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Daily news and analysis about the food tech revolution

The Weekly Spoon

In a Time of Broken Norms, Restaurants Experiment to Stay Intact

So earlier this week I was chatting with a food industry colleague who pointed out the sheer amount of opportunity food businesses have right now to experiment with existing norms. At the moment, breaking those norms feels less risky because in many cases we can’t do things the old way.

No one knows this better right now than restaurants. Dining rooms are closed and once they reopen they won’t look the same. Shifting to a delivery-takeout model is a necessity, but it may not make up for all the lost sales. And lately, restaurants are going far outside their normal territory for ways to survive the double whammy of a global pandemic and an industry on the brink of meltdown.  

Selling groceries is one way.

Case in point: Subway this week announced Subway Grocery, a site where you can buy pantry staples straight out of the Subway supply chain. Think foot-long bread loaves, frozen soup, bagged lettuce, and bulk amounts of bacon. The move is a way to get consumers goods that might not actually be in the grocery stores right now (thanks, panic shopping). More importantly, it lets the chain supplement its to-go format while dining rooms stay closed due to coronavirus.

Panera quickly followed that news with a similar concept, Panera Grocery. Customers can order grocery items like breads, produce, and dairy items straight from Panera’s supply chain and via the Panera app or through Grubhub. Like any Panera meal, the goods get delivered to customers’ houses.

And in NYC, just salad launched Just Grocery, which says it will deliver household staples — from produce to paper towels — in 90 minutes or less to Manhattan residents. The company also launched a meal kit service of items from its own menu, which customers can also order from the Just Grocery site.

If I were a betting woman, I’d say more of these initiatives are to come. Right now, big chains like the ones above as well as smaller restaurant businesses (see below) have no choice but to adapt their businesses to new formats so they can add incremental revenue to severely declining sales Plus, I imagine prepping grocery and meal kit orders is another way to keep employees occupied in the process, not to mention save on food waste costs.

But what about when dining rooms open again? Will restaurants need an additional grocery business?

I’ll go on a limb here and say yes, and that at least some of these initiatives will be in place for a while. The reason is that once dining rooms re-open, they’re not going to resemble their former selves. I’m just going off my own speculation here, but I foresee the days of cramped tables close together and family-style seating as a thing of the past. Restaurants dining rooms will have way less capacity, and more than a few people will be wary of going out to eat.

That makes the additional revenue from grocery businesses an attractive long-term play for many of these chains.

Small Restaurants Turn to Big Grocery

Other restaurants are turning to grocery stores themselves, not to sell pantry staples but to get their own meals in the hands of customers at a time when eating out isn’t an option. Texas chain H-E-B launched a pilot program to carry ready-made meals from restaurants in 29 of its stores. For the program, the chain has partnered with local restaurants, some of which have been able to bring back furloughed employees thanks to the extra work (and presumably money). 

And in some cases, grocery stores are actually doing the hiring themselves. When Greensboro, NC-based chain The Fresh Market realized it didn’t have enough staff to keep up with the demand for groceries as well as the chain’s deli counter, it reached out to Darden Restaurants to hire out-of-work employees from the company’s restaurants (Olive Garden, Longhorn Steakhouse).

The sharing of employees seems more of a stop-gap measure than long-term employment solution for many individuals, particularly those building a career in the restaurant industry. Selling restaurant food in stores, however, might stick around. Like I said above, there’s a pretty good chance restaurants won’t be operating at their old capacity once dining rooms reopen, which means other sources of revenue — even incremental revenue — will be a necessary staple for some time to come.

DoorDash Slashes Restaurant Commission Fees By 50%

Of late, I’ve approached most news from third-party delivery aggregators with more than a little skepticism along with the question: Is this really helping restaurants?

DoorDash announced it is reducing commission fees for “local” restaurants by 50 percent, from April 13 through the end of May. “This is not a deferral of fees, nor will merchants be asked to pay anything back,” the company said.

Third-party delivery companies are getting an increasing amount of flack for those commission fees, which can go as high as 30 percent per transaction. Cutting back those fees would obviously help restaurants during this time.

What I’d like to know is, when will the other shoe drop? More and more, the major third-party delivery companies are seen as predatory entities that are astoundingly out of touch with the daily realities of running a restaurant. Is this news from DoorDash an about-face for the company or is the other shoe dangling in the air right now? Maybe it’s hidden fees or getting locked into a contract. Maybe it’s none of those things, though that feels too optimistic an idea in a discussion about third-party delivery.

I’ll be having a third latté and digging into the fine print, so more on this to come.

Keep on truckin’,

Jenn

This is the post version of our weekly restaurant tech newsletter. To get the newsletter delivered to your inbox, just sign up here.

Newsletter: How to Support Restaurants Right Now Without Endangering Everyone’s Health

To do my bit in supporting restaurants right now, I’ve been ordering from them once every few days for the last couple weeks. More times than not, it’s been a logistical circus that winds up costing a lot of money and, especially lately, unnecessarily putting workers’ health at risk.

Case in point: Tuesday night I ordered online from a local burger place. While the system gave me a “curbside pickup” option, there was no curbside at which to actually park once I arrived at the restaurant. Rather, I joined a crowd of other people clustered in front of the restaurant. A lone worker frantically ran in and out of the restaurant calling names as she tried to determine which order belonged to which customer. No one wore gloves and no one was standing six feet apart.

The inconvenience of the experience is the least problematic part of this example. Far more unsettling are the financial and health risks of running an off-premises business when you’re not an off-premises restaurant. Through no fault of its own, that burger place is not equipped to efficiently manage the volume and logistics of a curbside business. It’s never had to until now.

Restaurant owners and industry folks have long argued that the dine-in experience differs greatly from a to-go operation, and that one can’t simply flip a switch and be asked to transition from one to the next without a hitch. And yet that’s exactly what thousands of restaurants across the country are at this moment being forced to do. And what you get is a scene like the other night, where there isn’t enough staff to even pick up the phone, let alone manage the influx of orders going out and customers waiting. Staffers are interacting with way too many people than could possibly be safe, and everyone’s health is at risk. There’s also evidence that an off-premises strategy isn’t even financially fruitful for many restaurants.

Is it really worth it or is there another way to support restaurants that desperately need a lifeline as dining shutdowns and COVID-19 ravage the industry?

The answer, fortunately, is “yes.” Shortly after states began mandating dining room closures, charities and funds began popping up online. Last week I wrote about virtual tip jars for servers and bartenders out of work right now. And some of these funds go directly to restaurants themselves.

The James Beard Foundation has launched a Food and Beverage Industry Relief Fund that accepts donations from corporations, foundations, and individuals to provide micro-grants to independent food and beverage businesses.

Dining bonds and gift cards are another route. The Dining Bonds campaign was started by a group of industry professionals to get immediate relief funds to restaurants. It works like a savings bond: guests purchase a bond at today’s value rate and can redeem it for full face value at a later date. Support Local lets you purchase restaurant gift cards from independent businesses in a number of cities. They can be redeemed now or, if you’re not feeling up for off-premises, later on, when dining rooms open again.

Initiatives like these aren’t a magic bullet. But they do provide some other avenues for supporting restaurants, whether you’re trying to avoid other people or just looking for a way to give a little extra help.

Running a Restaurant? We Want to Hear From You

If you’re reading this and also happen to be a restaurant owner, operator, or worker, help The Spoon help you. We’re currently collecting stories, tips, and ideas about what it’s like to actually live and work in the restaurant biz during this strange, unsettling time.

That includes anything from new strategies to make delivery and takeout more efficient to how you’re keeping yourself and your workers safe. And, this being The Spoon, any stories of how you’re using tech to help cope with this situation are most welcome. But before the tech comes the people, which is why your voice is the most important piece of our ongoing coverage and narrative.

Drop us a line a tips@thespoon.tech or DM me via Twitter.

It’s Almost Here: The COVID-19 Virtual Strategy Summit

If you’re a restaurant, food business, or food tech company, join us next week for a virtual summit on how to do business in the age of coronavirus.

On Monday, April 6 The Spoon will host the COVID-19 Virtual Strategy Summit for Food and Restaurants. No travel required to get there and 100 percent socially distant, this online summit will features talks and fireside chats from leading experts including:

  • Chef Mark Brand – Founder of Save-On Meats and creator of the Token Program to feed those in food insecure situations
  • Caesare Assad – CEO of FS6
  • Sara Roversi– Founder of the Future Food Institute
  • Dana Gunders – Executive Director of ReFED
  • Phil Lempert – the SuperMarket Guru
  • Paul Freedman – Professor of History at Yale University and author of American Cuisine: And How It Got That Way
  • Ryan Palmer – Partner at Lathrop GPM and chair of firm’s Restaurant, Food, and Hospitality group

Register today.

Keep on truckin’,

Jenn

Newsletter: As Food Gets Personal, What Happens to Our Data?

With Customize, The Spoon’s daylong NYC summit, just around the corner, we’re talking all things food personalization these days. And with personalization comes personal data, which you, me, and a growing number of consumers endlessly hand over these days to CPGs, grocery services, nutritionists, and, of course, restaurants.

I was reminded of the data portion of personalization earlier this week when I came across a new report from Technomic that noted just over half of U.S. consumers want to know more about how restaurants use their personal information. To be honest, I was surprised the exact number, 56 percent, wasn’t higher, though it probably will be by the end of this year.  

Restaurants now have a growing number of ways to find out more about their customers, and since food preferences aren’t the most high-stakes form of personal data, we’re more willing to part with that information. As one survey respondent noted, “The benefits of using technology to order/pay for food and beverages from restaurants outweigh the risks to my personal data.”

Still, as more kiosks land in the front of house and more brands implement AI to better understand their customers, proving themselves trustworthy with customer data is crucial. So what does that look like?

There are the obvious steps around safety, of course: staying PCI-compliant, vetting third-party vendors, etc. Those are all back-end policies and procedures consumers neither see nor probably care about unless something like a data breach occurs. 

What consumers do care about is getting a consistently good experience with a food or brand. I don’t just mean having an easy-to-use mobile app or quick drive-thru times. Restaurants must also be able to show customers that the personal data they hand over is what creates that consistently good experience. If a chain has my birthday stored in its system, it should automatically be able to offer some kind of reward (e.g., dessert) on that day. If a coffee chain already knows I can’t have sugary syrups in espresso drinks, its system should stop offering me those upsells when I order. Use the digital real estate to try selling me something I would actually buy, like a bagel.

Many restaurants, multi-national chains and indies alike, are already working to offer these kinds of experiences. Many more will follow as personalization becomes as common in restaurants as mobile apps have. Right now, however, it’s no sure bet your personal data is going to create your most optimal experience from one restaurant to the next, or even from one chain’s store to its next. Figuring out how to standardize some of these processes will be the next step in restaurant personalization. 

Can Customization Lead to More Food as Medicine?

Food customization and personalization are happening outside the restaurant, too. Some of it involves using your DNA to tell you exactly what foods you should be eating. 

My colleague Catherine Lamb explored that this week when she wrote about her experience with GenoPalate, a service that uses information gleaned from a user’s DNA to create a personalized nutrition plan for them.

As Catherine rightly points out, a tool like GenoPalate isn’t yet terribly useful to the average person, other than telling them to eat a healthy diet. However, for those who suffer from chronic illness or other issues, the service could offer an easier way for people to adjust their diets in order to live healthier, more comfortable lives.

I wonder about the food-as-medicine angle here. If GenoPalate can recommend certain foods and recipes for someone with, say major digestive issues, could a more personalized diet keep that person from having to heavily rely on over-the-counter pills and prescription meds. And to take things a step further, can personalization tech eventually help consumers make the needed behavioral changes necessary to eat better instead of simply swallowing another pill?

There’s tech that simply informs us and there’s tech that can actually help us alter our lifestyles for the better. When it comes to personalization, companies that can accomplish the latter will be the ones who stand out. 

Last Chance for Customize Tickets

Since we’re talking food personalization today, now’s the point when I shamelessly plug The Spoon’s NYC event next week. If you want to know more about how your DNA could create a better diet or simply when The Cheesecake Factory will start offering you a free birthday dessert, head up to Manhattan on February 27 to join us for the event.  Use code SPOON15 to get 15 percent off tickets.

Keep on truckin’,

Jenn

Newsletter: Consolidation Is Imminent for Food Delivery, Plus Customize is Coming to NYC

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If 2019 was the year restaurant food delivery companies went mainstream, 2020 is shaping up to be the year mergers and acquisitions whittle the competition among these third-party services down until just a couple companies emerge victorious.

Case in point: this week, Uber announced it is selling its Eats business in India to Zomato, a local rival that processes at least half a million more orders per day in that country than Eats does. Uber’s exit from the Indian market leaves just two major players: Zomato (which Uber will have a small stake in) and Swiggy, who also has access to deep pockets thanks to backing from investment firm Naspers.

And that news is just the latest in a series of announcements that all suggest acquisitions and mergers are the fuel pushing further consolidation worldwide in the crowded food delivery space. The ongoing bidding war over UK-based service Just Eat looks to finally be at an end, with Takeaway.com, who originally planned to acquire the company, coming out as the winner. The combined entity of Just Eat and Takeaway.com would form one of the largest food delivery companies in the world. In the States, Postmates has reportedly been exploring a sale instead of its planned IPO (which still hasn’t happened). A Wall Street Journal report from earlier this month said Grubhub had hired financial advisors to consider “strategic options including a possible sale” — though Grubhub denies the claim.

Uber’s motivation in the Zomato deal is in part all about cutting back on loss-making operations as the cash-burning business comes under increasing pressure to prove profitability over the next year. On that score, the company isn’t alone. Postmates shuttered its Mexico City operations in December. Deliveroo closed up shop in Germany last year. In 2018, Delivery Hero sold its German operations to Takeaway.com. And Uber itself ended its Eats business in South Korea last year.

Consider all that activity the tip of the proverbial iceberg. Most delivery companies are currently in the same boat as Uber, where investors are applying pressure to show the food delivery model can in fact be profitable and not just burn through money. So it’s safe to say that many services will continue shutting down or selling loss-heavy operations around the globe over the next several months and opening the door to further consolidation.  

At-home Indoor Farming Is Suddenly the New Black

There’s a new trend afoot in the connected kitchen: vertical farms built specifically for the home and meant to be used by your average consumer. 

Ever since CES, when major appliance-makers like LG and GE showed off flashy vertical farming concepts for the consumer kitchen of the future, here at The Spoon we’ve gotten a seemingly endless series of pitches and news announcements about this indoor-farm-to-table concept. The idea is simple: make an indoor farm that ranges anywhere between a flowerpot and a bookshelf in size, outfit it with accompanying technology that automates much of the actual work around growing the plants, and sell the product to consumers for, in most cases, under $1,000.

In the last several weeks alone, Rise Gardens, the Planty Cube, Miele, and many others have shown off products that hit these marks. But while there’s a lot of excitement (bordering on hype) around growing salad greens in your own kitchen, the still-nascent market hasn’t yet hit the point where the questions start to sprout up. Are these farms really as easy to use and automated as companies say? Can they actually save people money? Can individuals with a terrible track record when it comes to gardening (me) grow something that actually tastes good?

The next several months should provide some answers to these questions. 

Customize Is Almost Here!

That’s a wrap for this week. But before I go, here’s a quick reminder that we’re gearing up for Customize, our first NYC event. Personalization is changing everything from restaurants to grocery stores to our own kitchens, so join the Spoon team and our amazing group of speakers on February 27th! Just use the special Spoon subscriber discount code THESPOON15 for a 15% discount off of tickets. 

Keep growing,

Jenn


Newsletter: What Comes Next for Ghost Kitchens? Plus, Third-party Delivery and At-home Agtech

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I’m not gonna lie: putting together our market map on ghost kitchens was hard. The concept as we know it is relatively new, and the lines between the different categories of ghost kitchen might be easy enough to draw in a graphic but are never as solid in real life. For example, CloudKitchens provides kitchen space but it’s also a network of virtual restaurants. Starbucks runs its own kitchens but relies on Alibaba’s Heme supermarkets to provide the space. Grubhub, Uber Eats, and DoorDash deliver food but also operate in other areas of the stack.

That overlap, though, is a big part of what makes this area of the restaurant industry such an interesting one to watch. Not only is the 2019 ghost kitchen redefining the restaurant experience as we know it, it’s also redefining the way restaurants operate, the technology they use to do that, and even what their menus offer in any given area. Fat Brands, for example, uses Fatburger locations on the West Coast to also fulfill delivery-only orders for sister brands that would normally only be available to customers in the East. 

As we head into the next year, we can expect the overlap of companies and categories to increase as more multi-unit chains try their hand at ghost kitchens, more kitchen infrastructure providers try out their own virtual restaurants, and literal mobility (kitchens on wheels) becomes more commonplace. 

Head over to The Spoon for more predictions on what comes next for ghost kitchens (RIP POS?) and to download the map. And since this is such a nascent market that changes weekly, expect more iterations of this map to hit your inbox in the future.

Third-party delivery is staying put. Sort of.
It’s no secret that consumer appetite for delivery is driving the growth of off-premises orders. And while they may be controversial, third-party services like DoorDash and Postmates are a big part of this growth.

The biggest part, by some accounts. This week, CBRE Group noted in a new report that 70 percent of delivery orders will come from third parties by 2022. That’s a no-brainer. These services provide the tech infrastructure, logistics, and actual drivers that are often too expensive for restaurants to operate on their own. Third-party delivery may be expensive for restaurants and paddling through a sea of bad press lately, but it is in many ways necessary for businesses who want (need, actually) to offer off-premises ordering for customers. 

Like ghost kitchens, this is a messy, fast-changing market whose model will continue to evolve as restaurants adopt hybrid strategies and new laws are passed regulating how these companies do business.  

At-home vertical farms: Big convenience or big expense?
If you still prefer the old-fashioned method of actually cooking food for yourself, Miele’s latest news will be of some interest. As my colleague Chris Albrecht reported this week, the German appliance-maker known for everything from washing machines to coffee systems has acquired Agrilution, a Munich, Germany-based agtech startup known for its Plantcube indoor vertical farm. 

As Chris notes, the Plantcube looks like one of those at-home wine fridges, and like any vertical farm uses software to regulate temperature, climate, water levels, and nutrient delivery to crops. The system grows a variety of leafy greens and fits right inside your existing kitchen infrastructure. 

Question is, Do people want vertical farms built into their kitchens?

Potentially.

No, setting up a grow system in your home is not as convenient as buying a bag of kale from the store. For those so inclined, though, an at-home vertical farm like Agrilution’s means being able to pick fresh, better tasting ones right out of their own cabinetry. Those living in dense urban areas, where the fire escape is the closest thing to outdoor space, could have an actual at-home garden.

First, though, we have to get over the cost hurdle. Right now, price points of various at-home vertical farming systems go for anywhere between roughly $500 (Ponix Systems) and $3,000-plus (Miele). What we don’t have is abundant data on how much these farms cost consumers in terms of electricity, water, or repairs if the system breaks down. There is also the issue of space. Agrilution’s Plantcube may fit nicely into the under-counter space of a single-family home in Nashville. Your average New York apartment, on the other hand, would be hard-pressed to accommodate one.

Still, it’s a great sign that a major appliance-maker like Miele is showing interest in getting cabinet-to-table greens to more homes in the future.

Until next time,

Jenn

Newsletter: Personalization in a Tech-centric Food Era, Plus Food Tech Hacks for Your Thanksgiving Prep

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Customizing our food is a decades-old practice we’ve come to expect if not outright demand when it comes to the way we eat. Fast-casual chains like Chipotle and Sweetgreen are built on the idea of each person customizing a meal to their specific eating needs. Most of us will to some degree customize the traditional Thanksgiving spread tomorrow, using plant-based ingredients in place of meat or maybe even turning the whole meal into a bowl of ramen. Meanwhile, there are reportedly 87,000 ways to order a drink at Starbucks. Can our food and beverage consumption get any more customizable. 

Yes, actually, and largely thanks to tech. As we discuss often at The Spoon, apps and other tools powered by AI and machine learning, big data and analytics, as well as food science and research are making it possible to customize our food  right down to our DNA. That includes food not only at restaurants or holiday feasts, but also with our daily meals and snacks, our dietary needs and restrictions, and even our grocery shopping lists. 

Customizing and personalizing our food through tech, however, is a relatively new practice. While some standardization is beginning to occur — notably in the QSR drive-thru lane — this space is right now a pretty fragmented one, with many ideas and solutions but no clear idea yet as to how they come together to help us eat smarter and enjoy our food at the same time.

That’s why we created Customize, a one-day executive summit slated to take place on February 27 in NYC. During the one-day event, which will be held at WeWork’s 85 Broad St. space, The Spoon will examine topics from the world of food personalization, including microbiome-based nutrition, AI-powered grocery recommendations, new developments in CPG products, and much more.

We’re already got a great lineup of speakers to talk about the impact of personalization in the grocery store, at the restaurant table and in our own kitchens, and we’re adding more every week so make sure to check them out!

Want to learn more? Head over to The Spoon Publisher Mike Wolf’s post introducing the event, then grab tickets before they sell out (which they will).

Nutrition is one area where customization is going to be huge, and indeed is already showing up via apps and websites that help users determine the kinds of foods they should be eating and plan out meals and diets.

Trouble is, it’s one thing to download an app that promises to help you eat healthier. It’s another to actually take the time to track the food you’re eating and determine whether it has any actual nutritional value in your life (hey, iceberg lettuce).

That’s where companies like Foodvisor come in. As my colleague Chris Albrecht noted recently, the French nutritional coaching app startup lets users simply snap a picture of their food then, using computer vision and deep learning, the app analyzes it and auto-creates a nutritional report of the food. The company just raised $4.5 million in fresh funds, and it’s one of a growing number of food-tracking apps out there. Another notable example is Bite.ai’s app, which also offers consumers visual food tracking through their smartphones.

Getting consumers to actually change out unhealthy eating habits for smarter ones is, of course, a whole other mountain to tackle, and one we’ll be discussing more of at Customize. 

Last-Minute Food Tech Hacks for Thanksgiving

Of course you may have more immediate concerns around customization, like how in the heck you’re going to get dinner on the table on time and with every dish at the right temperatures.

Fear not. Chris put together this handy guide that highlights a few pieces of connected-kitchen gear that could make your cooking easier, some of which you can still grab before your Thanksgiving cooking commences.

Finally, if you are planning on going to CES and are looking to explore some food tech in Vegas, make sure to check our Food Tech Live event. If you want to showcase your product at FTL drop us a line, and if you want to attend you can request a ticket here.

Feast responsibly,

Jenn

Newsletter: Third-party Food Delivery Keeps on Fighting, But Its Opponent Is Getting Stronger

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It’s getting to be that time when us journalists haul out the predictions for the coming year. You can be sure we here at The Spoon will have plenty of those in the coming weeks. And you can be sure some of them will center around the how the food delivery model could change in the wake of the many controversies its currently mired in. Exorbitant commissions for restaurants, antitrust accusations, paying workers a wage they can’t live on — all this and more (did I mention plummeting stock?) underscores the same point: the third-party food delivery model is unsustainable, far from profitable, and larger swaths of the entire food industry are starting to push back. Hard.

Another log went on that fire last week when online grocery fulfillment platform Instacart cut bonuses for its Shoppers — that is, the folks getting groceries off the shelf and delivering them to customers’ houses. Oh, and it just so happened that this cut, which can reportedly account for up to 40 percent of some Shoppers’ earnings per order, came just days after said Shoppers instituted a protest over previous changes to their pay.

Instacart says the new pay cut is “not a form of retaliation.” Whether that’s completely true or not seems irrelevant. It’s a bad look for Instacart, who, along with DoorDash and Postmates, already came under fire earlier this year for its worker-tipping policy.

Then there’s the fight over AB 5, California’s so-called “gig worker bill,” which was signed into law recently and reclassifies gig workers as actual employees. Instacart is not in on that fight, but DoorDash, Uber, and Lyft are, and they’ve vowed to spend $90 million in 2020 to get a ballot measure passed that would counteract AB 5. Talk about a bad look.

Plus, even if these companies overturn the protections laid out in AB 5, they will still face an endless series of new bills, laws, and regulations that will undercut their core business model and further put the question of profitability in question. Meanwhile, investors are getting antsy, and restaurants themselves are starting to take pieces of the delivery chain, from branding to retaining customer data, back in-house, further eroding the reach of third-party delivery.

Instacart, DoorDash, Uber, and others can fight all they want, but their opponents are getting undeniably stronger. Grab your (delivered) popcorn and sit back. The battle is far from over.

Food Delivery Services Pile On New Features
One fighting tactic for food delivery services is far simpler than pledging tens of millions of dollars to fight legislation: pile on the features in the hopes of attracting more customers and restaurant partners.

This week, Deliveroo announced a pickup feature that lets customers order food via the app then collect it themselves, bypassing the delivery fee on the way. The move could appeal to more cost-conscious folks. Customers ordering food might not want to pay a $5 delivery fee for a restaurant that’s a three-minute walk away. And some restaurants could find the option appealing as it would allow them to work with these off-premise order platforms but pay them slightly lower commission fees.

Uber Eats also recently announced some discounts for its restaurant parters — specifically those who use the Ordermark system, which funnels delivery orders from different third-party channels into the restaurant’s main POS system. Ordermark restaurant customers who sign up to use Uber Eats through the Ordermark platform will receive discounted rates.

Eats is also selling ad space inside its platform to restaurants. “If we have all the restaurants on the marketplace and we give them tools to help them grow, then this will be a very efficient marketplace,” Uber told TechCrunch.

The Robots Are Coming (For Your Food Order)
In another likely scenario for the future, we won’t need a gig economy because the robots will do it all.

At least, they’ll be able to do an awful lot of peddling restaurant and grocery deliveries to customers’ apartments and houses. With delivery robots roving around college campuses, some cities, and now Russia, it’s possible — nay, inevitable — that delivery services will render the debate over human workers pointless by replacing said humans with these six-wheeled bots.

So too will autonomous vehicles. Amid far more controversial statements this week, Uber’s CEO Dara Khosrowshahi’s said autonomous ride-hailing is probably five to ten years off, and that there will be some autonomous driving going in just three to five years for simple tasks and routes.

Writing about the Uber news, my colleague Chris Albrecht points out that “food delivery certainly seems like it could fit the bill when it comes to simple tasks and routes” and that autonomous vehicles nix the cost of human drivers. But he also rightly notes that “this displacement of human labor brings up its own societal issues.” Which means robots and autonomous vehicles could potentially resolve some of the fight around the gig economy, but they’ll open up a fresh can of worms when it comes to the ethics of the food delivery model.

Newsletter: Are Ghost Kitchens Now Mandatory for Restaurant Chains?

“To-go or not to-go.” That used to be the question. Then food delivery became commonplace, and with 60 percent of restaurant orders now off-premises, it’s pretty much mandatory for restaurants who want to stay competitive.

Now the big question is whether ghost kitchens will soon become mandatory, too. It certainly seems likely, particularly in light of news this week that DoorDash has launched its own ghost kitchen in Redwood City, CA.

The facility, dubbed DoorDash Kitchens, provides kitchen space and equipment to multiple restaurants needing to fulfill off-premises orders. As I wrote this week, it’s a way for restaurants to both accommodate the increase in off-premises orders and extend their geographic reach into areas where they might not have a brick-and-mortar location.

DoorDash’s own geographic reach is massive right now. The service is in all 50 states and also expanding outside of North America, and currently leads the market in terms of consumer spend for third-party delivery services. So even though the Redwood City facility is one single location (for now), its launch will have significant influence over the restaurant space.

DoorDash isn’t the first delivery service to try its hand at virtual restaurants, though. Uber Eats has been working with the concept for some time. Grubhub, meanwhile, is using ghost kitchen facilities to not just dish up to-go orders but also test out new restaurant concepts, for which the service is partnering with non-restaurant food brands like Bon Apétit and Whole30.

And those are just the third-party delivery aggregators. Kitchen United is rapidly expanding its version of the ghost kitchen, Starbucks is piloting them in Asia, and individual restaurant chains are even transforming existing brick-and-mortar stores into facilities for off-premises orders. Then there is Zume, which is blending the food truck and ghost kitchen concepts together to create what my colleague Chris Albrecht calls “an entirely new category of restaurant.”

To ghost kitchen or not to ghost kitchen? Pretty soon it will no longer be a question.

More Orders, More Partners

Another choice restaurants have to make these days is whether to go with a single third-party partner for delivery or multiple ones. We saw a significant shift towards the latter option in July, when McDonald’s ended its long-standing exclusivity with Uber Eats and added DoorDash to its delivery strategy. Not long after, Toast released a report suggesting restaurants best serve themselves by working with multiple delivery providers.

Wendy’s, too, hopped that bandwagon recently by announcing at an Investor Day event that it would expand its delivery capabilities in 2020 to include Grubhub and Uber Eats. As with ghost kitchens, a large part of the strategy behind partnering with multiple delivery services has to do with reaching more customers. In the case of Wendy’s, it needs the extra visibility to gain as much loyalty as it can to keep pace with the likes of McDonald’s and Burger King.

Uber Eats Announces Layoffs

All’s not completely rosy in the world of third-party delivery services, though. The model remains surrounded by controversy, including questions around whether these companies can ever become truly profitable — a point called into question this week when Uber announced layoffs that will include Uber Eats.

While we don’t yet know how many Uber Eats staffers that includes, and whether Uber’s profitability struggles will affect other initiatives, like its aforementioned ghost kitchens. But the news is a reality check and a reminder that the third-party delivery model is both new and far from perfect, and we’ll see more ups and downs happening simultaneously for some time to come.

Newsletter: Mapping Food Tech in 2019, Startup Accelerators to Watch

It was less than 100 years ago that the food industry figured out how to mass produce things like baby carrots and Krispy Kreme Doughnuts.

Nowadays the buzz is around robots that make pizza and cashierless food stores, but that drive to reinvent food has fundamentally remained the same. They may have more technologically sophisticated tools now, but engineers, scientists, food producers and upstarts alike still look for the same thing Krispy Kreme did in the 1950s: how to cost-effectively create consistently good (tasting) food at scale.

Brita Rosenheim, a Partner at Better Food Ventures, captured the current spirit of innovation in food tech this week with an enormous market map she published at The Spoon. Her map lays out the dozens of early-stage startups, mature companies, corporations, B2B technologies, and consumer-facing tools changing the way we eat in the home, at restaurants, in the grocery store, and across many other areas of the supply chain.

Brita included a number of important takeaways from the map around things like the role of personalized eating, whether we need connected content in the kitchen, and where investors are currently funneling their cash. But if there’s one major takeaway from her map, it’s that the food tech landscape is . . . absolutely enormous. And getting bigger every month.

Now we’re at a point where we’re starting to see the landscape shift to be less about tech for tech’s sake and more companies coming to market with solutions that address some of the world’s biggest food challenges. Brita’s belief that “technology will prove to be the single biggest catalyst to solving critical problems across the global food ecosystem” and her inclusion of categories on the map like Food Waste, Sustainability Tracking, and Nutrition suggest we’re slowly but surely trekking towards a more productive future for food tech.


Flavors of the Future
One thing food companies did not have in the 1950s was an AI-powered crystal ball to tell them exactly what consumers were interested in buying.

We don’t have the actual crystal ball yet, but Spoonshot came pretty darn close this week by announcing its AI-powered flavor recommendation platform, which combines data science and machine learning to understand what flavors are currently popular with consumers all over the world (though the company is currently focused on North America) and which ones will be popular in future. The goal? Get this information to CPGs so they can use it for new products and stay ahead of the competition in terms of what consumers want.

Spoonshot is actually one of a few companies now riding the flavor-prediction wave, among them Analytical Flavor Systems and Tastewise. We’re bound to see many more players come to market over the next couple of years, as CPGs look to skip the cost of hit-or-miss product development.


Startup Accelerators to Watch in October
Startups, of course, are a vital part of the food tech landscape, and as Brita’s map above shows, there’s a seemingly endless number of them these days. Part of the reason for that is the huge number of food tech accelerator and incubator programs out there that mentor early-stage companies (and line their pockets) as they develop prototypes, products, and solutions for the food industry.

Like lots of areas of food tech, many of these programs now look for companies grappling with major issues in the food system: reducing waste, finding cleaner meat, and tracing food safety, to name a few. And while the end of the year is a little quieter, there are a handful of these programs taking applications in the month of October. Check them out here.

Last Chance to Snag SKS Tickets
We’re less than one week out from The Spoon’s SKS North America show in Seattle. If you want to attend on October 7–8, now’s your last chance to grab a ticket. And if you want to talk about the evolution of Krsipy Kreme and other restaurant-tech-related topics, hit me up. I’ll be running around the show with the rest of The Spoon crew next week.

Stay cool,

Jenn

Newsletter: Business Heats Up in the NYC Ghost Kitchen Space, the Role of the Restaurant Robot

While maybe not quite the norm yet, ghost kitchens have become one of the most important trends in the restaurant business in 2019. And these days, the concept — restaurant kitchens with no front of house that exist primarily to help fulfill delivery orders — looks to be turning into less of a trend and more of a normal part of doing business for restaurants.

In the last few months alone, Kitchen United has expanded at a blazing clip and everyone from Starbucks to Uber is launching their own take on the ghost kitchen. Then this week, Zuul Kitchens will launch a 5,000-square-foot ghost kitchen facility in New York City that will help Sweetgreen, Junzi, and other notable chains further grow their delivery footprint.

Restaurants have good reason to invest in the concept: by 2020, over half of restaurant spending will be off-premises. As restaurant chains and third-party delivery services scramble to meet that demand, the ghost kitchen has so far proven to be the most scalable, economically feasible solution.

The Zuul launch, in particular, is noteworthy because NYC is poised to become one of the key settings in which ghost kitchens will compete for dominance. Kitchen United has the Big Apple listed on its website as slated for a location in 2019, and just today, The Spoon received news that the Halal Guys — a delivery pioneer who happens to rent space in Kitchen United’s Pasadena, CA location — has opened its own delivery-only kitchen in Astoria, NY.

I suspect the move will have a ripple effect on other chains that can afford to do the same, which will create a new layer of competition between kitchen providers and restaurants in the coming months.

Send in the (Food Delivery) Bots

Meanwhile, all that food being prepped in ghost kitchens could soon arrive at your door courtesy of a delivery bot. Of late, nearly autonomous rover bots have grabbed many a headline: Starship raised a $40 million Series A round in August as well as expanded its presence to more college campuses. Kiwi will unleash its li’l rover bots on Sacramento, CA streets this month. And at the end of last week, my colleague Chris Albrect reported on a four-wheeled bot called CarriRo, which Japanese robotics company ZMP developed and wants to use for food deliveries.

I doubt these delivery bots will put delivery couriers out of business anytime soon, though, when it comes to most major cities in the U.S. There are still numerous local and state laws that have to be put in place before wheeled bots can be released en masse onto city streets. Even then, many cities lack the sidewalks, densely packed populations, and concentrated areas of restaurants that are ideally suited to these creatures milling about. The more likely scenario would be rover bots such as those from Starship and Kiwi having a large presence at universities — something that’s already happening — and other campus-like settings. For multi-lane roads and longer travel distances, though, we’ll see more driverless cars a la Nuro, and possibly drones.

Can Robots Save High Turnover Rates at Restaurants?

If all this outsourcing and autonomy sounds a bit scary for restaurant food workers, consider a new statistic: fast food restaurants typically lose more than 100 percent of its workers in a year.

So says a new report from CNBC, which Chris looked at in-depth over the weekend, producing a litany of reasons why turnover at restaurants is so high, including disposable, routinized jobs, low pay, lack of career path, and the rise of the gig economy, which enables more flexible schedules for workers.

But this turnover is also providing an opportunity for robotics companies to bring their creations to market to take over some of those more repetitive, menial tasks, whether it’s flipping burgers (Creator), making airport lattes (Cafe X) or telling customers when their orders are ready (Brightloom).

The question is whether robots taking these jobs will actually do what is promised, which is to create more meaningful employment with better upward mobility for workers, which will in turn entice them to stick around longer. That won’t be the case in QSRs, where work is largely made up of mundane, repetitive tasks and human jobs disappearing is pretty much a foregone conclusion. But in other types restaurants, we could see robots actually improving servers’ jobs by freeing up their time to focus on meaningful interactions with guests. At this point, that’s still something a bot can’t replace.

Until next time,

Jenn

Newsletter: Robotics Companies are Going Back to School, Our Boozey Market Map, and Investing in the Middle-Mile

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It’s not just students heading back to college campuses this fall. Increasingly, tech companies are hooking up with universities to research and develop food-related robots.

South Korean company Woowa Brothers, which operates the popular food delivery app Baedal Minjok, became the latest such company to do so yesterday when it announced that it was partnering with UCLA to research and develop food robots that do things like place orders and prepare meals.

Woowa Brothers follows Nvidia, which opened up a robotic kitchen research lab near the University of Washington in January, led by Dieter Fox, a professor in the UW Paul G. Allen School of Computer Science and Engineering; and Sony, which hooked up with Carnegie-Mellon University last year to work on food robots.

That companies would lean on colleges shouldn’t come as a surprise; they’re filled with eager students and faculty working on cutting-edge technology in laboratory settings. That companies are interested in food isn’t a surprise either — I mean, everyone eats, so there are broad applications (that people will pay for). But equally important is that food provides an interesting challenge because it isn’t one uniform thing. Food comes in odd-shapes and sized objects of varying color and textures.

Plus, there are a lot of different ways researchers can apply robotics research to food: In addition to identifying and moving objects, there is preparation like chopping and slicing, the actual cooking and plating of the food, and transporting a meal either inside a restaurant or across town to your door.

Going back to school seems like a good thing for these companies. If they can get robots to successfully work with food, then robots will be better trained and prepared for applications outside the kitchen.

Spoon Market Map: Booze Tech
Speaking of robots, want to know who’s making robot-bartenders? Then you should check out our new Booze Tech Market Map 2019. My colleague, Jenn Marston put the map together, writing:

For The Spoon’s Booze Tech in 2019 market map, we divvied the market up into several categories where technology is making the biggest impact on the way people get, create, and consume beer, wine, and spirits. That’s everything from apps that update you on the best craft beers available to at-home bartending devices that let you release your inner mixologist to the many ways in which companies are making it possible to get the booze delivered right to your doorstep.

Sadly, none of the companies listed have made robots that flip the shakers around à la Tom Cruise (a different kind of robot) in Cocktail.

The Middle-Mile
Walmart announced last week that it was conducting a self-driving delivery test with Gatik AI. There are plenty of companies testing out autonomous delivery vehicles, but the hook with this announcement was that Walmart is only delivering goods between two of its stores — not to a shopper’s door.

This business-to-business delivery route is called the “middle mile” and it’s a path increasingly taken by companies looking to streamline their logistics. Uber is using the middle mile for its nascent drone delivery program: in San Diego the company will fly hamburgers from restaurants to designated drop off areas where an Uber Eats driver will complete the delivery. Amazon is working on a system where it makes deliveries to a neighborhood hub and a robot, which lives in your house, goes out to fetch your order. And Zume Pizza transports pre-made pizzas in mobile kitchens that park in different neighborhoods and act as a hub for delivery drivers.

In addition to augmenting logistical operations for companies, the middle mile has benefits for consumers as well, especially when it comes to groceries. Many shoppers aren’t sold yet on self-driving delivery vehicles for groceries because that only gets their goods to the curb. With no delivery driver, shoppers still need to go out to the sidewalk and lug the groceries in themselves. Additionally, curbside pickup at the store is proving popular as it can fit into a consumer’s existing schedule.

All this is to say that this isn’t the last time we’ll be talking about the middle mile.

Newsletter: The New All-in-One Restaurant Tech Is Here, Digital Drive-Thru Goes Down Under

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I was in a local coffee shop recently and overheard a rep from a well-known POS company trying to sell his product to the shop’s manager. But for every feature he offered up (“It’ll manage payroll!” “It makes tipping easier!”), the cafe manager had more or less the same rebuttal: more tech would make more work for her staff.

I suspect this conversation is happening all over the world. Tech’s march on the restaurant industry is here to stay, but that doesn’t mean it’s necessarily making life easier for restaurants. In a growing number of cases, too many digital tools actually make it harder to get work done, particularly as demands for delivery and mobile orders ramp up and those functions have to be integrated into an already chaotic workflow.

But this week, we got a different glimpse into the future of the digital restaurant — namely, one where disparate tech solutions are replaced by a single digital platform that can manage every corner of the restaurant, from the kitchen system in the back to the kiosk out front to the off-premises order on its way out for delivery.

At least, that’s what Brightloom hopes to launch to restaurants this fall. The newly rebranded company, formerly known as Eatsa, announced yesterday that it’s revamped its existing end-to-end restaurant tech platform, into which it’s also integrating Starbucks’ famed mobile technology.

This is a big deal because, while many products claim to be “all-in-one” restaurant management software packs that make it easier for restaurant owners and operators to manage the entire business, no one’s yet managed to seamlessly integrate the mobile aspect of business into their system.

And nobody does mobile like Starbucks. Love ‘em or hate ‘em, it’s hard to deny the mega-chain’s dominance when it comes to offering fast, highly personalized order and pickup functions for customers. Brightloom’s soon-to-be-unveiled system will integrate the Starbucks mobile order, pay, and customer loyalty tech into its own system. We don’t yet know exactly what that will look like, but it will undoubtedly raise everyone’s standards around what restaurant-tech systems should be able to do and put pressure on others to make their offerings just as useful and less of a burden for restaurants to implement.

Good-bye, Crackly Speakerphone. Hello Digital Drive-Thru
Will all these digital developments render the crackly speaker at the drive-thru null and void? Probably, and sooner than we think.

While major QSRs like Dunkin’ and Starbucks have been implementing digital and mobile ordering into the drive-thru experience little by little over the last couple years, KFC took things a step further recently by announcing its first-ever drive-thru-only concept store.

The store, which is slated to open in November, will feature multiple drive-thru lanes dedicated to customers who have ordered their food via the KFC website or mobile app. The idea is to streamline the order process and cut down on how long it takes customers — or delivery drivers — to get their food. But again, it’s all about the implementation. KFC’s concept store could raise the bar on what QSRs are expected to deliver in terms of speed and quality. Or it could just be introducing another digital process that stresses workers out. We’ll know more when the pilot launches in November, in Australia.

Delivery Bots on the Rise
Or you could just let the restaurant come to you in the form of a roving bot. There’s a growing number of these devices delivering food from restaurant to customer, often on college campuses, which hold a lot of people in a relatively small geographic area.

But as my colleague Chris Albrecht pointed out this week, Kiwi announced it will test its semi-autonomous delivery bots on the streets of Sacramento, CA this fall, which suggests we’re coming to a point where these li’l roving machines will start to become a more common sight on regular city sidewalks. Who needs drive-thru when you can have your meal brought to you by a cute little box on wheels? As Chris said, “it was pretty amazing to whip out my phone, order a burrito, have a robot fetch my lunch and bring it to my location.”

For now, roving delivery bots are probably not a priority for most restaurants’ overall digital solutions. But as all-in-one offerings like the Brightloom-Starbucks tech get more commonplace and digital ordering becomes routine for customers and workers alike, there may be room for most restaurants to accommodate a bot or two in their tech stack.