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The Spoon

Daily news and analysis about the food tech revolution

The Weekly Spoon

And Now, a Moment for Culture(d Meat)

If you’re doing it right, your Thanksgiving leftovers should be gone by now (so many turkey+stuffing+gravy sandwiches!).

Evidently, preparing for Thanksgiving in the middle of a year-long pandemic was a “logistical nightmare” for BIG TURKEY (Butterball, Perdue, Foster Farms, etc.), thanks to labor shortages and reduced family gatherings.

This got me wondering how long it will be before we see lab-grown, cultured turkey on the tables. Sure, cultured meat still has to overcome issues around scale, affordability and widespread governmental approval. And there are some who doubt whether cultured meat will ever become a thing at all.

But as an industry sector, cultured meat’s march towards our dinner table continues to make gains. Just this week, Eat Just announced today that it received the world’s first regulatory approval to sell cultured chicken in Singapore. And that’s just the latest development capping off what has been a robust year in the cell cultured meat space that has also featured:

  • Meat-Tech announced that it had successfully 3D-printed a cultured beef fat structure composed of bovine fat cells and bio ink grown from stem cells
  • Future Meat is using fibroblast cells to help bring down the cost of cultured meat
  • SuperMeat opened up a restaurant that serves its cell-based chicken (in exchange for your opinion)
  • NovaMeat started testing its 3D printing technology on cell culture + plant-based meat hybrids
  • BioBQ is developed cell-based brisket
  • Vow is developing a cell-based meat platform portfolio that includes goat, pork and kangaroo
  • BlueNalu announced it’s opening a new production facility next year for its cultured seafood
  • Mosa Meat said it achieved an 80x reduction in medium cost for creating lab-grown meat
  • Higher Steaks created the world’s first lab-grown bacon and pork belly

And that doesn’t even include the Ouroboros Steak art project that designed a kit for creating cell-based human meat. (Relax, it’s not real.) (We hope.)

While 2020 has been a pretty garbage year for the most part, that just hasn’t been the case for cell-based meats. As you can see from the assortment of stories, lot of companies are working on the problem from a lot of different angles, and all of them are making progress.

Now, we won’t be serving lab-grown turkey next year (or, presumably the year after that), but watching all these startups innovate on food tech that could help make food production more abundant and equitable is something to be thankful for.

Upcoming Virtual Events from The Spoon

The Ghost Kitchen Deep Dive – December 9th – An all day event looking at the fast-changing ghost kitchen & virtual restaurant market.

Food Tech Live 2021 – January 11th – Check out the latest food tech innovation to start 2021 at our annual food tech product showcase.

Tetra’s Tiny Dishwasher (Finally) Headed to Market

Heatworks’ Tetra countertop dishwasher is an example of a product that I totally don’t need and yet totally want.

We first covered the Tetra back at CES 2018, where we were enthralled by the diminutive dishwasher that could clean a few settings of dishes with only a half gallon of water in ten minutes. Fun!

Well, things have been quiet on the Tetra front since that CES and we were wondering if the device would ever actually make it to market. Turns out, the company was trying to solve the complex issue around soap dispensing in its machine.

This week, Heatworks announced that it has partnered with BASF to make that complicated mechanism and bring the Tetra to market. According to the press announcement, the improved Tetra “will be designed to deliver custom solutions and dosing, dependent on the selected wash cycle, ensuring each cleaning cycle is optimized. Tetra’s cartridges will last for multiple loads and consumers will be able to sign up for a subscription, so that cartridges are shipped to them automatically.”

That last part about a proprietary soap cartridge is a bit of a bummer. We’re not a big fan of Keurig-style solutions that lock you into a particular ecosystem. But we are happy to see that the Tetra is still alive and expected to be available in the back half of 2021.

Blendid.com, Jamba Juice, Walmart, AI, Robot, Smoothy, Kiosk, Dixon, Ca, 111220

More Headlines

Exclusive: Blendid and Jamba Co-Brand New Smoothie Robot – The robot is now open for business at a Walmart in Dixon, California. This is the first co-branded robot from Blendid and its second to open up at a Walmart.

Zuul Teams Up With Thrillist to Launch Rotating Ghost Kitchen – A series of 10 different NYC restaurants will each hold a two-week residency offering exclusive delivery-only meal offerings made out of Zuul’s ghost kitchen facility in Manhattan’s SoHo neighborhood.

The Spoon’s Plant-Based Egg Round-Up – Plant-based eggs are poised to become the next big thing in the plant-based space, and it can be hard to keep up with all of the companies involved in this industry. We’ve pulled together some of the emerging and bigger players in this space.

3D Meat Printing Startup SavorEat Goes Public – The Israeli startup has had an initial public offering (IPO) on Tel Aviv Stock Exchange (TASE), raising NIS 42.6 million ($13 million) in funding.

HungryPanda Raises $70M to Provide Food Delivery to Overseas Chinese Customers – The London, U.K.-based company will use the new funds to continue its global expansion, delivering authentic Chinese restaurant food and groceries to Chinese people living abroad.

It’s Been Big Week for Grocery Delivery Robots

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You know how last week felt like it dragged on forever? Well, food tech companies sure made up for that lost time, because once Monday hit, our desk was pelted with a flurry of announcements.

One food tech area that was particularly busy this week (and it’s only Wed.), was grocery delivery. More specifically, grocery delivery via robots. Now, I’m using the word “robot” a little loosely here, but mostly that’s because it packs a little more punch than saying “It’s been a big week for grocery delivery across a variety of different autonomous and remote controlled vehicle formats.”

Things kicked off on Monday with Nuro’s announcement that it had raised a $500 million Series C round of funding. Nuro makes the autonomous pod-like R2 vehicle that got the greenlight from the federal and California governments to operate on public roads. Nuro has been doing self-driving grocery delivery tests for biggies like Kroger and Walmart.

That news was followed on Tuesday when Self Point, a digital commerce platform for grocers, announced a partnership with Tortoise. Through the deal, Self Point’s retail customers will be able to offer grocery delivery via Tortoise’s teleoperated robots.

Walmart itself then jumped into the news cycle with the announcement that it has partnered with Cruise to pilot the use of that company’s electric, autonomous car fleet for grocery delivery in Scottsdale, AZ.

Now, each of these tests are small, so chances are good that you won’t see robots on your sidewalk anytime soon. But these stories, along with Starship’s recent launch at Save Mart in Modesto, CA, all illustrate how the use of robotics is being accelerated in grocery.

Grocery is actually a pretty good use case for robots. First, the pandemic’s continued presence has pushed record number of people to grocery shopping online. This in turn will spur an increase in grocery delivery. As we saw early on in the pandemic, it didn’t take much to overwhelm the delivery capacity for the likes of Amazon, Kroger and Fresh Direct. Having more delivery options like robots will give retailers more throughput.

Additionally, robots are good for grocery because speed is less of an issue. If you order a burrito or a latte for delivery, you want it as fast as possible. But if you’re stocking up for the week, scheduling your delivery out for later that same day or even the next day isn’t that big a deal.

As exciting as all this robo news is, it will still be a while before there are full-on fleets of robots bringing bags full of groceries to our front door. But as this week’s news shows — it won’t feel like forever before robots are here.

Will Biden Be a Food Tech President?

With the election (mostly) behind us, it’s time to think about what a Biden Administration could mean for the food tech industry. Spoon Founder Mike Wolf took some time to map out what the President Elect might do for food, and made a few suggestions, including the creation of a “Food Innovation Czar.” From Mike’s piece:

While “Czar” appointments in the U.S. government don’t usually mean they are heads of agencies, they often come with fairly broad administrative power. In fact, one of the first appointments of a Czar by the Republican party was a “Food Czar” that looked to put broad oversight power of food pricing during the Second World War.

What would a Food Innovation Czar do? They could focus on the current food system fragility, encourage the digitization of the food supply chain, and encourage legislation and funding for new food innovation initiatives. They would also help highlight innovative new approaches, organizations, and creators who are building food future and encourage private sector investment.

He also explores tax cuts for farmers to encourage the use of new technologies, an advisory council with food tech rock stars like Jennifer Doudna of CRISPR fame, and even installing a vertical farm at the White House.

You can see Mike’s full story here.

More Headlines

Zero Egg Raises $5M for Its Plant-Based Egg Product – The eggless egg product is made from pea protein and nutritional yeast and just launched in the U.S. last month.

Highpper Aims to Make Standalone Robot-Powered Restaurants-in-a-Box – The Israeli company says it will launch its first branded pizza robo-restaurant in June.

Beyond Q3 Earnings: The Company ‘Co-Created’ the McPlant, Will Launch Version 3.0 of Its Burger – It was a roller coaster couple of days for the plant-based burger giant as McDonald’s hemmed and hawed about who exactly will be supplying the McPlant.

Spyce Kitchen Relaunches with All New Robot Kitchen, Dynamic Menu and Delivery – The restaurant, now open in Boston, is built around a re-designed “Infinite Kitchen” robot.

McDonald’s Is the Latest QSR to Embrace the Drive-Thru-Centric Restaurant Format – McDonald’s unveiled a long-term growth strategy that includes a new loyalty program, more AI and machine learning in the drive-thru lane, and revamped formats for future locations.

In-House Delivery Needs to Disrupt Delivery

Some of the talk at last week’s Smart Kitchen Summit revolved around two newish concepts that are especially compelling when it comes to thinking about restaurants: in-house delivery and disrupting third-party delivery. Together, the two could substantially shift the the off-premises meal journey of the future.

Technically, in-house delivery — also called “native delivery” or “direct delivery” — is a decades old practice championed by Domino’s, Jimmy John’s, and other restaurants that have always used their own staff to ferry orders to customers’ doorsteps. But ever since customer demand for delivery went through the roof and then some, most restaurants have found it more economically feasible to offload delivery operations to third-party services like DoorDash and Uber Eats. 

As we cover ad nauseam around here, third-party delivery comes with its own lengthy catalog of grievances, and many restaurants don’t actually make money from those orders. On top of that, they lose control of customer relationships and oftentimes their own branding. 

In-house delivery 2.0, then, is all about restaurants bringing some of that control back under their own rooftops. One SKS panelist mentioned fast-casual chain Panera as a pathbreaker in this area, as the chain still uses its own drivers for many of its orders and only offloads the technical logistics of processing an order to third parties. Bloomin’ Brands, parent company of Outback Steakhouse and Carrabba’s, also handles many of its delivery orders in-house, and Panda Express recently launched its own program that handles the entire delivery journey, from order processing to food transport.

Simultaneously happening is the rise of services like ShiftPixy, which use their technology to power custom-branded websites for restaurants that can process ordering and payments. ShiftPixy also works with restaurants to provide them with drivers, erasing third-party delivery from the process.

All of these approaches to in-house delivery were mentioned during SKS. In a discussion about the rise of ghost kitchens and virtual restaurants, one set of panelists agreed that in the future we will see a wider range of restaurants — major chains and independent mom-and-pop stores — gravitate to in-house delivery as a way of controlling their customer relationships and branding, to say nothing of dodging predatory commission fees from third-party services.

The mention of mom-and-pop shops is important to note. Right now, most can’t afford to build out their own mobile ordering and payments system and pay employees to deliver the food. That territory currently belongs to the Paneras and Panda Expresses of the world, which brings me to our second point: disrupting third-party delivery.

At SKS, more than one person I spoke to predicted that the act of unseating third-party delivery apps’ dominance over restaurants won’t come from imposing more rules and regulations, but from someone bringing a better, cheaper solution to the table. As more restaurant chains with deep pockets take back more of their delivery stack, those solutions might very well surface in the process. 

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Del Taco Is Launching a Drive-Thru-Only Concept

Following in the footsteps of KFC, Chipotle, Burger King, and other chains, Del Taco is doubling-down on the drive-thru as an important source of sales in the future. The Lake Forest, Calif.-based chain announced on its recent Q3 earnings call it will build a drive-thru-only prototype that can be placed at Del Taco locations with a smaller physical footprint. CEO John Cappasola said during the call this prototype will include “a modernized design, improved functionality, and other operational enhancements,” though he didn’t get more specific than that.

If this story sounds somewhat familiar, it’s because other chains have made similar announcements in the recent past. Most notable among them is Burger King, who several weeks ago announced its own drive-thru-centric design prototype meant to take up less physical space and serve more drive-thru orders in a shorter amount of time. 

Drive-thru has been the most important sales channel for QSRs during 2020’s lockdowns and continued uncertainty over the dining room. However, QSR Magazine’s recent 2020 Drive-Thru Study found that drive-thru times are nearly half a minute slower than they were last year, so it’s not a surprise more chains are redoubling their efforts to make the experience faster and more efficient. With winter fast approaching, outdoor dining is about to get way less appealing to consumers in many regions. Chains will need every order they can get from drive-thru, curbside, and other off-premises channels to make up for lost sales in the dining room/patio over the next several months.

Restaurant Tech ‘Round the Web

A wider slowdown could erase up to 2 million jobs restaurant and retail, according to new research from Gusto cited by Restaurant Dive. The losses could total roughly $190 billion.

Following openings this year of three off-premises stores in Chicago, P.F. Chang’s will expand its to-go-concept to 27 locations by 2021. The company is also testing an in-house delivery service at 10 of its locations in the U.S.

As we reported this week, Burger King is piloting reusable cups and sandwich containers in New York, Portland and Tokyo next year. The program is being done in partnership with TerraCycle’s Loop, which is also doing the McDonald’s reusable cup trial in the U.K.

Augmented Reality Bites

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

Virtual food hall, meet the augmented-reality restaurant menu. You’ll soon be best friends.

Hear me out.

Over these last few weeks, multiple news bites around virtual food halls have surfaced. These food halls are collections of restaurants that exist online and where meals are only available for delivery and pickup. They are in many ways a natural effect of the pandemic shutting down dining rooms and the restaurant biz going off-premises.

The latest one comes from Lunchbox. This week, the company integrated its online digital order platform into C3’s virtual restaurant brand ecosystem to bring a bunch of different delivery-only eateries under one virtual umbrella.

Being able to order a plant-based burger, chicken, and maybe a rice dish through a single digital interface sounds great until you zero in on that word digital. One of the potential problems with this new wave of virtual food halls is that customers will never have the chance to actually visit these restaurants in person. Your introduction to their food comes in the form of 2D thumbnails you have to scroll through on your phone and squint at to even get an inkling of what you’re about to order. If you’re familiar with the restaurant that’s less of an issue, but most virtual food halls and brands are new, and ordering from them is something of a culinary gamble.

Enter augmented reality (AR), a technology some say is the next great innovation for restaurant menus. Modern Restaurant Management ran a piece this week exploring the possibility of customers using their own smartphones to display 3D models of the food they are about to order. With AR, instead of a small, flat, 2D image, a user could “see” how the dish looks on their table, zoom in on it and view it from multiple angles to get a much better idea of what they’re about to buy.

I should note that the Modern Restaurant Management Post was authored by Mike Cadoux of augmented reality platform QReal. In other words, Cadoux’s has skin in the AR game.

But he makes a good point when it comes to thinking about AR in the context of the new off-premises reality in which restaurants now operate: “Early adoption of AR was hindered by the problem of getting the experience to the customer. People are loath to download apps, and delivery platforms had to service thousands of restaurants, most of which wouldn’t have access to 3D models. Now a restaurant or brand can push their own content to the customer. They would be wise to utilize all the smartphones capabilities and showcase their food with the next-generation of content.”

Spoon Editor Chris Albrecht actually spoke with Cadoux back in August, when QReal released a study with Oxford University’s Saïd Business School that found participants were more likely to order an item if they could view options in AR. “It’s like a test drive for a car,” Cadoux told The Spoon at the time. “Same way when you buy food, you want to think about what it’s like to eat it.”

The tech makes especially good sense for virtual food halls. As I said, these restaurants do not have dining rooms, so customers are relying solely on the digital realm to learn about the food. If, for the sake of argument, Lunchbox and C3 were to integrate AR into their ordering platform, they could better showcase the “fine dining” aspects of their food and in doing so make their meals more appetizing. Everyone else, from Zuul’s virtual-only sandwich chain to Steve Aoki’s pizza brand, could also reap the benefits of AR in the virtual restaurant realm.

AR is not yet mainstream, and its presence in the restaurant industry is still largely forthcoming. But since one pandemic year seems equal to five normal ones, an AR-powered food hall may be closer than we think.

Uber Engineer Says “No” to Uber’s Prop. 22

Californians, take note. One of the things those in the Golden State will vote on come November is Prop. 22, a $180 million ballot measure that would allow third-party delivery services to classify drivers as independent contractors. The measure would effectively override California’s Assembly Bill 5 (AB 5), which was signed into law last year and dictates that Uber, Grubhub, and other gig-economy companies must classify drivers and couriers as employees. 

Classifying them as independent contractors means delivery drivers would lack access to workers comp., paid sick leave, and other benefits W-2 employees receive. It goes without saying that a lot of folks are against Prop. 22. One of them is an employee at Uber.

Kurt Nelson, who’s been a software engineer at Uber since 2018, penned an op-ed at TechCrunch this week that argues drivers should be classified as employees. Nelson, who still makes deliveries for app-based companies in order to understand the gig economy, writes that Uber “refuses to obey” AB5 and instead prefers to “write a new set of rules for themselves” with Prop. 22. 

Among many other notable lines, there was also this gem about the gig economy: “I’ve met drivers who have to sleep in their cars, risk financial ruin over a single doctor’s appointment or go without life-saving medication. There’s no way around it. Uber’s Prop 22 is a multi-million effort to deny these workers their rights.”

You can read the piece in its entirety here. Uber has yet to make any public response to Nelson’s op-ed, so stay tuned.

Restaurant Tech ‘Round the Web

Kitchen United CEO Jim Collins has stepped down to “focus on personal endeavors,” according to Nation’s Restaurant News. Collins played a major role in turning KU into one of the leaders of the ghost kitchen space. Michael Montagano, KU’s former chief financial officer and treasurer, has been named CEO.

Mobile POS platform GoTab launched an integration with hospitality labor management system 7shifts. The combined offering gives restaurant owners/operators the ability to view sales and labor data from the same interface.

Meal prep software company Meallogix announced a partnership with DoorDash this week. A press release sent to The Spoon notes that the deal gives Meallogix’ customers the option of using the third-party delivery service to manage their routes for the last mile of delivery.

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.

Time to Recirculate the To-Go Cup Debate

Since we now live in a world where the to-go order is the main attraction at restaurants, we need to start treating the issue of excess single-use packaging with a whole lot more urgency.

Clearly I’m not the only one to have that thought, as two major QSR chains made sustainability announcements of their own this week. Both are aimed at reducing the amount of plastic that winds up in landfills and the ocean — no small feat considering the billions of single-use cups, straws, and containers we throw out each year, thanks in no small part to the convenience-driven delivery and to-go craze. 

On Thursday, Starbucks, sent out an update saying its “strawless lids” are now “the standard for iced beverages” at stores in the U.S. and Canada. The lids use roughly 9 percent less plastic than the normal lid-and-straw combo. The rollout of these lids applies to company-owned and licensed Starbucks stores, and is expected to be completed by the end of the month. Straws will still be available upon request. 

It’s an important milestone, especially considering Starbucks is arguably responsible for the populace’s current fixation with fancy drinks in plastic or plastic-coated cups. But it doesn’t actually remove single-use plastics from equation.

The latest initiative from McDonald’s does. This week, the company announced a partnership with zero-waste platform Loop to create a reusable cup program at McDonald’s locations in the UK. Users can opt for a reusable cup, for which they leave a small deposit that’s retrieved when they return the cup. Loop collects the empties, washes and sanitizes them, and puts them back into circulation. The concept is reminiscent of Dishcraft Robotics’ “dishes-as-a-service” model, which recently added reusable takeout containers to the items it collects, washes, and returns to the foodservice loop.

The obvious drawback here is that putting down a deposit at McDonald’s and then taking the time to return the cup is inconvenient. Inconvenience doesn’t sell with many consumers these days (which is another separate issue itself). 

A reusable cup system is, however, a bolder move than simply reducing plastic, and bold moves are what we need right now to get excessive packaging out of the foodservice world. That the McDonald’s pilot is coming from a multi-billion corporation with a $4 billion digital business is encouraging. But to become widespread, the entire restaurant industry is going to have to pitch in, from the major chains and supply companies to delivery services, mom-and-pop stores, and consumers themselves.

That’s no small ask at a time when the restaurant industry is utterly crippled from the pandemic and small chains and independent restaurants are permanently shuttering at an alarming pace. But with off-premises orders being the future of restaurants for the foreseeable future, no one can afford to shelve the glaring issue of single-use packaging for much longer, not without risking further environmental consequences.

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

Zomato Raises $100M, Plans IPO

Zomato, one of India’s largest food delivery services, announced this week it has raised $100 million from Tiger Global and is preparing for an IPO in 2021.

The news is just another layer of development to what’s been a very busy year for Zomato. The company bought Uber Eats’ India business in March, raised a $5 million Series J round in April, and unveiled a grocery delivery service in the same month. It had to cut 13 percent of its workforce in May (thanks, pandemic), but things are clearly looking up for the service, as it raised $62 million from Temasek and just days ago said in a blog post that “recovery trends are strong.”

A prospective IPO is another sign of that recovery. In a letter to employees reviewed by TechCrunch, Zomato co-founder and CEO Deepinder Goyal set “sometime in the first half of next year” as a timeline for said IPO. At the moment the company has “no immediate plans” on how it will spend the investment from Tiger Global, if it spends it at all. Goyal called the cash a “war-chest” for future M&A and for fighting price wars from competition.

Given that Zomato competes fiercely with Swiggy for the Indian food delivery market, and given the consolidation the entire third-party delivery industry is undergoing, having a war chest doesn’t seem like a bad move right now.

Restaurant Tech ‘Round the Web

Fast-casual chain Sweetgreen this week launched Collections, a new digital-only menu available through the restaurant’s app and website. According to a press release sent to The Spoon, menu items are curated according to specific themes and dietary preferences/restrictions, and will make recommendations that are unique to each individual customer.

Order-ahead platform Allset has teamed up with digital ordering platform Olo to streamline the pickup order process for participating restaurants. Olo’s system lets restaurants manage menus, pricing, and order fulfillment across multiple third-party platforms, thus creating fewer manual workflows for restaurant staff.

Starting Sept. 30, NYC restaurants will be allowed to operate indoor dining rooms at 25 percent capacity. The announcement, made by Gov. Andrew Cuomo this week, comes just as the city gears up for the colder days ahead that will limit outdoor seating for most businesses.

Is Your Restaurant Ready for Ghost Kitchens?

Ghost kitchens. You’ve heard about them nonstop since the pandemic overturned the foodservice industry and forced almost every restaurant in the country to go off-premises. And with the fate of the restaurant dining room still very much uncertain (see below), we’ll see more restaurants turn to the ghost kitchen model in the future.

That’s a nice blanket statement, but which restaurants, exactly, should use ghost kitchens? And there being more than one kind of ghost kitchen, which do they choose? Where do they locate? Will it affect franchisees?

I could go on, but instead, I’ll point you to our latest report, The Spoon Plus Guide to Ghost Kitchens. In it, I address all of the above questions (spoiler alert: ghost kitchens do affect your franchisees) and many more in an effort to understand just how widely ghost kitchens will serve the restaurant industry in the future. I’ll leave you to read the report for more how-tos and considerations on opening a ghost kitchen. In the meantime, here are a few things driving the growth of this potentially $1 trillion market:

  • Virtual restaurants. Soaring rents, high operational and labor costs, one pandemic and a lot of economic uncertainty make the idea of running a delivery-only brand attractive. After all, they don’t need a front of house to function and live solely in the digital realm, which is where most customers are the days anyway.
  • Off-premises everything. There’s no telling when — or if — restaurant dining rooms will again function at the scale and capacity they did before COVID. By now, consumer habits will have shifted farther towards pickup, delivery, drive-thru, and curbside orders. They may not shift back once we can (safely) venture out again.
  • Demand for delivery. Love ‘em or hate ‘em, third-party delivery aggregators keep getting bigger, and that’s not likely to change anytime soon. Many of these companies’ services are built right into the monthly membership of ghost kitchens, making them, for better and for worse, an obvious choice when it comes to fulfilling the aforementioned off-premises orders. 

But don’t sign your business away to a commissary space just yet. Certain parameters have to be in place in order for restaurants to justify the cost of doing a ghost kitchen. Kitchen United, ChefReady, Fat Brands, and other food industry leaders give their thoughts in the report on how to get your business ready for ghost kitchens.  

Grab yourself a Spoon Plus subscription to read the full report. And let us know what you think.

Yelp’s Latest Restaurant Data Is Alarming

Almost 16,000 restaurants have permanently closed, according to new data from Yelp that came out this week. In the site’s latest Economic Average Report, restaurants surpassed retail as having the highest rate of permanent closures.

Bear in mind, those numbers are only for restaurants listed on Yelp. It will be a long time before we know the exact number of total restaurant closures around the U.S., though plenty of other organizations have released their own data sets that give us an idea. For example, a June report from the Independent Restaurant Coalition found that as many as 85 percent of independent restaurants couLd shutter by the end of the year. And at least 3 percent of restaurants overall have alreadyclosed, according to the National Restaurant Association.

Beyond the closures themselves, what’s alarming about Yelp’s data is that it also found “a statistically significant correlation” between consumers’ interests in restaurants and other businesses and an increase in COVID cases. In other words, more people going to restaurants means a higher risk of the coronavirus spreading, which seems obvious but also puts restaurants in something of a catch-22. Many restaurants still need foot traffic to survive, but that foot traffic is a public health risk that, to get really Doomsday, could eventually lead to widespread shutdowns once again. Then nobody wins.

As we say ad infinitum these days, switching to off-premises formats is the surest way to stay in business without putting customers’ health at risk. But this is not a simple pivot for everyone, and as the industry reinvents itself for this to-go-centric era, I’m afraid many more restaurants could go by the wayside. So if you’re able, support your local indie restaurants by ordering a takeout meal every once in a while. Don’t forget to tip the staff.

Restaurant Tech ‘Round the Web

Clean Juice launches a new app with Lunchbox. Juice Bar franchise has teamed up with restaurant tech platform Lunchbox on a new app that services pickup, curbside, and, for the first time, delivery. 

Wendy’s launches a loyalty program. In a bid to compete with the McDonald’s and Burger Kings of the world, Wendy’s finally launched its own digital loyalty program. Customers earn points by ordering directly through the Wendy’s app, not through third-party delivery services.

Sonic has a new Alexa skill. Amazon and Sonic have partnered to give Sonic a new skill for Echo and Alexa devices. Customers can ask things like “Alexa, ask Sonic for a nearby location” in order to make the process of finding stores and new menu items faster.

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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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My Other Phone Is a Restaurant

The surprise hit story on The Spoon this week has been our recent post on Mexico City-based remotekitchen, a startup that’s building a mobile-first restaurant-tech platform that, theoretically at least, only needs a smart phone to operate. 

I highlight this story not because I think every restaurant needs to pare down their tech stack to a smartphone, but because now more than ever, restaurant tech companies need to ensure their products are offering real value to restaurants. In other words, they need to solve problems restaurants are having right now while also helping to prepare for the ones waiting for us in the future.

Remotekitchen’s platform solves some obvious problems for its core audience. Its founders explained to me that 96 percent of independent restaurants in Latin America are not online, that restaurant tech solutions are underdeveloped in the region, and that a vast majority of restaurant owners have to take orders via their own smartphones. The mobile-first approach also better equips operators to run virtual restaurants, which may be necessary depending on how high the coronavirus wave spikes.

The U.S. is not like Latin America when it comes to restaurant tech. We have choice and then some. Prior the pandemic, restaurant tech solutions included not just point of sale systems and self-serve kiosks, but also reservations management, wearable computing, virtual reality on boarding . . . the list goes on and on and on.

I don’t think restaurant tech companies should necessarily stop work on any of the above solutions, so long as they’re somehow helping restaurants solve the industry’s most urgent problems. Such as:

Improving restaurant pickup orders. For restaurants new to the off-premises world, juggling takeout and/or curbside pickup orders has proven challenging — to put it politely. Restaurants need more streamlined ways to both receive and deliver pickup orders to customers. (Geofencing, perhaps?)

Making restaurants more socially distant. I don’t refer to space between tables here. That is not a problem tech needs to solve. Menus, on the other hand, are. The number of simple digital menu solutions out there right now is encouraging, and many of them rely on simple signage or QR codes. And unlike chalkboards or disposable paper menus, digital menus could eventually become interactive tools for guests to learn more about the food they’re eating.

Enabling better communications with customers. This one is huge. Back when the pandemic first hit. I remember one restaurant telling me their customers didn’t even know they were open for takeout. Part of this is due to the rise of third-party delivery, which owns a lot of customer relationships. Delivery integrators are one way around this, as they allow restaurants to offer off-premises while still keeping their customer data.

These are just a few of the hot-button issues in the restaurant biz right now. I’m sure you have others, so drop us a line (tips@thespoon.tech) to let us know where you think restaurant tech will be the most valuable right now.

Restaurant Closures Underscore the Need for Off-Premises

The week, Yelp released new data about COVID-19’s continued impact on businesses, the restaurant industry included. The takeaway? A bunch of restaurants that have temporarily closed may never reopen.

Quite a lot of them, actually. 

As of June 15, roughly 140,000 businesses were listed on Yelp as closed. While retail got hit the hardest, restaurants came in at a close second, with 23,981 businesses closed. And here’s the kicker: more than half — 53 percent — of those restaurants currently closed won’t reopen, according to Yelp. 

“Restaurants run on thin margins and can sometimes take months or even years to break even, resulting in this higher rate of permanent closures,” Yelp explained in its update. 

This is aggravated by the rising number of COVID-19 cases across many states, which is causing governments to either delay reopening or order closures again. Some restaurants that had already reopened have to close once more because of employees becoming infected. 

Right now it’s incredibly hard to predict the total number of restaurants that will close permanently. Yelp’s numbers are actually smaller than a report by Independent Restaurant Coalition that said 85 percent of indie restaurants could close by the end of the year. Still, tens of thousands of restaurants is a lot of restaurants.

The lesson? First, that we’re going to be riding this will they-won’t they wave in terms of restaurant closures for a long time. Second, those that can, must continue finding ways to serve their customers with off-premises orders, even if their dining rooms have partially reopened. 

I’m All-In on Smart Vending Machines for Restaurants

On the note of restaurant tech that’s useful, The Spoon’s Editor recently did a report on the promise of automated vending machines in the foodservice world. I give it a shout out here because these next-generation machines, which serve up actual meals created by real chefs, could be the answer to getting good food in a socially distanced manner in many settings.

Consider the old mall food court, where you could mill between different restaurants and build your own smorgasbord of mediocre mall food. Digitizing as much of these very public spaces as possible will be necessary for sanitization and social distancing in the future. Since next-gen automated vending machines are basically their own little restaurant in a box, it’s possible we’ll one day head to food courts not manned by people but equipped with multiple machines from different brands offering increased choice without so much human interaction.

Given the way this pandemic is heading, smart vending machines could be a really smart idea.

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A (High-Tech) Sign of the Times

Of all the reinventions the restaurant is undertaking right now, menus are one of the more fascinating. Between calls to action about paring down the size of their menus, offering disposable ones, or, preferably, going full-on digital and contactless, restaurants have a lot of choices and decisions to make when it comes to how they will present their menus in the future. It’s not a question of wanting to or not. The pandemic, social distancing guidelines, and new regulations for restaurants have, as I wrote a couple weeks ago, rendered the reusable menu null and void.

In some cases, a simple sign that connects customers to the menu might be the best way forward, at least for now.

A boat-load of third-party restaurant tech companies now offer contactless tech bundles that include digital menus, but I was intrigued this week after talking to Larry Oberly, CEO of SpreedPro.

SpeedPro isn’t a restaurant-tech company; it’s a large-format printing service with locations around the U.S. and Canada. Over the phone, Oberly explained that the company recently started offering these large-format signs with its new technology, called InfoLnkX, embedded into them. Customers just hold their phones up to the NFC-enabled decal on the sign, which pulls up the restaurant menu on that person’s device.

Oberly said the tech is highly customizable, which means different signs could take users to different digital places: the menu in one instance, a promotion coupon in another, a video somewhere else. Remember the days of strolling down the sidewalk and pausing at a random restaurant then asking to view their menu? Were a restaurant equipped with something like SpeedPro’s signage, a person could simply hold their phone up to a sign outside and pull up that info themselves instead of cramming around a bunch of other people to all view the same menu posted in the window.

Social distancing is obviously the motivator behind the tech. While an InfoLnkX-enabled sign isn’t quite as technically flashy as, say, a contactless dining bundle from a restaurant tech company, it could very well have it’s own place in the future of restaurants. Besides lessening the number of people crowding around to view the same menu, being able to browse a menu from their own device would help customers decide on what to order before they ever set foot in the restaurant, hopefully lessening the number of people in line and making the entire order process faster.

For restaurants struggling to stay afloat and trying to adjust to dozens of new operational realities, the best interim solution for the menu issue might be a case of simpler is better.

Disney, Dole Whip . . . Delivery?

At some theme parks, the food is as much a part of the experience as the rides. We’re getting neither at the moment, thanks to the pandemic, but that might change soon, at least where food is concerned.

This week, Disneyland asked its annual passholders if they would like theme park food items delivered to their home. Think funnel cakes, churros, and the ever-popular Dole Whip, not to mention more substantial meal items found at restaurants around the park.

Disney hasn’t made any promises or shared any plans beyond the survey question. And while I thought the news was odd at first, the more I sit with it, the more it actually makes sense. Hear me out.

Disneyland has yet to set a reopen date for its Anaheim, CA theme park, and a note on the site from this week said that date “has not been identified.” Giving diehards a chance to order their favorite foods from the park would in a small way keep fans locked into the Disney ecosystem. It would also help generate some sales for the theme park, which has obviously lost revenue since it closed up due to COVID-19. And if memory serves me correctly, much of the fare you get (sandwiches, salads, pretzels, popcorn) at Disneyland would travel well, making the items easier to deliver.

Again, there’s no official word this is happening, but if enough passholders are missing their Dole Whip and can’t adequately recreate it at home, Disney may have a new sales channel on its hands. That could in turn set a standard for other theme parks with memorable food items. Harry Potter World Butter Beer, I’m lookin’ at you.

Restaurant Tech Around the Web

DailyPay adds CYCLE to its instant pay app for restaurants. The app, which lets restaurant workers access their earnings immediately instead of waiting for a paycheck, now lets restaurants provide bonuses, termination pay, or other “off-cycle payments” to employees instantly.

To-go sales grew in May. Black Box Intelligence shared new data at the Restaurants Rise conference this week indicating an increase in sales for restaurant to-go orders for April (66.8 percent) and May (96.4 percent). “Everything that was lost in the way of dine-in sales, in some cases, was made up by … to go and off-premise,” Kelli Valade, Black Box Intelligence CEO and president, said during the conference. 

Popeyes is getting a makeover. Chicken chain Popeyes plans to open 1,500 worldwide that feature an updated design (see image above) and lots of high-tech bells and whistles to make its operations more efficient. 

Hold the Phone. Soon it Will Be Your Restaurant’s Menu

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A couple of years ago I came across a restaurant in Dallas, Texas that featured a menu written entirely in emojis. It was unexpected and creative, yet clear enough that a server didn’t have to come over and re-explain everything on the page.

I’m not (necessarily) advocating we battle the current restaurant industry fallout with emoji menus, but maybe we could use some of that outside-the-box thinking when it comes to revising menu formats to fit the new reality we live in. 

Since reusable menus are basically germ repositories, it’s no surprise they’re out now that dining rooms are reopening. The CDC’s recently released guidelines for reopening suggest restaurants “avoid using or sharing items such as menus” and to “instead use disposable or digital menus. . .” The National Restaurant Association’s guidelines tell restaurants to “make technology your friend” and suggest mobile ordering, and every other restaurant tech company that contacts me these days is offering up some form of digital menu for restaurants to integrate into their operations. 

A lot of restaurants will definitely start out by offering simple disposable menus. Paper is cheaper than software most of the time, and typing up and printing out a menu is faster than onboarding your business to a new tech solution.

Over time, though, that could change. As more emphasis gets placed on digital ordering for everyone, we’ll access more restaurant menus through our own phones and mobile devices. That opens up a whole world of possibilities in terms of what restaurants could one day offer on their menus beyond just the food items themselves.

Just a few examples: Menus could provide in-depth information the ingredients in a dish, like where that cilantro came from and how many months the apple traveled before it hit your plate. Menus might also include ratings from other customers, and Amazon-esque “you might also like” recommendations could show up on the screen. Maybe you could dictate the portion size you want, thereby reducing food waste.

With AI making its way into restaurant tech more and and more, restaurants could also build dynamic pricing into menus, based on time of day, foot traffic, weather, and offer coupons and promotional offers in real time. And sure, if someone really wanted to, an emoji menu would probably fly right now in more than a few places.

Most of these things exist already, though they’re not widespread and some are still in conceptual stages. The massive overhaul of the restaurant menu is a chance to start bringing those disparate pieces together to revamp the way we order our food.

Kitchen United Is Open for Business in Austin

One effect of this whole pandemic is that we’ve seen an uptick in to-go orders, and that trend won’t subside anytime soon. That makes now a good time for restaurants — some of them, at least — to consider adding a ghost kitchen to their operations. 

Those in Austin, TX can add Kitchen United to their list of choices when it comes to choosing a facility. The company, which provides ghost kitchen infrastructure (space, equipment, etc.) to restaurants announced this week its new location near the University of Texas is open for business. 

A number of restaurant chains have either already moved into the space or plan to do so in the coming weeks. Kitchen United has also allocated one of the kitchens in the new space to Keep Austin Fed, a nonprofit that gathers surplus food from commercial kitchens and distributes it to charities. As part of the deal, Keep Austin Fed will be able to “rescue” food from restaurants with kitchen operations inside the new KU facility. 

A press released emailed to The Spoon notes that “additional kitchen space is currently available” for restaurants that want to expand their off-premises operations. On that note, a word of advice for restaurants: make sure your restaurant is actually in need of a ghost kitchen before signing up with one. Kitchen United’s own CEO, Jim Collins, told me recently that restaurants need a certain amount of customer demand in order for the economics of a ghost kitchen to make sense. It’s not a small demand, either. In times like these, where the future of all restaurants is uncertain and what little money there is needs to be spent carefully, it pays to exercise some caution, even when it comes to an enticing new trend like ghost kitchens. 

Los Angeles Moves to Cap Third-Party Delivery Commission Fees

Behold, more fee caps for third-party delivery companies. This week, the Los Angeles City Council voted 14–0 to ask attorneys to draft a law that caps the commission fees delivery services charge restaurants at 15 percent. “Why should restaurants, and their customers, be put in a position to subsidize delivery app companies? We need to level the playing field,” Councilman Mitch O’Farrell told the Los Angeles Times.

This week’s proposal would also require that 100 percent of the tips customers leave on delivery orders through these apps go directly to the driver, which is pretty standard nowadays but caused some ruckus in the not-so-distant past. The fee caps would end 90 days after Los Angeles lifts its dining room closures. 

Needless to say, the move — which several other cities have already made — is not popular with delivery companies. Postmates, which is LA’s most popular third-party food delivery service, said governments setting a price on fees threatens jobs and creates “a false choice between local restaurants and the delivery network companies that support them.” The service wants instead to have a fee charged in delivery orders that would assist restaurants. That in turn would translate to yet-another fee for the customer, and be yet-another way in which restaurant food delivery services will suggest/try anything to avoid having to shoulder some of the burden the pandemic has brought on the restaurant industry.

As restaurants slowly reopen and the industry starts to adjust to its new normal, now we’ll begin to see if fee caps actually make a difference for struggling restaurants, and if they are here to stay for the long run.

Fee Caps Can’t Save Restaurants

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I was going to use this newsletter to write about pandemic profiteering and the report that Uber wants to buy Grubhub. Then this gem of a dire headline hit: one in every four restaurants will go out of business because of coronavirus quarantines.

So says a new forecast by OpenTable, which Bloomberg reported on this week. According to OpenTable, total reservations and walk-in customers from its network (which has over 54,000 restaurants) were down 95 percent on May 13 from the same day one year ago.

That number shouldn’t surprise too much, seeing as most states have been on lockdown for the last six weeks. But according to the company’s data, even in states where restaurants are slowly reopening (at reduced capacity, of course), numbers are “still far below where they were last year.” Consider Scottsdale, AZ, which had no reservations from March 21 but saw that number change to -72 percent for May 13. Houston, TX was next, recording a -82 percent change. Other cities in Texas and Arizona, as well as those in Florida and a few other southern states saw some uptick in reservations, too. 

As much as I’d like to put an optimistic spin on this, I can’t. There are too many elements out there that make the idea of one quarter of American restaurants going under totally plausible.

For one thing, restaurants are not doing nearly as much business right now, and some none at all. Even those that have transitioned to off-premises formats struggle with the operational aspects of the model, and more and more restauranteurs say that delivery doesn’t make them any money. Full-service restaurants specializing in haute cuisine are even worse off because their food isn’t meant to be eaten out of a to-go box.

As OpenTable data shows, restaurants are slowly reopening. But those same numbers also clearly tell us restaurant traffic isn’t bouncing back to pre-pandemic rates. They can’t. States have mandated businesses operate at reduced capacity, as low as 25 percent in some cases. Diners are wary of going out to eat right now, which further reduces foot traffic. And while some states say their restaurants will be operating at full capacity by July, we’re simultaneously getting warnings of a second wave of coronavirus that could lock us all down again.

The bitter pill from all this is that we’re going to lose a lot of local restaurants. There is no way to sugar-coat that. Now we have to figure out what we can do to save at least some of them. That’s going to take a combination of government assistance, charitable donations, technological innovation, and a rethinking of what the restaurant experience means. It’s a tall order — and one we have to accept as we continue the fight to save restaurants.

More Regulation Comes for Third-Party Delivery Caps

Fee caps — another hot-button topic in the restaurant biz — got their fair share of news this week as well. New York City, which has considered placing limits on the commission fees Grubhub et. al charge restaurants for a while, finally voted to cap those fees at 20 percent while NYC is in a state of emergency.

The original bill, which was debated at a recent public hearing, had fees capped at 10 percent. The bill was modified over fears that delivery services would offset the revenue lost from fee caps by lowering workers wages. 

At the same time, Chicago’s 5 percent cap got an upgrade this week when Mayor Lori Lightfoot imposed additional rules over transparency around commission fees. Third-party delivery companies like Grubhub will now have to provide itemized recipes of all the charges involved in each transaction, including the cost of the meal, service fees, delivery fees, and, yep, commission fees.

Right now, the average consumer doesn’t necessarily understand where their money goes when they purchase food via a third-party delivery app. They may not know, for example, that there’s a difference between a tax and a service fee. Many certainly don’t know that third-party services charge up to 30 percent per transaction in commission fees for the restaurant.

Chicago’s new rules seem aimed at making consumers more aware of this. Of course the question is, will knowing that Grubhub is gutting your favorite restaurant keep you from conveniently using the Grubhub app to order?

I doubt it — for now. what needs to happen simultaneous to these rules and regulations is this: restaurants need simpler, faster ways to offer convenient off-premises options through their own digital properties. Due to time and cost, independent restaurants are unlikely to have the resources to go DIY when it comes to food delivery. Restaurant-tech companies are responding, and a number of different solutions exist that claim to reduce or eliminate fee caps. As of now, though, it’s hard to tell which tools actually deliver on that promise. 

One thing that may come out of the pandemic will be a more standardized set of tools for native food delivery. A restaurant could work with a single third-party tech company that would provide them with the infrastructure to create and manage a mobile app, from updating menus to processing orders. Restaurants would still need to pay someone to actually deliver the food, which is a huge cost in and of itself. In that case, third-party delivery services would still be relevant, and restaurants would still owe some commission fees, though not nearly as much.

Only with a solid platform for native delivery will restaurants be able to convince consumers to drop the third-party apps and order direct. If this happens, maybe someday we won’t need to rely on government regulation to give restaurants a fair playing field.

Dive Bar, Meet Your New Reservations System

In a lot of states, bars didn’t make the cut when it comes to foodservice businesses allowed to reopen. It’s not hard to see why, since they tend to be dark, crowded rooms in which strangers mingle, often in a shoulder-to-shoulder capacity. On a busy night, there might also be scores of used glasses lying around. None of that exactly instills confidence in would-be customers emerging from a pandemic.

To combat that, bars, when they do open again, will have to stick to the same reduced capacity guidelines restaurants do, and in some cases may even have to start accepting reservations.   

OpenTable clearly anticipated that development, as the company just announced it has added bars and wineries to its platform. Once “drink-focused destinations” open again, customers will be able to book a table at their favorite watering hole, join a virtual waitlist, and, at participating wineries, prepay for tasting menus. A couple famous spots — the Flatiron Room in NYC and The Roosevelt Room in Austin, TX, have already signed up with the platform in preparation for reopening. 

To be honest, it’s not hard to picture spots like those two taking reservations. They’re upscale — dare I say chic — spots you would hit for a classy night on the town. In other words, they are not your average dive bar. It’s the latter category that’s going to struggle more when bars are finally allowed to reopen. Your average bar sells $6 beer-and-shot specials, not $80 bottles of wine that could help make up for reduced capacity. Reservations will certainly help with social distancing efforts, but for bars that specialize in selling huge quantities of small-ticket items, they may not make a difference in terms of keeping a lot of places in business. 

The larger question is, How will the pandemic change bar culture in general? Once bars are allowed to turn the lights back on, your average Friday night out could look a whole lot different.