets of Uber, DoorDash and others get to set the terms for what the delivery market becomes? After all, these companies haven’t exactly been beacons of trustworthy behavior. Do their policies get to become the long-term norm simply because they have more money to fight with?

Consider the commission fees restaurants must pay delivery services in order to use their platforms. These fees can reach as high as 30 percent per transaction and have been an ongoing source of grief since before the pandemic, eating into restaurants’ practically nonexistent margins. Right now, multiple cities across the U.S. have imposed mandatory caps on these fees for the duration of the pandemic. But those emergency measures won’t stay in place forever. And even were fee caps signed into law, it’s not unreasonable to assume delivery services would eventually fight them, via another ballot measure or some other means.

There are many other controversies involving third-party delivery, among them: listing restaurants on delivery platforms without their consent, worker tipping policies, bogus fees, and menu pricing. 

Above all else, Prop. 22’s success shows us that Uber, DoorDash, and the rest of them are willing to spend hundreds of millions of dollars to keep their existing business model — and therefore chances of profitability — intact. That Prop. 22 passed also shows that figuratively kicking and screaming, if accompanied by millions, can get you your own way. Given the untrustworthy history of these tech companies, that point doesn’t bode other areas of delivery that regulators and restaurant industry advocates are working to change.

   

Reef Technology Raises $700M to Reinvent the Neighborhood, Including Ghost Kitchens

Reef Technology, which turns underutilized urban space into what it calls “neighborhood hubs,” announced today it has just raised a $700 million syndicate investment to further that vision. TechCrunch first reported the news. Softbank and Mubadala led the round, along with Oaktree, UBS Asset Management, and Target Global. This brings Reef’s total funding to $701.9 million.

Reef started its life as ParkJockey with the goal of more efficiently managing parking lots. Over time, however, the company has evolved from disruptor of parking lots to a real estate business that provides infrastructure for retail spaces, clinics, and cloud kitchens, among other ventures. The idea is to turn these underutilized spaces in cities into hubs for local neighborhood businesses. Think town square of olden days, only in this version it’s equipped with shipping containers that hold kitchens and stores and powered by software.

According to TechCrunch, Reef will use the new funds to scale from about 4,800 locations to 10,000 locations around the U.S. Ari Ojalvo, the company’s cofounder and chief executive, said ghost kitchens “will be a significant part of non-parking revenue” for Reef. 

These ghost kitchens are housed in Reef’s mobile trailers that can be parked virtually anywhere there is underutilized real estate. Restaurants wanting to offload delivery orders or those launching virtual concepts can rent the spaces. Right now, the kitchens house a mix of local and national brands across the country, including Saladworks, Wow Bao, and BurgerFi. Customers order meals via the major third-party delivery apps (DoorDash, Uber Eats, etc.).

Reef’s gargantuan fundraise comes a time when ghost kitchens, virtual restaurants, and virtual food halls are becoming an integral part of the restaurant industry. The future of the restaurant dining room still hangs in the balance — especially with winter coming and COVID-19 cases rising. That in turn is forcing restaurants, restaurant tech companies, and infrastructure providers like Reef to rethink the formats in which customers access to-go and delivery meals.

Euromonitor recently predicted the ghost kitchen sector will be worth $1 trillion by 2030, and there are investment dollars a plenty to support that projection. Ordermark just raised $120 million to build out its virtual restaurant network, which will utilize ghost kitchens. NYC-based Zuul raised another $9 million for its Big Apple-based concept. And outside the U.S., Yummy Corporation (Indonesia), iKcon (Dubai), and Zomato (India) have all raised capital in the last few months.

In Reef’s case, its kitchens also provide employees to prep the food in addition to physical space. The company has over 100 kitchens across 20 markets in North America. Between the ongoing pandemic and the new influx of investment, those numbers will rise quickly in the coming months. 

If you’re interested in diving deep into ghost kitchens, you won’t want to miss The Spoon’s upcoming ghost kitchen virtual event on December 9th.

Following Other Cities, San Francisco Halts Its Restaurant Reopening Plan

Another day, another grim piece of news for the restaurant biz. Over the weekend, San Francisco announced it will pause its reopening plan for indoor restaurant dining. The decision follows moves from a growing list of cities around the U.S. as cases of COVID-19 continue to break records.

SF restaurants were set to increase dine-in capacity from 25 percent to 50 percent on Nov. 3. Mayor London Breed said the pause, which also affects movie theaters, places of worship, and other public spaces, is a precautionary measure, even though the COVID-19 infection rate in San Francisco is currently low. “We’re still in the middle of a pandemic,” she said. “We are tired of COVID-19 but COVID-19 is not tired of us.”  

In the U.S., the seven-day average of new COVID-19 cases is the highest the country has seen. Around the world, countries are imposing new lockdowns that will affect indoor dining. And in addition to San Francisco, multiple cities in the U.S. are also restricting restaurant dining rooms. 

As of last Friday, Chicago banned indoor dining in response to rising COVID-19 cases (outdoor dining is still allowed). NYC has shut down dining rooms in certain neighborhoods, and in Los Angeles county, only outdoor seating is allowed.

The closures won’t stop with major cities. Communities across Massachusetts are already reversing reopening plans, as are New Mexico, Idaho, and Colorado. A large number of states remain reopened, but given the rise in COVID-19 numbers, not to mention the lockdowns happening in other parts of the world, that’s not likely to stay the case for long.   

In DoorDash We Trust?

It’s our weekly restaurant tech news wrapup!

Food delivery aggregators: love ‘em or hate ‘em, few would at this point deny that restaurants need them right now. Maybe that’s not where we’d like to be as a restaurant industry, but it’s where the pandemic has forced businesses — a point underscored by new survey data from tech company Raydiant. According to the new report, which surveyed restaurant operators and managers, 37.5 percent of restaurants would not have been able to stay in business without third-party delivery apps over the last several months.

But not all third-party delivery aggregators are equal in the eyes of restaurants when it comes to trust. Arguably the most interesting part of Raydiant’s survey is the breakdown of which delivery service respondents “associated most with trust and support.” DoorDash won in a landslide, with 58 percent, followed next by Grubhub at 18 percent and Uber Eats at 17 percent. Seamless, which is owned by Grubhub, came in last, with a whopping 1 percent.

The report does not go into specifics as to how it defines “trust” and “support.” But a quick comparison of recent developments from these services illustrates why the names stacked up as they did in Raydiant’s survey. 

DoorDash was quick to respond to restaurant shutdowns when the pandemic came Stateside back in March, waiving fees for certain restaurant partners and setting up a relief fund for businesses. Since that time, the company — which is trekking towards an IPO — has positioned itself as an ally to struggling restaurants. Just earlier this week, it launched its Reopen for Delivery initiative, which will help shuttered restaurants rebrand as virtual concepts. The company is not without its controversies, but it’s managed to steer clear of major ones over the last several months.

Grubhub also responded speedily to the restaurant shutdowns — by making an opaque announcement that initially seemed to say it was waiving commission fees when in reality the service was only delaying collection of them. Grubhub has also racked up numerous complaints from restaurants, including bogus phone fees, outrageous commission fees, listing non-partnered restaurants, and this bizarre saga. 

Uber Eats and Postmates generate fewer controversial headlines, though they, along with DoorDash, also charge restaurants unsustainably high commission fees for every order placed through their platforms.

All this doesn’t mean restaurants should ditch their partnerships with the others in favor of working with DoorDash. Many agree that more is better when it comes to delivery aggregators these days. And like I said, we can hate on delivery services all we want, but the complicated logistics of delivery in 2020 makes them cheaper and faster for restaurants than any other solution that exists right now.

Nor, however, should restaurants hedge all their bets on third-party delivery services, which are definitely not hedging all of theirs on restaurants. Recent moves by both DoorDash and Uber Eats into grocery delivery make clear that these services will go where there’s money to be made. Online grocery sales are expected to hit $250 billion by 2025. The restaurant industry, meanwhile, has already lost billions of dollars due to the pandemic.

Simultaneously, new approaches to restaurant delivery are emerging that bring ordering, branding, and sometimes even the drivers back into restaurants’ control. This will only accelerate with the rise of virtual restaurants and ghost kitchens. Restaurants may still need third-party delivery, but it’s only a matter of time before they need it, or at least pieces of it, less.

It all makes third-party delivery something of a fair-weather friend to restaurants. Despite the relief funds and press releases proclaiming they’re here to help restaurants, delivery services are also making clear that they are, first and foremost, tech companies in the business of moving goods. They’ll go wherever those goods happen to be most plentiful. Given that, trust around these services seems tenuous at best when it comes to restaurants.

Dive Deep Into Ghost Kitchen Strategy

Delivery isn’t the only thing that’s here to stay. Ghost kitchens and virtual restaurants have also proven themselves mainstays of the restaurant biz over the last few months. But what’s the difference between a ghost kitchen and a virtual restaurant? Does every restaurant need to invest in this space? Where the heck does one even begin?

On December 9, The Spoon will gather together restaurants, industry analysts, restaurant tech companies, ghost kitchen operators, virtual restauranteurs, and others to talk through the above questions and more. The day will provide a variety of perspectives on where the ghost kitchen and virtual restaurant sectors are headed as well as next steps for those wanting to get involved.

Register to join us for this event.  If you’re in the ghost kitchen space and are interested in sponsoring the event, let us know!

Dunkin Donuts

Restaurant Tech ‘Round the Web

Dunkin’ will close over 680 underperforming stores, according to the company’s Q3 2020 earnings release. The company said it will allow these franchisees to reopen in Dunkin’s “NextGen” store format or relocate to higher-traffic areas that can accommodate drive-thru.

Delivery integrator Chowly announced this week it has added Grubhub to its list of delivery partners. Mutual customers of the two companies can use both pieces of restaurant tech to streamline the management and fulfillment process of their delivery orders.

Chicago has shut down indoor dining again in response to rising COVID-19 numbers. No indoor service, including bar service, will be allowed, and outdoor dining must end by 11 p.m.

 

Mobile Servers and Menu Innovation: Crave’s Virtual Food Hall Brings Fine Dining to the Delivery Realm

A new concept is taking shape in the world of virtual restaurants: the fine-dining virtual food hall. That idea might have been outrageous one year ago, but it’s practically necessity now, thanks to the pandemic-induced meltdown of the restaurant industry. In response, third-party hospitality and restaurant tech companies are emerging to assist these high-end concepts with the makeover they need to exist — and, more importantly, thrive — in an off-premises-centric world.

One such concept comes from Crave Hospitality Group, which will officially launch its first ghost kitchen-meets-virtual restaurant initiative in Boise, Idaho next month.

On a call last week, Crave cofounder Devin Wade talked me through the details of the operation, which he says is “hard to categorize” but probably closest to a “virtual food hall” in name. The Boise facility will house 16 restaurant concepts, including ones from James Beard nominee Lincoln Carson, Food Network Pizza Champions Challenge gold medalist Tony Gemignani, and award-winning restauranteur Michael Mina.

Chefs and their culinary teams cook and prepare the food, assisted by a tech stack that manages order fulfillment and deliveries. On the consumer-facing side, guests ordering through the Crave app can mix and match their menu choices, bundling different meals from different concepts into the same order. Food is delivered via Crave’s own fleet of drivers, and there is also a pickup option. 

The official launch of the Boise location comes as full-service restaurants, including fine and higher-end ones, faces more permanent closures and, in some cities, new restrictions. The most recent numbers from the Independent Restaurant Coalition note that revenues for these businesses still “remain 60 percent lower on average than last year’s levels, with many remaining closed at a 100 percent reduction in revenue.”

The high-end restaurant experience faces an additional challenge: it is designed for a dining room, not a to-go box.

That’s a problem Wade said he had been thinking about long before COVID-19. As delivery and ghost kitchens grew in popularity over the last few years, he kept returning to the issue that delivery as-is would not work for high-end dining, and that there had to be a model where the relationships between chefs, their restaurants, kitchen providers, and delivery services was based on collaboration rather than the obsession with speed and efficiency. 

Menu design was one major consideration. Award-winning chefs are “known for certain dishes,” according to Wade, which had to be accounted for on the menu. At the same time, Wade pointed out the inherently creative nature of chefs, and that this asset led the company to work with its chosen restaurant concepts on new menu items “designed to travel.”

Crave also built its own proprietary tech stack to power the Boise facility that includes everything from order processing for back-of-house management, like designating fire times for each individual food item in process. Wade says the goal of Crave’s technology is “Using tech not to dominate and push [chefs] away but to extend their food outside their restaurants.”

Part of that extension, of course, is getting the food through the actual last mile of delivery. Here, too, Crave is aiming to replicate the fine-dining experience in a to-go setting. Instead of using DoorDash or Uber Eats drivers, Crave employs its own couriers, which it calls “mobile servers.” They are W-2 employees, and many are former servers out of work because of the pandemic. They work regular hours, earn server-level wages, and follow many of the same processes they would inside a brick-and-mortar restaurant. For instance, servers meet before each dinner service so chefs can go through the night’s features. “They should know customers names, suggest a follow-up item [to customers],” says Wade, adding that the whole point is to mimic the customer-server relationship that takes place in a restaurant. 

The concept is practically unheard of in the world of delivery, where nowadays many customers hit the “contactless” option in their delivery app and expect food to be dropped on the doorstep. The idea of getting to know your delivery driver seems counterintuitive to social distancing, but the decision to go this route also seems like something of a long-term play for Crave and its restaurant partners. Fear of human-to-human interaction won’t permeate the restaurant experience forever. Delivery, on the other hand, is here to stay. Over time, Crave’s efforts to mimic the server-customer relationship for delivery orders could be a bridge between those two factors.

We will have a better idea of the concept’s short-term success over the next few months. The Boise operation, which Crave has been piloting since June, just moved into its permanent space and will have its grand opening on November 17. From there, Crave plans to scale quickly: Wade says the company already has the next 15 locations mapped out, with four deals already well underway, two in the Dallas, Texas area and two in Salt Lake City, Utah.

Right now, Crave doesn’t have any real competitors in terms of operating a virtual food hall like a fine-dining restaurant. Lunchbox recently teamed up with C3 for a high-end food hall, but the higher-end part of that concept exists mostly in the food itself.

That makes Crave a rather unique player in an increasingly crowded world of ghost kitchens and virtual food halls. If its approach to delivery proves profitable for those involved, full-service restaurants may discover they have one more option when it comes to keeping the lights on during the ongoing fallout.

Nespresso Adds Touchless Features To Its Momento Machine

Since the start of the pandemic, the words “contactless” and “touchless” have become the new buzz words in food tech. Nespresso Professional is the latest company to accommodate this COVID-19-prevention protocol: Today, the company announced the release of three new touchless features for the Nespresso Momento machines.

The Nespresso Momento machines are commonly found in office settings, so these new features aim to provide a safer coffee-making experience for those returning to work. The Nespresso Momento machine and its new features are available for businesses on the Nespresso Professional website.

One of the machine’s new features is an app, which allows a user to control the machine from their phone. A user must insert a capsule (so it’s not completely touchless), and then they are able to select the cup size and choose the recipe without ever touching the screen. The machine has a QR code that users scan with their phones to connect to the app.

The machine can also be set to automatically brew a cup of coffee when a particular pod is inserted. A user can pre-set the machine to brew a certain size or recipe with different coffee pods that the machine will automatically recognize when inserted. Lastly, the machine can be set to force users to clean the touch screen before using it again. A “lock screen” appears after every use, and it must be disinfected to use the screen.

Amongst Nespresso Professional, countless other companies have also expanded to oblige with COVID-19 safety precautions in the workplace. Pepsico released a Sodastream Professional over the summer that allows users to select different unsweetened, carbonated beverages through a mobile app. Minnow’s pods, which are essentially Amazon lockers for food, can be placed in a workplace to provide a solution for contactless food pick-up and delivery. With no clear end to the pandemic, these new contactless features don’t seem to be going away anytime soon.

In November, Nespresso Professional will additionally be launching a single touch capsule filling dispenser that is compatible with the Nespresso Momento machine.

Some NYC Restaurants May Close Again Due to COVID-19

Nine New York City neighborhoods are at risk of having to shut down both indoor and outdoor dining due to rising COVID-19 cases, according to a Sunday press briefing from Mayor Bill de Blasio. Pending approval from New York Gov. Andrew Cuomo, NYC will close schools and nonessential businesses in those nine zip codes, which are in Brooklyn and Queens, starting Wednesday.

The affected neighborhoods are those neighborhoods where the test positivity rate for COVID-19 has been “above 3% for the last seven consecutive days,” Mayor de Blasio told CNN.

The proposal comes just one week after NYC allowed restaurants to reopen dining rooms at 25 percent capacity. If it goes through, restaurants in those nine zip codes would have to return to offering delivery and takeout meals only.

The news is just the latest blow to NYC restaurants, which have taken some of the hardest hits of the industry-wide meltdown brought on by the pandemic. Recently, the New York City Hospitality Alliance said that 87 percent of the 457 restaurants, bars, and nightclubs it surveyed could not pay their rent for the month of August. And at the end of last week, the Alliance released a new report jam-packed with some unsettling stats. As of Aug., employment in the restaurant industry was only 55 percent of its pre-pandemic level from Feb. 2020. Meanwhile, nearly half, or 44 percent, of NYC restaurants have used outdoor seating. It need hardly be said that shutting down that outdoor dining will be another serious blow to business across those nine zip codes.

Offering delivery and takeout bring in some revenue, but as we’ve discussed before, those formats are not yet enough of a lifeline to save a business. In some cases, delivery — an area plagued by controversy and sky-high commission fees for restaurants — can do more harm than good to a business’s margins.

Nor do many independent restaurants have the money to invest in some of the recent developments around off-premises ordering, like GPS-enabled pickup systems, sophisticated digital-ordering technology, and native delivery platforms. Meanwhile, Paycheck Protection Loans are running out, which means so is any hope of governmental assistance. Last week, the U.S. House of Representatives passed the updated $2.2 trillion HEROES Act, which would include $120 billion in relief for independent restaurants. However, it is not expected to be taken up by the Senate.  

Contactless: ‘Easier Said Than Done’

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Achieving a contactless restaurant experience when it comes to the drive-thru lane is easier said than done, according to QSR Magazine’s 2020 Drive-Thru Study, released today in partnership with SeeLevelHX.

Every year, QSR Magazine’s study looks at various aspects of drive-thru performance, from speed of service to order accuracy to the effectiveness of digital menu boards. This year’s study includes all of those things as well as some elements that wouldn’t have made it in there if not for the COVID-19 pandemic.

The so-called contactless restaurant experience is one of them. If you follow the restaurant biz or are a regular reader of The Spoon, you’ll know that restaurant tech companies large and small have lately been championing software that enables contactless ordering and payments. Instead of a customer and staffer passing a credit card back and forth, guests order and pay from their own mobile phones. 

That goes some distance in keeping unwanted germs at bay, but as we’ve said before, there’s no such thing as a truly contactless restaurant experience right now. And as QSR’s data suggests, there’s no such thing as a truly contactless drive-thru, either. 

The survey found that 80.1 percent of all drive-thru orders were handed to the customer directly by the employee. In 16.4 percent of the cases surveyed, the order was placed on a tray. Rounding out the math, 1.3 percent of orders were placed on a window, and 2.2 percent were labeled “other.” Use your imagination. 

QSR’s survey found that 78.1 percent of employees wear gloves at the drive-thru window, while 91.3 percent wear masks. But the survey’s basic conclusion to all of this is that contactless “proves easier said than done” when it comes to the drive-thru lane.

Unlike a physical restaurant space that can be altered to make room for pickup shelves or lockers, there’s not much in the way of architectural adjustments a drive-thru window can absorb that would make much sense. And actually, one could argue that too many alterations done in the name of contactless service would just confuse things, slow down service, and impair order accuracy. 

If the restaurant industry wants a truly contactless drive-thru experience, it’s going to have to do some major overhauling when it comes to the design of the drive-thru process. Burger King hinted at this a while back with its new restaurant prototype that includes a conveyor belt system for retrieving food and a good deal of re-architecting of the physical store layout, among other things. That’s the first of what will likely be dozens more examples over the next year of what the drive-thru of the future will look like. As to whether the industry can ever achieve one that’s truly contactless, stay tuned.

Device of the Week: TableYeti’s Virtual Tip Jar

Besides having the best company name I’ve heard of in a while, hospitality payments company TableYeti also makes a virtual tip jar product called the “Tap to Tip BOX.” The device, which is powered by TIPJAR’s software, can be mounted to a wall, placed on a countertop or stationed at any other location in a bar or restaurant that’s highly visible to customers. 

On its website, UK-based TableYeti says the BOX is meant to replace TRONC, which is the tipping pool system used in many bars, cafes, and restaurants around the country. Essentially it’s the digital version of the big jar of cash you’ll find next to many cash registers at eating and drinking establishments. Instead of dropping a few bills into the jar, you tap a credit card.

It’s a compelling product in this day and age when so much of the restaurant biz is going digital. It also comes at a time when the concept of a virtual tip jar is a little more widely known, thanks to various efforts to help restaurant industry workers during the height of lockdown. TableYeti’s product joins multiple other iterations of this idea, not just in the U.K. but all over the world.

TableYeti’s BOX is only available to U.K. businesses at the moment, though a U.S. equivalent is bound to surface at some point in the near future as restaurants get further digitized and cash gets increasingly less popular.

More Restaurant News

Food ordering platform Olo this week launched Serve, a revamped version of its ordering platform restaurants can use to consolidate order flows and manage their digital storefronts. The redesigned platform, which Olo says enables faster ordering and checkout and higher conversion rates, is available to all restaurant customers using the Olo platform.

Fast-casual chain Fazoli’s put something of a twist on the dark kitchen/virtual restaurant concept this week. The chain had been using some of its restaurants as dark kitchens to test a delivery-only chicken wing product. Said product has proven to be so popular Fazoli’s said this week it will now go on the chain’s regular brick-and-mortar menu. Which just goes to show you that the definitions of “ghost kitchen” and “dark kitchen” continue to evolve.

Taco Bell just launched the “Taco Gifter” on its website and mobile app that lets users, uh, gift tacos to one another. Pick an item, pay for it, and T. Bell will generate a unique URL the recipient can use to retrieve the order. Somehow I suspect this will be popular with those who need last-minute gift ideas for the holidays.

NYC Ghost Kitchen Company Zuul Launches a Virtual Food Hall

NYC-based ghost kitchen operator Zuul announced this week that its virtual food hall, Zuul Market, is now live.

The new initiative is a cross between an online marketplace and a white-label delivery platform. The marketplace sells a limited number of items from restaurants that are currently members of Zuul’s ghost kitchen facility in SoHo, including Junzi Kitchen, Stone Bridge Pizza & Salad, and Sarge’s Deli. Zuul has also worked with its member restaurants to co-create virtual brands, which are also available through the marketplace. For example, Stone Bridge also operates the virtual-only Rival Sandwich Co.

All food is prepped and cooked in the SoHo kitchen facility. Zuul then delivers the food at scheduled times to drop-off points located in office buildings as well as residential properties around NYC. Zuul controls the entire process, from order processing to fulfillment to the last-mile delivery.

The idea is to provide a more efficient system for delivery, where meals from multiple restaurants going to multiple different people can be bulked together and taken to a single location. To do this effectively, Zuul has partnered with Silverstein Properties and Broad Street Development, both major property developers in NYC that own both office buildings and residential properties. Zuul Market menus will be available to residents and employees throughout those companies’ properties. For example, Silverstein integrated Zuul Market into its Inspire app for tenants as a building-wide amenity across its buildings. 

How successful this delivery strategy is in office buildings depends a lot on how many people actually wind up going back to the office. Right now, it’s not many. But residential properties could be a lucrative area for delivery and commerce during the pandemic, and probably after. Folks are spending more time at home these days, and with colder weather coming, that’s likely to increase. So whether it’s automated convenience stores, contact-free delivery pods a la Minnow, or a virtual marketplace like Zuul’s, more and more companies are finding new ways to bring the restaurant experience into the home. 

Zuul said it plans to build additional food hall partnerships with both restaurants and properties in addition to more ghost kitchen facilities across NYC in the future.

Ghost Kitchen, Meet the Automat

Inexplicably, I’ve always wished I could have experienced the Automat in its heyday. Created at the tail-end of the Nineteenth Century, Automats consisted of a wall of cubbies containing simple food and beverage items users could unlock for a nickel. It was essentially fast food before fast food existed.

Fast forward to 2020, and it looks like I may yet be able to experience the concept, albeit a higher-tech version of it.

As we chatted on this week during our Editor podcast, the Automat is making a comeback. That’s thanks to restaurant companies launching cubby systems that are equipped with temperature control functionality and that can be unlocked with a user’s own smartphone. Brooklyn Dumpling Shop is the latest to iterate on the old concept, following in the footsteps of Minnow, Brightloom (née Eatsa), and others.

The resurgence makes sense, given the restaurant industry’s sudden shift to off-premises formats and simpler foods that travel well. Which is why I can think of no better location for Automat 2.0 than outside a ghost kitchen.

One of the major selling points for ghost kitchens is that they allow restaurants to operate without incurring the costs of a front-of-house operation. The ghost kitchen as we know it is also specifically designed to serve off-premises formats. Up to now, that’s been primarily delivery, but the pandemic has generated so much interest in ghost kitchens that we’re now seeing different styles of the concept emerge, including those that offer pickup. Kitchen United lists both options on its website, as does DoorDash (for its DoorDash Kitchens facility). Having a pickup option means restaurants can still take advantage of the ghost kitchen format without necessarily coughing up the sky-high commission fees associated with delivery orders.

At the same time, the pandemic continues, and even if it were to magically disappear tomorrow, our heightened expectations around cleanliness and “contactless” restaurant experiences are here to stay. Which is to say, customers are going to want minimized human contact for restaurant transactions for a long time to come. 

It doesn’t get more minimized than the Automat. By way of a hypothetical example, imagine a virtual deli that has a kitchen space from which it fulfills online orders. It would fulfill delivery orders, but also maintain a cubby system outside to hold any pickup orders. Throw a few tables and chairs near the machine where those who want can eat onsite. Other than the smartphones and the digital ordering, the setup isn’t hugely different from the original Automat concept.

Of course, some ghost kitchen companies choose to locate their facilities in former warehouse districts that don’t get much foot traffic. But as we outlined in our recent Spoon Plus report on ghost kitchens, that’s the exception, rather than the norm right now. Most ghost kitchen operators will tell you location matters, and the closer you can locate one to customers, the better.

And actually, we’re already trekking towards this automat-in-a-ghost kitchen future. Besides the above examples, Starbucks launched its Express stores in 2019 that act as ghost kitchens for nearby locations and include a wall of pickup lockers onsite. Other fast food chains have whittled their dining room concepts down to more to-go-friendly formats, and many of these orders are now being fulfilled in ghost kitchens.  

Automats were originally a precursor to fast food. These days, it seems like fast food may yet prove to be the forerunner to Automat 2.0.

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Location-based Picnicking

You may remember a year or so ago when I wrote about Domino’s partnering with a company called what3words to delivery food to street corners, parks, and other non-traditional addresses. 

It seems what3words is at it again with food delivery, this time partnering with Honest Burgers in London to deliver to random swaths of grass in the city’s Clapham district.

What3words’ platform divides the entire world into 3m x 3m squares, which are GPS coordinates. An algorithm then converts the coordinates into three-word addresses to give each a unique (and often bizarre) name (see image above). With this technology, you could literally choose a random patch of a park sans any notable landmarks or other identifiable items and get your burger delivered to your exact location.

The program with Honest Burgers is only running for a few days and restricted to Clapham. But with more of the restaurant experience taking place outside the four walls of the business, a technology like this could become huge. That’s assuming the restaurant biz makes it through winter and and once more heads to outdoor spaces.

Cracker Barrel’s gone the ghost kitchen route. The company said at its earnings call this week that it plans to convert one of its locations in Indianapolis, Ind. to a ghost kitchen that will handle large-scale catering orders as well as some individual orders placed via third-party delivery services. The store will also be used to help fulfill delivery orders from other nearby Cracker Barrel locations during busy times, like the upcoming fall/winter holiday season.

Meanwhile, Shake Shack said this week it has expanded curbside pickup to 40 percent of its stores, and that roughly one third of all app orders are being placed for curbside. The company has plans to extend curbside to 50 of its locations by the end of September, and is also exploring the possibility of more drive-thrus and walk-up windows.

The New York City Council passed a bill that lets restaurants add a “COVID-19 surcharge” of up to 10 percent to a customer’s bill for up to 90 days after indoor dining reaches full capacity. In other words, for the foreseeable future. The bill is an attempt to help restaurants generate additional revenue as the struggle to keep the lights on continues.

The CDC’s New Findings Put Restaurant Tech In the Hot Seat Once Again

The big restaurant news over the weekend was a new set of findings from the CDC that suggest a higher risk for COVID-19 among those who eat in restaurant dining rooms.

The inescapably obvious point is that the findings are worrying for restaurants planning to reopen or increase the capacity of their dining rooms. That in turn brings up a less-obvious point, that the so-called contactless technologies out there that say they’ll make restaurants safer have yet to prove their value.

As has been extensively covered, the CDC’s report found that adults who test positive for COVID-19 were “approximately twice as likely to have reported dining at a restaurant” than those who tested negative.

These are exactly the types of findings the restaurant industry has tried to avoid, and it has used a lot of tech to do that. When dining rooms first started to reopen, restaurant tech companies rushed to bring contactless “kits” — software that enables digital menus, ordering, and payments — to market. There are now so many of these offerings it’s often hard to distinguish one from the next.

To be super-duper clear, no company is claiming they’ll fend off COVID-19 with a QR-code enabled menu feature. It’s also worth noting that we don’t have extensive data yet on how many restaurants (including those in the CDC study) have actually implemented contactless software, which is expensive and a time-consuming process.

While we don’t know how vast contactless implementations are, we know restaurant tech companies use phrases like “safe,” “contact-free,” and “end-to-end contactless experience” all over their marketing copy and product-speak nowadays. 

But giving a piece of software the “contactless” label and actually eliminating (as opposed to minimizing) human-to-human contact in the dining room are two different things. Customers might be able to browse a menu, order a meal, and pay for it from their own device, but someone still has to run the food to the table, refill drinks, and step in if there is a problem with the order. Humans still cook and plate the food, and even spreading tables further apart won’t necessarily stop the spread of coronavirus. (One study found that infectious droplets can spread up to 16 feet away from the infected person.)

In their current form, contactless restaurant tech solutions can’t totally eradicate human intervention in the restaurant experience. Even if it could, there are still the other diners to contend with (see above), which means contactless tech can’t completely wipe out the risk that someone will get COVID-19 from going out to eat. Hence the CDC’s latest findings.

What contactless tech can do is speed up the order and pay process, help restaurants keep labor costs lower (fewer staff to pay), and even drive more people to restaurants’ native mobile apps instead of third-party delivery platforms. It can also speed up formats like curbside pickup and drive-thru, areas where restaurant operators should perhaps spend the bulk of their energy implementing contactless tech.

For now, at least, all signs point to off-premises formats like drive-thru and takeout as the areas where restaurants should be spending the bulk of their energy, period. The National Restaurant Association just released new figures that note one in six restaurants have closed either permanently or for the long term. I doubt the CDCs findings will make that number any less bleak anytime soon. For the present, restaurants should continue to focus on developing their off-premises formats, whether that’s faster curbside service via contactless tech, a ghost kitchen, or even a makeshift drive-thru lane.

As far as the dining room is concerned, it may be time for bolder moves than a QR code. By that I mean more robots to do things like run food and wash dishes, and more creative ways of arranging the dining room layout. In other words, it’s probably going to take more than iterative tech to get the restaurant biz back on its feet.

Ocean Hugger Has Big Plans to Re-Enter the Plant-Based Seafood Market

Plant-based seafood startup Ocean Hugger said this week it is in the midst of planning a relaunch, according to an interview with Food Navigator. 

In June, the New York-based company had to cease operations, citing the COVID-19 pandemic as the reason. Up to that point, Ocean Hugger ran a promising business selling its “tuna” and “eel” products to foodservice businesses. As we’re all too aware these days, the foodservice industry has been one of the hardest hit by the pandemic, and Ocean Hugger found itself facing no sales and had to stop operations.

Now, however, it appears the company is planning its comeback. An update from August 31 on the Ocean Hugger website states that, “Over the coming months, we will be exploring paths to relaunch bigger and better than ever.”

How the company plans to do that is under wraps for now. Food Navigator notes that new developments should “enable the business to relaunch next year.” Co-founder David Benzaquen suggested to the publication that Ocean Hugger is exploring ways to re-enter the market and also hinted at new products. He gave no further details.

It’s reasonable to imagine that, with the right business model, Ocean Hugger will be successful in its attempt to relaunch. Investment in alternative proteins has already reached over $1.1 billion in 2020, and both plant- and cell-based seafood startups have made many a headline recently. General Mills invested $32 million Good Catch at the beginning of 2020. BlueNalu, which grows cell-based seafood in bioreactors, nabbed a $20 million investment in February. More recently, S2G ventures said it would be investing $100 million in seafood and ocean health startups including alt-protein.

Ocean Hugger has so far raised $500,000 from a funding round in 2019. Benzaquen said in his interview this week that seafood is one of the most obvious areas of animal protein to disrupt from a sustainability and animal welfare angle. If others agree, that investment figure for Ocean Hugger could go up significantly in the future.