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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.

Recipes for Relief Ends Initial Run, Raised More Than $11,000 for Chefs and Bartenders

Recipes for Relief is ending its inaugural run today after raising more than $11,000 for foodservice workers like chefs and bartenders out of work because of the pandemic.

The initiative was launched at the beginning of May, at the height of the shelter-in-place orders that forced so many restaurants to close dine-in operations or shut down completely. As we wrote back then:

Recipes for Relief is a website where famous chefs and mixologists post recipes for meals and drinks. Each recipe features a title, the name of the chef who created it, and a short description. You can choose to purchase the recipe for $2, $5, or $10. All of the funds go directly back to the chefs or mixologists. 

Recipes for Relief (RfR) was spun out of meez, a company building a recipe management software tool for professional chefs and mixologists, allowing them to digitize, edit and scale their recipes.

RfR was only supposed to last through the end of June but was extended through today. In that time, thousands of recipes were downloaded and RfR raised more than $11,000, all of which went to the chefs and mixologists posting content, with meez covering the operational costs of running the site/service. While today may be the last day to make purchases through Recipes for Relief, the site will be coming back.

“The main reason to stop for now is to build something much better and more scalable,” meez Founder and CEO, Josh Sharkey told me by phone this week. “My goal is to scale chef’s knowledge and IP, and what we did for Recipes for Recilief was a great step one. Next we want to create something that is genuinely a new revenue stream for chefs.”

Sharkey told me that unlike other avenues chefs have explored for revenue generation, like online cooking classes, a next-gen RfR can provide better scale. Instead of having to commit the resources and time to teach and record an online video cooking class, a cook could simply put their recipes up online once to reach a large audience.

One of the ways Sharkey wants to improve RfR is by helping content creators better market and monetize their recipes. During the first phase of the pandemic, the company learned that people tend to purchase whatever recipe had the best photo. The next version of RfR seeks to provide guidance around marketing tips like hero images as well as different pricing tiers.

With so many restaurants shutting down permanently because of the coronavirus, chefs and bartenders will be needing new sources of revenue, and ones that scale and provide meaningful income.

For those that can wait, Sharkey said that he is targeting a re-launch of Recipes for Relief at some point towards the end of this year, beginning of next.

I, Restaurant

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This week’s virtual Spoon event was a goldmine of information for restaurants and restaurant tech companies, or really anyone who wonders what the word “digitization” actually looks like in action in a restaurant.

Once an industry reticent to adopt any new technology, the restaurant biz has been forced into using all manner of digital tools — from delivery apps to contactless ordering platforms — to stay afloat in the troubled waters brought on by the COVID-19 pandemic. As one of the event’s panelists, Ian Christopher of Galley Solutions, put it, there is now a “survive or die” mentality when it comes to digitization for restaurants.

Front-of-house technologies get the bulk of the investment money right now. But as Christopher, along with Martin Flusberg of Powerhouse Dynamics, SousZen’s Stephen King, and The Spoon’s Mike Wolf discussed, the reinvention of the back of house is arguably more important. 

As the panelists noted, 75 percent of a restaurant’s costs are in the back of house. If restaurants can’t address those, they’ll never get a good handle on their margins. Meanwhile, the pandemic has made those margins even thinner, intensified the labor shortage issue, and accelerated the widespread rise of ghost kitchens, which consist of nothing but the back of house.

How can more technology in the back of house assist in those areas and others? Here are a few takeaways from this week’s event:

More automation. Back of house automation isn’t just about robots making burgers. It has much more to do with digitizing operational processes to make them more efficient. That could mean a robotic arm doing manual tasks. But it could also mean using tech to replace paper-and-pen accounting books or taking a better, more granular analysis of food inventory to cut down costs.

More operational efficiency. Related to automation, the back of house will become more about making operational processes faster and more efficient. One of the panelists went as far as to say efficiency is the biggest thing for restaurants to get right. That’s especially true with fewer people eating in dining rooms and instead ordering takeout or delivery meals that are constantly evaluated for convenience and speed in addition to quality.

More transparency. The pandemic has arguably brought a greater desire for transparency when it comes to our restaurant food, and tech-savvy companies will respond with a variety of solutions. That could include installing software in a restaurant that can tell a customer exactly where their order is at any given moment (e.g., “on the grill,” “out for delivery”) or a tool that better informs them of a restaurant system’s security measures.

Will everyone in the restaurant industry welcome these changes with open arms? Absolutely not. Panelists said we can expect some pushback at the individual level from different folks in the restaurant industry, and one can hardly blame them. After all, what I just laid out above sounds more like a manufacturing facility than a restaurant. 

And to be honest, part of me balks at this new restaurant “experience” where speed and convenience rule and the majority of meals are flung together in ghost kitchens and delivered to me in a cardboard box. But listening to today’s panelists, it’s also clear that digitizing the restaurant biz could mean more businesses being able to stay open (in some fashion), more entrepreneurship, less waste (food and money), and safer procedures for everyone. At a time when the entire industry hangs in the balance, those factors provide some welcome sense of optimism.

80% of Restaurant Jobs Could Go to Robots

On the subject of digitization, this week, the Spoon’s Chris Albrecht wrote about some new numbers that claim 80 percent of restaurant jobs could be taken over by automation. That includes cooking, serving, and prepping jobs.

While the 80 percent figure is high, it doesn’t feel all that surprising. Automation was already coming for the restaurant industry, and robots specifically have been in use for the consumer-facing side of the business for some time (see Starship’s delivery bots or Chowbotics’ Sally).

The pandemic has obviously accelerated that. Reduced dining room capacity, full-on restaurant closures, and a move towards the so-called “contactless” experience has amplified the labor shortage. Throw in the above discussion about efficiency being the number one priority for many restaurants, and it’s easy to see why the industry’s automated future seems a foregone conclusion at this point.   

Restaurant Tech ‘Round the Web

Pacific Northwest chain Duke’s Seafood has installed a pathogen-filtering system in all of its restaurants “to kill COVID-19 particles.” The filtration process uses needlepoint bipolar ionization (NPBI) to reduce airborne pathogens, and is the same system installed in the White House, the Mayo Clinic, and some airports.

Hospitality platform BentoBox this week launched its own take on the contactless dining experience, according to a press release sent to The Spoon. The company’s Dine-In Ordering product features customized QR codes and digital menus, as well as complimentary tabletop signs with a restaurant’s branding.

Adobe Spark this week released a guide that, according to a press release, “covers everything small business owners and marketers need in order to implement QR and other touchless efficiencies right now.” Restaurants that sign up for a free Spark trial can access templates for in-store signage, mobile menus, and other graphical elements needed to communicate social distancing and contactless ordering.

 

The Real California Milk ‘Snackcelerator’ Opens Applications for Dairy Startups

You’ve heard about the uptick in snacking thanks to the pandemic. But perhaps no one is taking the rise of snacks more seriously than the California Milk Advisory Board (CMAB). Today, the organization announced the return of its product innovation competition dubbed the Real California Milk Snackcelerator. 

The competition looks for food producers that integrate the flavor and functionality of California dairy products into snacks. A blog post outlining the contest lists several products that “speak to the type of innovation” CMAB “is looking for.” Those products include a Keto- and diabetes-friendly ice cream treat, probiotic snack bars, Kombucha yogurt, and something called “cheese wraps.”

“The goal of this competition is to tap into our global obsession with snacking to inspire new ideas and help clear the hurdles to bringing these products to market,” CMAB CEO John Talbot said in today’s press release. 

As of the end of June, snack consumption was up 8 percent, according to NPD. And in today’s press release, CMAB cites Mondelez International, which recently found that 59 percent of adults worldwide prefer snacking to meals.

Companies interested in CMAB’s competition should have products that use cow’s milk as their first ingredient and making up 50 percent or more of their formula. Companies that win must commit to producing their products in California, using California dairy farms for milk. 

Up to eight companies will get “up to $10,000 of support” to develop a prototype as well as mentorship and guidance around packaging, distribution, marketing, and other areas of running a food business. They also receive an all-expenses-paid “business development trip” where they will tour dairy farms and meet individuals in that industry. The overall winner gets “up to $200,000 worth of support to get their new product to market.”

While the snacks market is thriving, the dairy industry has had a rougher time of it lately. U.S. milk sales have been declining for decades, especially with the rise of plant-based alternatives. Two major milk producers so far, Dean Foods and Borden Dairy, have filed for bankruptcy.

However, sales of dairy rose thanks to the pandemic: From January through July 18, U.S. milk retail sales were up 8.3% to $6.4 billion, according to Nielsen. And the sector definitely has its pockets of innovation, with a notable example being the Dairy Farmers of America’s startup accelerator, which has a similar mission statement to that of CMAB: to bring more agility and innovation into the dairy sector.

Still, dairy companies have a long haul ahead of them. Finding nimble, innovative startups with new approaches to dairy products could help the industry stay relevant at a time when alternative protein is steadily on the rise. Feeding into the highly popular market for snacks doesn’t hurt, either. 

Applications for the Snackcelerator are open until August 28, 2020.

Wawa Goes Beyond Standard Convenience Store Fare With a Plant-Based Breakfast

Like most other types of food businesses, the convenience store is changing due to the pandemic, and that includes what’s on the menu when it comes to food. In line with that, today, convenience store chain Wawa announced a partnership with Beyond Meat to bring a plant-based breakfast option to its stores.

Dubbed the Sizzli Breakfast Sandwich, the new item will use Beyond’s Breakfast Sausage product. As of today, it’s available at 650 Wawa stores in the Mid-Atlantic region and will be available in all Florida stores from August 10 onward.

In certain parts of the country, namely the Mid-Atlantic, Wawa is practically iconic in the world of convenience store chains. But like many food businesses nowadays, it’s having to reinvent itself in the wake of changing consumer demands around healthy eating and massive shifts in how people get that food.

The chain already offers its “Wawa Your Way” menu, which offers healthier options and caters to various dietary needs/preferences (gluten-free, plant-based, etc.).

Adding a plant-based option to the menu is the obvious next step. Consumer demand for plant-based proteins has surged during the pandemic as ugly truths about the meat industry continue to come to light. The whole of the alternative protein category, including plant-based meat, is expected to grow to $17.9 billion by 2025.

But plant-based options isn’t the only change Wawa has introduced recently to meet new consumer behaviors. With more people staying at home, or just wary of mingling with strangers in public settings, the company has had to turn its attention to serving folks off-premises. Wawa struck a delivery deal with DoorDash in April, then launched curbside order and pickup in June. Just this week, the chain announced its first-ever drive-thru location, which will begin construction in August in Falls Township, PA.

Wawa’s announcements follow moves by other well-known convenience store chains to shift both their formats and products to meet the current times. 7-Eleven expanded delivery and introduced a new pickup feature in July. It too has a partnership with DoorDash. Over in Tokyo, Uber Eats is delivering food from Lawson Convenience stores. And let’s not forget cashierless checkout’s march into the convenience store realm, led by Zippin, Aramark, and others.

Wawa’s news from the week is further proof multiple intersections are happening right now between convenience stores, grocery stores, and restaurants, and between plant-based diets and traditional ones. Expect more of these lines to blur as the entire food industry continues changing at the pace of the pandemic.

Denny’s Off-Premises Sales Have Almost Doubled Thanks to the Pandemic

Denny’s announced on its Q2 earnings call this week that average weekly sales for off-premises orders have almost doubled since the start of the pandemic, from $4,000/week in February to $7,900/week in July.

Like other restaurants that have historically been known for their in-dining room experiences, Denny’s found itself having to quickly pivot when the pandemic hit. Speaking on the call, John C. Miller, CEO of the Spartanburg, S.C.-based chain, outlined the ways in which his company has adapted to the changes.

Those efforts included continued focus on Denny’s long-established Denny’s on Demand platform, which allows guests to place online orders for pickup and delivery. (The chain’s menu is available through most of the major third-party delivery services.) Like others, it also added curbside pickup and, once stay-at-home restrictions began to loosen, converted areas of its parking lots and sidewalks into outdoor seating.

The reinvention of the restaurant menu is another common theme to emerge from this pandemic. And by reinvention, I mean pared down selections that allow kitchens to work more efficiently. Denny’s was no exception here, having streamlined its own menu to focus on its most popular items, and offering family-style bundles, as well.

If Denny’s story of off-premises orders saving the day sounds familiar, that’s because it’s the state of most major restaurant chains the U.S. right now. McDonald’s said it made 50 operating changes to get “pandemic ready,” many of them around digital ordering and off-premises orders. Starbucks, which saw one of its toughest quarters so far, is completely overhauling some traditional sit-down locations and turning them into to-go-centric stores. 

Denny’s itself has permanently closed some of its sit-down locations due to “unforeseeable business circumstances prompted by COVID-19.”

“This quarter has proven to be one of the most difficult quarters this country and especially the full-service restaurant industry has ever seen,” Miller said on the call. And there’s no telling what Q3 will look like, since the state of the restaurant industry changes practically every day and full recovery is dependent in part on the trajectory of the pandemic.

FAIRR: Investment in Alternative Protein Has Already Reached $1.1B in 2020

Investment in alternative protein for the first half of 2020 is almost double what it was for the whole of 2019, according to a new report by investor network FAIRR. Between January and the beginning of July of 2020, over $907 million was invested into plant-based foods, compared to $457 for the whole of 2019. More than $290 million has been invested into cell-based meat so far in 2020. The entire market for alternative protein is expected to grow to $17.9 billion by 2025.

The U.S. is still the largest market for alt-protein, reaching almost $5 billion in sales in 2019, $1 billion of those for meat alternatives. China’s is also a huge market for alternative proteins, particularly when it comes to meat replacements. 

We’ve noted this growth frequently over the last few months, and FAIRR’s report lays out some of the main drivers behind consumers’ insatiable appetites for non-animal protein. There’s the aforementioned uptick in investment, a point supported by a recent slew of news announcements. In the last week alone, Better Meat Co. raised $1 million, Joywell Foods raised $6.9 million, and plant-based cheese company Grounded raised $1.74 million.

FAIRR also calls out the rise of plant-based seafood products and a decrease in production costs for manufacturers as market drivers, along with an increase in companies using alt-protein to diversify their product lines. Last year saw a number of major milestones that brought these issues further into the light and helped alt-protein go mainstream. For instance, Nestlé opened its own production facility for plant-based meat in May of this year. UK grocer Sainsbury’s launched its own line of plant-based products in early 2020. Meanwhile, Starbucks, KFC, and a host of other QSRs have rushed to add plant-based offerings to their menus.

Then, of course, we have the pandemic to thank for this massive uptick in demand for alternative protein. “Consumers worldwide are rethinking how they eat and what they eat amidst supply chain disruptions and public concern over the link between meat production and viral diseases,” the report states.

Across the board, investment in food tech is up since the start of the pandemic, having reached $4.8 billion in the first half of 2020 according to a report from Finistere. This too is in response to the current global health crisis.

But FAIRR also calls COVID-19 “only the latest straw on the camel’s back” when it comes to alt-proteins. Pre-pandemic, our heavy reliance on animal-based proteins was already under scrutiny because of animal supply chains’ negative impact on the environment, not to mention human health. Throw a zoonotic pathogen in there (which COVID-19 is widely believed to be), and it’s easy to see why the pandemic has accelerated the demand for animal-free protein sources.

What’s next? Cell-based protein, probably. While that sector has made up a much smaller portion of investments in the first half of 2020, those dollars are nonetheless pouring in. As the pandemic wrecks more havoc on our food system and sheds light on the importance of finding new sources of protein, expect the interest in cell-based proteins to continue its acceleration.

Finistere: Food Tech Investment Reached $4.8B in the First Half of 2020

An unusually high volume of food tech investment news has kept us on our toes all summer, and we’re not the only ones to notice. Food tech VC firm Finistere Ventures said today that 2020 so far as been an “extraordinary” investment time for both food tech and agtech, with much of that investment happening smack dab in the middle of the pandemic. More importantly and according to the firm’s latest findings, much of the capital is actually a direct reaction to the pandemic. Finistere, whose investment portfolio includes Memphis Meats, CropX, and Good Eggs, released the findings today in collaboration with PitchBook Data, according to a press release sent to The Spoon.

For the first two quarters of 2020, total agtech investment reached $2.2 billion compared to the $2.7 billion raised for the entirety of 2019. While slightly lower, food tech investment reached $4.8 billion during the first two quarters of 2020 compared to $7 billion for all of 2019, and that number will continue to rise rapidly (see below). 

Large investments, what Finistere calls “mega rounds” of more than $100 million have continued and encompassed all of the top 10 food tech investments and 50 percent of the top agtech investments. 

Other notable points, as quoted directly from the report, include:

  • Investors are helping startups push their funding needs outside the “Covid zone” and build more evidence of their value as future growth investors will be looking for signals of scalability.
  • Rounds led by new investors have been a lesser part of the 2020 total, which is likely to continue while capital managers take stock of the market conditions.
  • While early-stage Agtech has seen a decrease in pre-money valuations, valuations for late-stage financings continued to increase in 2020 despite the current pandemic. Valuations will be under pressure looking forward and will likely require a year or more for the true impact of Covid to manifest in this metric.

Food tech, in particular, has a promising outlook right now, thanks in no small part to consumers’ collective behavioral shift to eating more at home. “It is our view that there will be lasting and persistent changes to consumer behavior in at-home consumption, and interesting to note this is the first year since 1994 that restaurant share of food consumption dropped versus in-home,” the report stated.

Other activity around the food tech sector supports this idea. Online grocery sales have experienced record highs since the start of the pandemic. Many companies, from plant-based meat producers to snack brands, have launched direct-to-consumer channels in response to this shift away from public spaces and into the consumer home. And with the state of the restaurant industry still very much in flux, these behaviors aren’t likely to change anytime soon.

Finistere noted that for food tech, retaining customers and growing margins will be important to future funding rounds.

Agtech will have a bit more of an uphill climb. The report states that agtech companies “are likely to face a turbulent outlook for 2021,” citing farming margins, labor costs, trade conflicts, and pressure to develop more sustainable farming methods as factors. The industry should expect much consolidation in the future.

7-Eleven Continues Off-Premises Push With Pickup Feature, Expanded Delivery

Convenience store chain 7-Eleven today announced updates to its off-premises business that include expanded delivery and an order/pay ahead feature for pickup orders placed through its 7NOW app.

The new pickup feature works much like pickup at a restaurant or grocery store would. Customers log into the app and select “pickup” instead of delivery, then place items in their cart and pay for them. The app notifies the user of the order’s progress and sends a four-digit code to show the clerk once the order is ready to be picked up. 

The ability to order and pay for snacks, household supplies, and drinks ahead of time is becoming an increasingly mandatory feature in these pandemic-stricken days. Historically, convenience stores have catered more to spur-of-the-moment purchases, so it remains to be seen if the concept of ordering ahead will translate to this setting. 

One thing the new feature does underscore is technology’s continued advancement on the convenience store format. Earlier this month, Aramark opened a convenience store in an apartment complex that features cashierless checkout tech from AWM Smart Shelf. DoorDash, meanwhile, has been delivering items from Circle K and Wawa as well as 7-Eleven, since the early(ish) days of the pandemic. The common denominator for all these developments is the emphasis on contactless transactions and minimizing human-to-human contact. Given the state of the world, the push to further integrate those things into every corner of daily life will continue for some time to come. 

In the same announcement, 7-Eleven said it has doubled its delivery reach to 2,000 stores across 1,300 cities. At the moment, delivery is available through DoorDash, Postmates, Favor Delivery in Texas, and through the 7NOW app itself.

How Will the Pandemic Change Restaurant Tech? The Most Recent Shutdowns Give Us a Clue

One topic we’ve batted around ad nauseam since this pandemic started is the changing role of restaurant tech amid the shutdowns, reopenings, and the second round of closures.

At this point it pretty much goes without saying that restaurants will be more digitized in the future as businesses look to minimize human-to-human contact between guests and staff. That means more tech in general when it comes to the restaurant experience. But how does this latest round of dining room closures affect that growth? Will, for example, all the contactless dining room software packages released over the last few months be worth nil now that coronnavirus cases are up and dining room visits are down? Can delivery save us all? (No.)

On a quest to find out more, I rounded up some thoughts from restaurant tech companies themselves about the future of their industry. Here, I’ve listed some common threads to come out of the replies, and you can read the full responses over at The Spoon. In the meantime:

  • Certain types of restaurant tech will prove more valuable than others. Online ordering platforms, yes. Reservations systems . . . maybe not so much at the moment, unless they can be tied into a larger offering.
  • The future of restaurant tech will also be about learning to use the tech. Restaurants will have to decide which tools make the most sense for their individual business, and how those tools can be used most effectively.
  • Restaurant tech must also play a role in keeping customers and employees safe. Health-checking features and those that promote social distancing will start to get built into back-of-house systems.
  • Service can’t be sacrificed in the name of tech. Just because more parts of the restaurant operation are going to be automated doesn’t mean businesses can be any less attentive to guests. 
  • Restaurant tech platforms need to address multiple formats. The new “restaurant experience” means more than just the dining room. Tech platforms need to function not just on-premises but also at the drive-thru, in a curbside setting, and with delivery. 

Bear in mind that this is just one side of the restaurant tech conversation. By that I mean restaurant tech companies are quite naturally going to be enthusiastic about tech in the dining room because it’s in their best interest. Over the next couple weeks, we’ll also hear from restaurants themselves on the matter, so stay tuned.  And drop us a line if you’re a restaurant tech company and have thoughts about the future of your industry.

To Go Is Here to Stay

Chipotle hit a milestone this week: the chain opened its 100th spot with a drive-thru lane, known as the “Chipotlane” in Chipotland. More importantly, the chain said 60 percent of new stores it opens will focus on drive-thru.

Chipotle’s shift in focus from dining rooms to drive-thrus is the latest in a trend that, in retrospect, was inevitable from the start of the pandemic: major chains reformatting their store concepts to meet the demands of a socially distanced, to-go-centric restaurant industry. 

This was already happening in 2019 (see KFC’s drive-thru of the future), but the pandemic has accelerated the rate at which restaurant chains are making this pivot. Starbucks has already said it will reformat many of its traditional cafe-style locations to cater to drive-thru and pickup. And with brands like McDonald’s and KFC voluntarily re-closing dining rooms or halting reopening plans, it seems only a matter of time before these companies just decide to forgo the front-of-house altogether at many locations. 

Don’t expect this trend to reverse, either. We may not know exactly how the rest of the overall pandemic story plays out, but one narrative already cemented in place is that to go is here to stay. By the time a coronavirus vaccine is found, consumer behavior will have already adjusted to treating off-premises as the norm for quick-service dining. Expect a lot more drive-thrus and pickup windows, and a lot fewer tables.

Beyond Fried Chicken at KFC

Here’s What Else Happened in Restaurant Tech This Week

Chopt, Dos Toros Piloting CLEAR’s Biometric Platform to Screen Restaurant Employees – Founders Table, a restaurant group that includes Chopt and Dos Toros Taqueria, announced today it has teamed up with the CLEAR platform to test a health screening process on employees. The success of this pilot could mean a new form of employee health management is on its way to the restaurant biz.

KFC Bringing Beyond Meat Plant-Based Chicken to SoCal, 3D Printed Chicken to Russia – KFC announced a partnership with Beyond Meat today to bring plant-based chicken sandwiches to 50 KFC locations across Southern California. Starting on July 20, the Beyond Meat Chicken will be available for a limited time in select KFCs in Los Angeles, Orange County and San Diego.

Miso Robotics Expands Equity Crowdfunding Efforts to the UK – Miso Robotics, maker of Flippy the robot cook, announced yesterday that it has launched an equity crowdfunding campaign in the UK on the CrowdCube platform.

Bbot Raises $3M for Its Contactless Restaurant Tech Solution – NYC-based restaurant tech company Bbot today announced a $3 million seed funding round led by Craft Ventures. The company says it will use the new funds to hire up and expand its reach and product capabilities, according to a press release sent to The Spoon.

Fireside Chat: Building a Direct-to-Consumer Business

With everyone from Shake Shack to Impossible launching direct-to-consumer initiatives these days, one has to wonder if more D2C moves will become a normal part of doing business.

We’ll address that question at our next virtual fireside chat, Building a Direct to Consumer Food Business In a Post-Pandemic World, on July 23 at 10 a.m. PT. 

Spoon Founder Mike Wolf will be chatting with Jeremiah Kreisberg, CEO of Slow Up, and Vanessa Pham, CEO of Omsom. All three will be discussing: 

  • What are the key company building blocks for creating a direct to consumer business
  • Who are the key hires/personnel/outside partners needed to go DTC
  • What is the DTC tech stack?
  • Marketing and community building
  • Pricing and product strategies vs distribution and retail channels
  • and lots more!

This fireside chat is for Spoon Plus Members only, which is good because as a member you also get access to our premium reports, deep dive interviews and more! 

Reserve your spot now.

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Restaurant Tech Companies React to Restaurants Shutting Down Again

In case you hadn’t heard (but you totally heard), restaurant dining rooms are closing up shop again. Whether it’s states mandating the closures (California), chains delaying their openings (McDonald’s), or some combination of those things, dining rooms are once again in peril. 

Since we’re all things food tech at The Spoon, the first question that came to my mind was, What happens to the restaurant tech companies, many of which have moved quickly in the wake of the pandemic to offer things like contactless order and pay systems, digital menus, and other ways to keep diners socially distanced?

I figured the best way to answer that question was to ask restaurant tech companies themselves and round up their answers below. Note that, though extensive and informative, these answers form just one side of the conversation, and we’ll be following up with the restaurants themselves over the next couple weeks, too. In the meantime, here’s what the tech companies are saying:

Dimitri Nikulin, CEO of Allset:

“Companies that help and support restaurants during the pandemic, like online food ordering platforms, will continue to work and benefit in this new reality. However, others like reservation services or marketing platforms will face a new round of struggle. We believe that tech companies will benefit in the long run, as the post-pandemic world will be more digitized and there will be a greater appreciation of on-demand convenience.”

John Miller, CEO of PopID and chairman of The Cali Group:

“For tech companies like ours that have developed solutions to help restaurateurs enhance the safety of their employees and customers, the renewed state restrictions only make our work more vital and in-demand.”

Andrew Robbins, president and co-founder of Paytronix Systems, Inc.:

“The question is not just what it means for us as tech companies, but what it means for the restaurants themselves. Many of the restaurants that made it through the first phase of this pandemic have brought in some kind of tech to help manage the change. Moving forward it’s going to be about learning how to use and expand the capabilities of that technology, whether that’s loyalty programs, order and delivery software or sophisticated POS systems.

Our customers found that their loyalty programs helped them stay afloat by enabling them to communicate with their best customers. As an example, as the worst of the downturn hit, one of our clients saw their non-loyalty member-related sales drop 75%, while their loyalty member sales were only down 20%, and many of those were spending about 80% of pre-COVID levels. It was this core group of customers who helped them survive and even thrive. We saw this across the board.

Solutions like loyalty, order and delivery platforms or those for contactless dining are only tools for our clients to use. The creative ways they use them will be what sets them apart from their competition.”

Steve Simoni, CEO of Bbot:

“In the first wave of closings, we saw hospitality operators quickly adapt and look for new technology to implement. Broadly, we expect that trend to continue. Therefore, we think that restaurant tech companies continue to have a huge opportunity to help restaurateurs with support and the ability to safely operate during these difficult times. 

At Bbot, our entire team is working around the clock to build new features and onboard customers to make sure we are helping as many hospitality operators as possible navigate through the pandemic. Whether a business is open to customers or only offering curbside pickup, operators have pivoted to investing in software that can personalize and better the guest experience, while still allowing their staff to follow social distancing orders. Adding technology solutions to daily operations doesn’t mean sacrificing service. In fact, tech companies like Bbot are focused on assisting staff with efficiency so that they have more time to be hospitable.”

Bart Shuldman, Chairman and CEO of TransAct Technologies Inc. (BOHA):

“The virus crisis has accelerated the adoption of technology by restaurants to digital and cloud-based solutions as they grapple with openings, mandated maximum level of customers allowed in restaurants and temporary closings. The use of technology lowers their cost while also providing specific solutions to provide their customers a level of confidence. Further, not unlike how restaurant operators have had to get creative with ways to drive business like selling grocery staples and cocktails to-go, restaurant technology companies have had to pivot to find ways to meet the needs of operators and their consumer.

It is incumbent upon those of us who serve the industry to find new solutions to help restaurants keep employees and guests safe, all while trying to keep their doors open. For example, we have built upon our existing automated back of house management technology to now allow operators to easily record employee temperatures and health checks in advance of shifts, and created a labeling tool so that staff can mark bathrooms and tables as to when they were last cleaned. We imagine there will continue to be mandates to re-close restaurants as we all contend with how to combat COVID-19, and we will all need to find ways to pivot accordingly.”

David Rusenko, Weebly founder and Square’s head of eCommerce:

“Times are difficult and uncertain, but Main Street is nothing if not resilient. We’re seeing restaurants increasingly turn to technology to stay ahead of the curve and continue thriving in this rapidly evolving business environment – one use case that’s risen to the top is the prevalence of eCommerce. Obviously restaurants have been leaning heavily into features like curbside-pickup and delivery, but the future may offer even more changes. 

For example, traditional distinctions separating food, retail, services, and nonprofits are disappearing. As businesses adapt, many have invented new ways of doing business in industries (like the restaurant business) that haven’t seen significant change in decades. 

Consider a restaurant that now sells groceries and merchandise (retail), hosts a live video cooking class (service), and offers meal donations to front line workers (nonprofit). A robust eCommerce platform will help businesses manage across all of the various ways that they do business, rather than just one. 

To survive in this environment, it’s imperative that restaurants remain flexible, leverage the tools at their disposal, and stay in tune to changes in consumer behavior – like preferences for contactless delivery, use of new technologies like QR codes, and more.”

David Peña, Founder and CEO of remotekitchen:

“The reclosings are a huge hit to restaurants, many of which had already been shuttered for months. “The hammer and the dance” cycle is not sustainable, especially for many independent restaurants — remotekitchen’s target audience in Mexico City. To be blunt, it’s vital that restaurant tech companies work with restaurants to help them generate the dire sales they need to stay open versus pickpocketing from them.”

Ray Reddy, Ritual Co-Founder and CEO:

“Restaurants are an important part of communities and the fabric of society. They are going through a hard time and tech companies and the broader ecosystem need to support them through it.

We can’t speak for other tech companies, but we believe in order to support local, we need to help restaurants go digital and support contactless pickup while keeping a larger share of sales. This means building tools & strategies for restaurants that shift customer demand from expensive 3rd party platforms (that take 20-30%) to first-party products like Ritual ONE that are commission-free. With the uncertainty in dining restrictions, we want to enable restaurants to safely convert sales from every medium possible. This is why we recently rolled out Instagram order buttons along with tableside & storefront QR code ordering for all of our partners.

Our philosophy has always been that restaurants should only pay commissions for new customers and not on their own regulars and Ritual ONE is our way of doubling down on this.”

Joel Montaniel, CEO of Sevenrooms:

“As restaurants close their doors once again due to surging COVID-19 rates, it highlights how important hospitality technology is in helping operators generate revenue and profit in the short and long term. From the early days of COVID-19-related closures, tech companies had to reexamine their value proposition to help operators drive more revenue and profit in a sustainable manner while offering platforms that provided solutions to new operational challenges that popped up overnight. Those that rose to the challenge, offering online ordering and contactless ordering solutions, continue to see success by providing value to their clients whether a dining room is open or closed. 

What became apparent in mid-March is that restaurants cannot solely rely on one aspect of their business to bring in revenue nor can they just do what they have done in the past. Over the past few months, operators have started to look more holistically at their businesses, creating more awareness of the importance of tech, guest data, and owning their guest relationships in helping achieve their goals. These technology solutions are now mainstays in restaurant operations, and will not be going away anytime soon. 

Restaurants cannot focus exclusively on one stream of revenue (e.g. outdoor dining which is subject to unpredictable weather conditions and city legislation) for their businesses. Instead, they need to examine all of their available channels, including pickup and delivery. Success in this area will come through working with tech companies that offer the tools restaurants need to build direct relationships with their guests. Best-in-class hospitality tech platforms do this by enabling operators to offer experiences that meet changed guest expectations around health and safety, while helping them market to guests in a personalized manner to drive repeated visits and orders. 

To be successful, restaurant tech products need to address every aspect of the guest experience, especially as expectations rapidly change. Now, more than ever, technology companies have a big opportunity to create innovative solutions that address these new challenges, helping to carry our industry into the future.”

Are you a restaurant tech company with thoughts about the future of the industry? Drop us a line to share your thoughts.

Chopt, Dos Toros Piloting CLEAR’s Biometric Platform to Screen Restaurant Employees

Biometrics in the foodservice industry tends to raise questions, but the debate over whether restaurants should use it may soon become a thing of the past. Founders Table, a restaurant group that includes Chopt and Dos Toros Taqueria, announced today it has teamed up with the CLEAR platform to test a health screening process on employees. The success of this pilot could mean a new form of employee health management is on its way to the restaurant biz.

According to a press release, a pilot of this program will start with the reopening of Chopt in Washington, D.C., and Dos Toros in NYC. More than 30 employees will use the new “Health Pass by CLEAR,” which was released this year, as part of their daily health screening. 

Anyone who’s been to an airport in the last few years will recognize CLEAR as the company that keeps kiosks near the terminal that scan a user’s fingerprints to identify them and enable faster check in. Health Pass by CLEAR does away with the kiosk aspect of this, as the system works on mobile devices to connect health information to employees biometric data like their faces and fingertips. 

Once set up in a restaurant, employees verify their identity with biometrics from a mobile device, and also complete a real-time health quiz (based on CDC guidance). They upload their data to their test provider, which verifies their health scan and identity. The system can also perform temperature checks. The idea is that once restaurants have near-instantaneous results on these elements, they can decide whether to send a worker who isn’t feeling well or has a high temperature home.

Biometrics, of course, bring up a lot of questions around data privacy. However, most of those questions originated in a pre-COVID world, and more people could be wiling to part with that data in order to be assured they’re eating, working, shopping, etc. in a safer environment. CNBC mentioned recently that “health screening could become an everyday task for many Americans.” That would make sense in a restaurant — even those with off-premises formats — where the operating model relies on other people touching your food.

Plenty of other companies offer health-related tools for restaurants. Squadle released its own scanner in June, and DragonTail Systems is using its AI to scan the cleanliness of food prep areas. Then of course there’s PathSpot, which scans employees hands to ensure proper hand washing. CLEAR, however, goes the most in depth because of the identity recognition aspect of its system. And if its pilot with Founders Table proves a valuable tool for restaurants, many other chains will likely adopt the system.

NPD: As QSR Transactions Improve, Full-Service Restaurants Continue to Struggle

Consumer transactions at restaurants have seen some improvement in the last couple weeks compared to the early days of the pandemic, though not much of it has gone beyond the quick-service restaurant.

NPD released new data today that notes consumer transactions at major U.S. restaurant chains declined 10 percent compared to one year ago for the week ending July 5. That’s a slight uptick from the previous week’s decline of 14 percent. 

However, NPD notes that “all of the improvement in the week sources to major quick service restaurant chains, where customer transaction declines improved by 4 points from the prior week’s decline of 13 percent versus year ago.”

That QSRs are seeing the bulk of the improvements shouldn’t surprise. The QSR format is inherently designed to better serve off-premises orders than full-service dine-in restaurants. Even before the pandemic and shelter-in-place mandates upset the entire industry, QSRs were accelerating their efforts to offer more pickup, delivery, and drive-thru capabilities. Starbucks, for example, has said 80 percent of its orders were already to-go before the pandemic. And a large portion of Chipotle’s business has for more than a year now been dedicated to building out off-premises-friendly store formats and developing a robust digital ordering strategy. 

Chipotle is a good illustration of how much more quickly and nimbly many QSRs were able to act in the wake of the pandemic compared full-service restaurants. Once social distancing measures went into effect, the chain simply accelerated its existing efforts around off-premises and digital ordering. The result was that Chipotle recorded its highest quarter ever for digital sales in Q1 2020. 

The last few months have been a much harder haul for full-service restaurants. NPD reported this week that full service restaurants saw customer transactions down -30 percent compared to one year ago, which is a five-point decline from the previous week. 

Author and NPD food industry advisor David Portalatin said that “full-service performance remains largely at the mercy of governmental regulation and the persistence of the coronavirus. For many full-serves, making the pivot to off-premise is far more difficult.”

As of right now, many would-be restaurant customers are still wary of actually sitting down in a dining room to eat a meal. The current spike on coronavirus cases across the U.S. also complicates matters, since some states have had to halt or roll back their reopening plans.

These challenges aren’t going to let up anytime soon, unfortunately. In all likelihood, nobody will be dining out en masse until a vaccine is found and widely administered. By then, consumer behaviors may have shifted to off-premises orders so heavily many people may not want to eat out, at least not on a regular basis. That will present a whole new bucket of challenges for restaurants and restaurant tech companies alike.