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The Spoon

Daily news and analysis about the food tech revolution

Restaurant Tech

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.

The Sustainable Restaurant Needs Big Chains Right Now

A worrying point that comes up a lot in conversation these days is that sustainability has taken something of a backseat while food businesses scramble to fight the pandemic. So it was encouraging to read this week that burger chain behemoth McDonald’s is continuing its sustainability initiatives and just completed construction on its first “net zero energy-designed restaurant.” 

An email sent to The Spoon this week outlines what this “net zero energy” restaurant looks like in practice. The store is located on the Disney World property in Orlando, Florida. Among other things, it includes a solar-paneled roof, photovoltaic glass panels around the building, and an automated energy system and passive ventilation dining-room to circulate air and regulate temperature. There are also interactive elements, such as stationary bikes that produce electricity and tablet games for kids to learn more about sustainability.

But hold on. Said bikes and tablets aren’t available just yet. McDonald’s said in its email that the new location is open for drive-thru and delivery, but like other McDonald’s stores in the U.S., its dining room remains closed. Florida being one of the new coronavirus hotspots, this will probably be the case for some time.

The biggest takeaway here, though, is not about the tech-forward energy systems in place or even the giant Golden Arches made of shrubbery (see photo). It’s that McDonald’s pushing forward on sustainability initiatives is even more important right now, during a pandemic, than it would have been a year ago.

Why, you ask? Because at the moment, the restaurant industry is collapsing around us. Data from OpenTable recently suggested that one in four restaurants will go out of business permanently because of coronavirus shutdowns. For the ones that remain open or plan to open, the majority of them are struggling to even pay the rent. One can’t reasonably expect them to also use what little margins they have to develop ways to make the restaurant biz less damaging to the planet. 

But someone’s gotta do it. Otherwise we’re going to emerge from this pandemic only to find ourselves buried in an inescapable pile of to-go containers and with no clear plan on how to make sustainability cheaper and easier for all restaurants. 

That means big chains with billion-plus-dollar digital businesses must continue their sustainability initiatives, pandemic or no. Just like Amazon will invariably influence other, smaller e-commerce retailers, the moves massive chains like McDonald’s, Starbucks, etc. take always have at least some effect on the smaller restaurant players. If the pandemic ever subsides enough to let some of the dust from the fallout settle, a lot of businesses are going to need help pulling their sustainability goals back on track. Those that can afford to need to start writing that playbook now.

Uber Had a Busy Week

On Monday, Uber announced it was buying Postmates for $2.65 billion. The delivery service quickly followed that news with an announcement that it is also is starting grocery delivery in the U.S. as well as parts of Latin America and Canada through its stake in Cornershop. 

Put ‘em together and whad’ya got? A lot more competition for Uber to contend with. 

The pandemic has blurred some lines between grocery and restaurant over the last couple months. But each sector still undoubtedly has its major players. In the world of restaurant food delivery, that includes DoorDash, which still holds the largest marketshare in the U.S. It also includes Grubhub, which Uber tried to acquire but who instead got snapped up by Just Eat Takeaway.com. Combined, Grubub and Just Eat Takeaway.com will form the largest food delivery service in the world outside of China.

Over in grocery, Instacart has raised over $2 billion, and the Big Big guys like Amazon and Walmart have robust online grocery services that got many folks through the pandemic.

Uber’s simultaneous moves to expand its reach with Eats as well as diversify with grocery speak to the boost the company is trying to give its food business now that the pandemic has decimated its rideshare business. Uber posted a loss of $2.94 billion for the first quarter of 2020 and also cut staff in the recent past. But its Eats business is growing, according to first-quarter numbers. The Postmates acquisition will give Eats a bigger footprint in key cities like Los Angeles (where Postmates is the number one service). Meanwhile, online grocery is still in high demand, and with coronavirus cases still hitting new records, that demand is unlikely to change anytime soon. Now we’ll have to see if Uber can handle the competition in both the grocery and food delivery sectors.

Automation’s Next Stop? The Ghost Kitchen

Two things the restaurant industry will see more of in the near future: ghost kitchens and automation. And if The Spoon’s fireside chat yesterday is any indication, we’ll see more of both in the same place.

Yesterday, Spoon Editor Chris Albrecht discussed the state of restaurant robotics with Linda Poulliot, CEO of Dischcraft Robotics, and Clatyon Wood, CEO of Picnic. While the group covered a wide range of topics in terms of when and how we’ll see robots in the restaurant, one of the most interesting takeaways was that these machines could speed up the order fulfillment process for many businesses while also ensuring a higher level of sanitization and better ways to keep workers in the kitchen socially distanced. 

Wood, who indicated the ghost kitchen market is a lucrative one for robotics right now, at one point suggested a hub-and-spoke model where a machine like Picnic’s could prep food in a central kitchen before sending it out to smaller ghost kitchen operations for final fulfillment of orders. 

My bet is that we’ll see more of this kind of efficiency in the near future. While they would never work in a fine-dining setting, where the experience is as much about the food preparation as it is the food, this utilitarian approach to food prep makes sense for quick-service restaurants and delivery-only concepts that are all about making fast food faster.

You can tune into the video from the event by heading over to Spoon Plus. Members get access to this and past fireside chats, as well as premium reports, interviews and exclusive research.  

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Euromonitor: Ghost Kitchens Poised to Become a $1T Market by 2030

Ghost kitchens could become a $1 trillion market by 2030, according to a Euromonitor webinar from this week (h/t Restaurant Dive). 

The webinar was led by Michael Schaefer, the Global Lead for Food & Beverage at Euromonitor International. During the webinar, he noted that “we’re going to see a lot of new operators looking to fill the void with cheaper concepts . . . more delivery-friendly concepts that require less capital up front.”

Via a series of slides and commentary, Schaefer notes that “global foodservice delivery sales more than doubled from 2014 to 2019” and that 52 percent of global consumers are “comfortable ordering from a delivery-only restaurant (no physical outlet).” The pandemic, too, has made the market for ghost kitchens even more lucrative than it was at the beginning of 2020. 

With most restaurants having now been more or less forced into building out off-premises strategies, ghost kitchens provide in many cases a faster, cheaper way to fulfill things like delivery orders. An accompanying slide the webinar breaks down just how much of the restaurant segment ghost kitchens could potentially capture:

  • 50 percent of drive-thru ($75 billion)
  • 50 percent of takeout ($250 billion)
  • 25 percent of dine-in ($450 billion)

That said, ghost kitchens are “one step” in an ongoing evolution, according to Schaefer. “As more and more of the foodservice environment becomes optimized for delivery, a generation of consumers growing up with smartphones becomes accustomed and habituated to being able to order literally anything from their smartphone. That is going to drive ever-more innovation,” he said.

That innovation will in all likelihood touch every aspect of the restaurant experience, from how food gets from kitchen to customer to the types of foods prepared to the underlying technology powering operations. Ghost kitchens are getting a ton of press right now because of the role they could play in helping restaurants keep the lights on as the pandemic wreaks havoc on traditional dining rooms. But, as this week’s webinar suggests, it’s important to remember that things are just getting started as far as ghost kitchens are concerned. 

Updated: DoorDash Did Not Violate the SF Commission Fee Cap for Restaurants

UPDATE 07/09 at 6:03 EST:

A representative from DoorDash sent the following statement to The Spoon: “We have corrected a separate error affecting fewer than 10 out of over a thousand of our SF restaurant partners and will be issuing reimbursements to these restaurants.”

UPDATE 07/09 at 5:37 EST:

San Francisco chef Christian Ciscle, who originally surfaced news suggesting DoorDash had violated San Francisco’s 15 percent cap on restaurant commission fees, sent an update this afternoon via Twitter: 

“UPDATE: Doordash called around 5:30- I fucked up. While the Merchant Info STILL said 30%, they were actually only taking 15% when I looked at the invoice. They never responded to my emails about it from weeks ago. But, hopefully those “10” Restaurants will get reimbursed.”

The Spoon has reached out to DoorDash for clarification and will post another update in the event of new information on this story.

PREVIOUSLY:

DoorDash looks to have violated the 15 percent cap the city of San Francisco put in place in April for the commission fees delivery services charge restaurants. Some businesses have reported getting charged unexpected 30 percent commission fees from the third-party delivery service after the caps went in place, according to the San Francisco Chronicle. 

DoorDash told the Chronicle that the charges were a mistake and that it will reimburse restaurants affected by said mistake. According to the delivery service, fewer than 10 restaurants were impacted, and those restaurants will be reimbursed.

However, Christian Ciscle, a San Francisco chef, said he had not been notified of any reimbursements “despite multiple calls to DoorDash.” 

Ciscle was the one to shed light on the issue via a screenshot posted to Twitter:

Normally (read: no pandemic), the commission fees services like DoorDash charge restaurants can reach as high as 30 percent per transaction, a point that’s been an ongoing problem in the world of restaurant delivery. When the pandemic shuttered dining rooms around the country this spring, the problem became a major focal point in the debate over the ethics of third-party delivery. 

San Francisco isn’t the only city to have introduced mandatory fee caps for delivery services. New York, Seattle, Chicago, and several others made similar moves in the recent past. Most of these fee caps are set to last so long as cities remain under emergency states due to COVID-19. That could be a while longer, given the record-setting number of cases the U.S. is now seeing.

DoorDash should absolutely pay back restaurants involved. However, let’s hold off a bit before we herald fee caps as the thing that will keep third-party delivery practices in check. They won’t. They’re necessary to some degree while restaurants are forced to do delivery and off-premises orders. But they’re still just a bandage on a much larger ailment, which is the convenience-driven, gig-economy-reliant model on which third-party delivery is built. Until some of delivery’s more fundamental issues, including the glaringly unprofitable nature of the model, are addressed, fee caps are just one in the crowd when it comes to problems for restaurants.

Shake Shack Will Teach You How to Run a Lemonade Stand This Summer

Shake Shack, the same chain that recently brought us DIY meal kits and to-go-only stores, this week introduced what’s maybe it’s weirdest pandemic offering yet: summer camp in a box.

Dubbed the Shack Camp Box, the kit contains a bunch of supplies with which to do craft-y activities, including food-related ones. The brand will run a virtual camp via its Instagram channel where folks can follow along through the summer. Build your own lemonade stand (complete with prompts on how to run a business), create ice cream sundaes, and other activities are on the agenda. The “camp” website also notes $75 worth of exclusive offers as a perk, so there’s doubtless some Shake Shack grub thrown into the mix, too.

Considering the various and strange ways restaurants are currently employing to connect with customers they can’t serve in dining rooms, a box of glorified swag doesn’t actually seem that outlandish. For those with kids, it might actually prove useful, since many summer camps have been cancelled and more kids are staying at home this year. 

There’s also a philanthropic angle to it, which means it’s hard to get too cynical here. The campaign supports The Fresh Air Fund’s virtual summer program that brings virtual camp activities to underserved children in NYC.

The Shack Camp Box is available as of today. Each box includes six activities and goes for $79 via the Shack Camp’s site. Corresponding Instagram videos start on July 13.

Shake Shack needs as much customer connection as it can get right now. Despite its efforts around improving its off-premises strategy during lockdown, the chain reported this week that second-quarter sales were down 49 percent as a result of both the pandemic and nationwide protests. In a business report released Tuesday, the company noted that “Shack sales were estimated to be negatively impacted by approximately $3.2 million in the fiscal period June due to nationwide protest activity and resulting curfews causing temporary Shack closures and reduced operating hours.”

The company has also had to re-close some stores because of the rise in coronavirus cases of late.

Virtual summer camp won’t be able to fix all the brand’s problems, but it is another example of a restaurant trying to redefine what the restaurant experience means, both right now and for the future. 

Fare Launches ‘Ethical’ Delivery Service in NYC With Zero Commission Fees for Restaurants

Restaurant delivery service Fare, which calls itself “an ethical and fair alternative” to third-party delivery, today announced its official launch in NYC. The company’s number one claim to fame right now is that it charges restaurants zero commission fees on orders because of its more local approach to food delivery.

Fare works with local restaurants around NYC, curating a menu of available options for customers to choose from based on their neighborhood. Given that, customers get a much more limited number of options to pick from each day compared to, say, Grubhub or Uber Eats. The company claims to taste-test every single menu that goes onto its site. It also says, via its FAQs, that if a restaurant’s food quality starts to slip, Fare will remove their menus from its site.

The service differs from third-party delivery apps in that orders need to be placed in advance, usually on the day before, through the Fare website. There is no minimum for orders. Fare then groups orders together by neighborhood, block, or building, and the restaurant drops the order off at each customer’s door within a designated 1-hour timeframe. 

Having the restaurant drop the order off itself is how Fare gets around charging businesses commission fees — which, as we’ve documented ad nauseam, can be as high as 30 percent per transaction with the major third-party delivery services. To make money on orders, the company says it charges customers a small service fee.

Fare’s localized approach to delivery is definitely an attractive option for smaller restaurants that primarily serve customers in their immediate vicinity and may not have the money to ink a deal with Grubhub. For customers, it might not be as convenient as using a major third-party delivery service, since orders have to be placed ahead of time and food choices are limited. The real acid test will probably be the convenience factor, which seems to drive everything in the restaurant industry nowadays. Will consumers be willing to sacrifice some of the “on-demand” aspects of food delivery to get a cheaper meal and ensure restaurants aren’t getting gauged with commission fees? The jury, as they say, is still out.

Fare is currently operating in Manhattan, Brooklyn, and Queens. 

Burger King Doubles Down on Tech, Delivery to Lure Finland Away From McDonald’s

Burger King Finland is at it again. The same QSR chain that brought us the “silent drive-thru” last year is now offering free delivery to Helsinki residents who are physically close to a McDonald’s but instead choose to order Burger King.

The so-called conquesting campaign uses out-of-home advertising and mobile technology to target McDonald’s users in an attempt to win them over to BK’s side of the fence. To do that, BK placed outdoor ads strategically near McDonald’s locations (see image above) and then partnered with local delivery service Wolt to turn these areas into delivery hotspots. The stunt was publicized with an influencer campaign, which ended July 1.

This isn’t the first time BK has employed tech to lure would-be McDonald’s customers away from the Golden Arches. In 2019, the chain used geolocation technology to prompt customers already inside McDonald’s to leave within a certain timeframe and get a 1-cent whopper. That promotion featured a whole tie-in with Pennywise the clown and the release of It Chapter Two, further gamifying the experience.

The Finland campaign comes at a time when  many places in the world are just now easing up on their lockdowns. Prior to this, out-of-home advertising hasn’t been all that effective since everyone’s been at home. One research firm predicted a decline in out-of-home advertising over the next few years, since this particular ad type relies on places like subway cars and bus shelters. But on that note, Adweek noted in April that brands were shifting their out-of-home advertising spend to focus on areas still getting foot traffic. Given the uncertain trajectory of the coronavirus and the threat of another lockdown ever present, it remains to be seen how effective this style of advertising will be over the long term.

One thing that could have a major effect: dining rooms shutting down again. McDonald’s has already announced it is halting its reopening plans for another three weeks in the U.S. BK’s contesting campaign is only focused in Finland right now, and wouldn’t actually rely on in-restaurant foot traffic at McDonald’s to work. Nonetheless, it’s another example of the pandemic’s far-reaching effects on the restaurant industry, right down to its advertising tactics.

In the meantime, the Finland campaign is at least an amusing tactic to lift the spirits. It’s also a way for restaurants to promote delivery at a time when many dining rooms are still shuttered and customers are still wary about actually setting foot in a restaurant. 

Uber to Acquire Postmates for $2.65B

Uber has agreed to acquire Postmates in a roughly $2.65 billion all-stock transaction, according to a press release from Uber. The deal is expected to close in the first quarter of 2021.

Uber first made the offer to buy Postmates at the very end of June, after a failed attempt to snap up Grubhub. According to sources close to the matter that spoke to Bloomberg, the two companies have actually been in talks on and off for about four years. 

The boards of both Uber and Postmates have approved the transaction, which is still subject to the approval of Postmates shareholders and also any regulatory approvals. Uber said in the press release today that it will keep the consumer-facing side of the Postmates app running separately from its Eats app, “supported by a more efficient, combined merchant and delivery network.” 

Acquiring Postmates would give Uber a larger presence in certain key markets, like Los Angeles, where Postmates is the leading third-party delivery app. In the past, Uber has said it will pull out of markets where it is not the number one or number two player.

Today’s deal is another piece of evidence that third-party delivery is consolidating fast. Grubhub itself was acquired by the newly formed Just Eat Takeaway.com in June. Elsewhere, Delivery Hero recently bought South Korean service Woowa Bros. for $4 billion and Brazil-based iFood announced a merger with Colombian delivery heavyweight Domicillios.com.

Notably, DoorDash, which is still the U.S. leader in terms of marketshare for third-party delivery, has not come up in this M&A flurry. At last check, the company secured an additional $400 million in funding. It filed to go public in February and still plans on a listing for 2020.

Week in Restaurants: A Classic SoCal Diner Goes Off-Premises, Dom’s Still Checking Pizzas

Why are you reading this and not grilling up a delicious Beyond Burger this holiday weekend?

As long as you’re here, let’s take a quick look at the week in restaurants. And what a week it was. With states halting the reopening of dining rooms, it’s clear the effects of the pandemic are far from over in the restaurant industry. Yet business keeps on, and there were a number of noteworthy developments from this week around ghost kitchens, AI pizza checkers, and the greatest diner of all time.

New NORMS

NORMS, a much-loved diner chain in Southern California, this week debuted NORMS Junior, a new store prototype geared towards to-go orders. The company says NORMS Junior will be the model for future NORMS locations — no surprise, given the pandemic’s effect on dining rooms (see above). NRN has some great slides of what this new NORMS will look like.

Next Stop for Wingstop: Ghost Kitchens

Also riding the off-premises wave strong is fast-casual chain Wingstop, who this week opened its first ghost kitchen in its hometown of Dallas, TX. The new facility is less than 400 square feet and is for delivery-only orders. Wingstop says one of its goals is to digitize 100 percent of its transactions. A delivery-only ghost kitchen will aid in that.

Taco Bell Redoes Digital Rewards

Simply dubbed Taco Bell Rewards, the new app-based loyalty program comes five years after the band’s original rewards program. Apparently the idea of a new loyalty app was so popular it sent Taco Bell traffic through the roof and temporarily crashed the site. To access the new rewards program, customers can download the latest version of the Taco Bell app, which includes a beta version of Taco Bell Rewards.

AI Will Continue Checking Your Pizzas

Domino’s and Dragontail Systems said this week they will continue their partnership, which puts Dragontail’s AI tech in Domino’s restaurants to ensure quality. The smart scanner uses advanced machine learning, artificial intelligence, and sensor technology to check the quality of pies before the go out for delivery. (Dragontail’s tech can also be used to ensure proper sanitization in restaurants.) The continuation of the partnership means more of these pizza scanners across more Domino’s locations. So far, the partnership between the two companies has been limited to Domino’s locations Australia. They have not yet said if this extended partnership will bring the technology to stores elsewhere in the world.

Pudu Tech Raised More than $15M as the Server Robot Space Heats Up

Pudu Technology, which makes autonomous server robots used in hospitality settings, announced yesterday a funding round of more than $15 million, according to VentureBeat.

The Shenzen, China-based Pudu makes a number of self-driving robots equipped with a rack of trays to shuttle food and drinks to and from customers inside a restaurant. Pudu introduced the BellaBot, which sports cat-like features and even makes a cute LED-face when you pet it, at this year’s CES.

Pudu’s funding comes at the right time, as the COVID-19 pandemic has forced restaurants and bars to reduce the amount of human contact during table service. Server robots like Pudu’s provide a way to reduce at least one point of human-to-human interaction while dining out.

But Pudu will also need the funding because the robot server space is getting increasingly crowded. In the VentureBeat story, Pudu claims has 2,000 customers including Sheraton and JD.com, across 20 countries. Rival Keenon Robotics, server bot company based in China, says that it has 6,000 robots in action and that it can produce 30,000 robots a year.

Over in Korea, Woowa Bros. partnered with consumer electronics giant LG to develop and expand its robot waiter program. In Spain, Macco Robotics launched its Dbot modular server robot. And here in the U.S., Bear Robotics, raised $32 million earlier this year for its Penny robot server.

All of this is to say that there are a lot of companies looking to bring robot servers to your restaurant. So much so, that as I wrote back in February, they could become a commodity:

It feels like restaurant server robots are on their way to becoming less of a novelty and will soon be a commodity. They all do the same thing — carry food. They are meant to do the grunt work so humans don’t have to. So the feature set will be the same: Take food to table > carry food without spilling > avoid humans and other obstacles along the way.

Sure, there are enhancements that can be made, or perhaps there’s a unique way to move food from the robot to the table. But there really isn’t much else for the robot to do. Server robots will become a commodity, and whichever company creates the cheapest robot that does a decent job will win.

Given the debate and debacle around re-opening restaurants here in the U.S., and restaurant workers test positive for COVID, we could see a rise in demand for restaurant robots. And it looks like there are plenty of companies ready if that demand comes.

McDonald’s Halts Reopening Plans. Here’s What That Could Mean for Restaurants and Restaurant Tech

McDonald’s is pausing its reopening plans for dining rooms for three weeks following a rise in coronavirus cases around the U.S., according to The Wall Street Journal.

To be clear, the mega-chain isn’t (yet) re-closing dining rooms that are already opened. The WSJ reports that McDonald’s restaurants that have already reopened may continue offering dine-in service “if their jurisdiction allows it.” Right now, roughly 2,200 of the 14,000 U.S. locations are open for dine-in service. 

But it could well mean that all newly reopened McDonald’s dining rooms will have to shutter again in the near future. The McDonald’s news comes as some U.S. states are seeing new surges in coronavirus outbreaks. Texas, Florida, Arizona, and California lead in terms of the number of new cases. 

In response, restaurants that had already reopened or were planning to are instead having to grapple with another shutdown. California governor Gavin Newsom ordered the closures of all reopened bars and restaurants (among other businesses) in 19 counties. New York City halted its plans to reopen indoor dining on July 6, and Texas put the brakes on its own plans about a week ago. 

McDonald’s pausing its reopening plans nationwide in response to all this will undoubtedly influence other national restaurant brands that have already reopened some stores. 

But like everything else about this virus, when it comes to these re-closures, confusion reigns supreme. In some states, only bars are closed. In others, like California, stops to reopening plans only apply to certain counties. And some businesses are voluntarily closing their doors.

All of this makes for yet-more uncertainty for restaurants, particularly independent businesses that have been struggling to keep the lights on for the last couple months. The hope is that more restaurants are better equipped to deal with dining room closures, now that they’ve been through the process once and have (hopefully) implemented to-go strategies to offset some of the lost revenue. But that feels overly optimistic, given how badly the pandemic has already decimated the restaurant industry.

It also calls into question the long-term viability of some front-of-house-focused restaurant tech solutions that rushed to unveil “contactless dining room” packages. If more states hit the pause button on reopening plans, companies like Presto, Paytronix, and Sevenrooms may again have to pivot in order to remain relevant.

The Good, the Bad, and the Ugly of Deliveroo’s New Table Service Feature

U.K.-based food delivery service Deliveroo launched a new feature this week that sounds convenient on the surface but could cause some problems for more than one party in the restaurant biz. This “Table Service” feature, as it’s dubbed, is meant “to help restaurants reopen safely to dine-in customers and help the recovery of the sector,” according to a company blog post. The feature is available on July 15.

In terms of how it works, the feature is simple: Customers sit down at the cafe, restaurant, or bar, pull up the existing Deliveroo app, and order their food with the Table Service feature, rather than directly interfacing with a server. Payment also happens in the app, so that all the restaurant staff (theoretically) have to do is cook the food and bring it out to the table.

Here’s the good of this new way of operating dining rooms:

If you’re an existing Deliveroo user, it’s convenient. You don’t have to download yet-another mobile ordering app, and since this is table service, not delivery, the extra fees third-party services tack onto orders should be minimal. Deliveroo also said in its blog post it will charge zero commission fee to the restaurant on these orders.

Without a doubt, there is also a level of social distancing built into this concept that will be safer for both restaurants and customers. Being able to sit down and order a meal from your phone gets rid of long lines and crowding near a cash register, and it does, to a degree, minimize customer-to-server interactions.

But on that note, here’s what’s less awesome about Deliveroo’s new feature:

It’s not as socially distanced as the hype would have you believe. Someone has to run the food and be available to refill drinks or assist if there is a problem with the meal. (“I said fries, not salad!”)

This isn’t a Deliveroo-specific problem. All restaurants and restaurant tech solutions have to account for the fact that in any sit-down dining experience, you can’t get away from at least some customer-to-staff interactions. I don’t think Deliveroo, or any company, is promising to completely eradicate those interactions. The company blog post specifically says “minimising in-person contact.” Even so, it’s something to keep in mind as more companies come to market with these contactless solutions for dining rooms. 

More worrying is what a feature like Deliveroo’s Table Service means for restaurant tech companies. Like I said, tech companies, and even non-tech companies, offering contactless dining room solutions have multiplied in the last several weeks. Sevenrooms, Presto, Zuppler, this signage company, and many others offer restaurants the technical means to let guests order and pay from their phones in the dining room. Paytronix has a system that even lets you keep your virtual “tab” — that is, ticket — open so you can order another round of drinks or dessert without making multiple transactions.

If third-party delivery starts offering order and pay features for the dining room en masse, it could be a serious competitive threat for these companies. 

Most alarming about this new feature is what it means for customer data. Ownership of customer data is already seen as a huge issue with third-party delivery services. If restaurants can’t see data about what their customers are ordering, when they’re doing it, etc., they’re less able to cater to exactly what those customers want when it comes to food. 

Deliveroo owning the customer data in the dining room could potentially mean restaurants wouldn’t get the feedback they need to deliver good service that’s enjoyable and simultaneously safe in this pandemic-stricken era. 

A while back, one restaurant tech CEO told me that the COVID-19 pandemic should be treated as “a wakeup call” for restaurants when it comes to their data. In his view, these restaurants need to “to rethink how they’re connecting digitally with their customers.” This is likely to become even more important going forward as governments encourage contactless technologies in restaurants and more customers gravitate towards using their phones for browsing and buying from restaurant menus.

So before you restaurants go signing up for Deliveroo’s new model for the dining room, consider first your digital relationship to your customers, how you treat your customer data, and, most important, how willing you are to part with it when it comes to the newly reopened dining room.