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Daily news and analysis about the food tech revolution

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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.

Talking 23andMe For Farms, Bioreactors-as-a-Service & Other Crazy FoodTech Ideas With Dave Friedberg

But here’s the thing: most ideas about the future sound a little crazy the first time you hear them.

I had known about Friedberg for some time, in part because was the founder and CEO of agtech’s first unicorn in the Climate Corporation, a company that sold to Monsanto in 2013 for over $1 billion.

More recently I’d been tracking his progress at the Production Board, a company that is essentially an idea incubation factory for food, bio and ag tech concepts. The group is run by what Friedberg describes as “operators more than investors”.

The Production Board company portfolio is strung together by something closer to a grand unified theory about how the world should work rather than any sort of single investment theme. This theory, which Friedberg articulates in a manifesto on the Production Board website, reads as much like a science fiction short story as it does an investment guide and is centered around how the world’s existing food and agricultural production systems are antiquated relics of an inefficient industrial production processes that have taken root over the past couple centuries.

I sat down for a (virtual) meeting with Friedberg recently to talk about how the Production Board works and the progress he is making for upending some of the antiquated food and ag systems. We also talk about Friedberg thinks the future of food could look like ten years or more in the future.

You can see some excerpts from our interview below. In order to see the full interview and read a transcript of our conversation, you’ll want to subscribe to Spoon Plus.

Friedberg on how crazy it is we aren’t harnessing the full technology development to address our problems around food and agriculture:

If a Martian came down to planet Earth and they look at the way we’re doing things they would say, “that’s a little bit crazy. Not only that, but it’s crazy that you guys do things the way you do them given all the technology you have. You can do crazy shit as humans. You can like write DNA and you can like ferment things in these tanks and make whatever molecule you want. And you can pretty much print anything anywhere using different chemistry.” It’s ridiculous that the systems of production operate the way that they do.

Friedberg on the idea behind Culture Biosciences, a company he describes as an AWS for Bioreactors:

If you fast forward 50 years, Tyson Foods and these feedlots and cattle grazing, I mean, it’s so fu**ing inefficient it’s just unreal. It’s mind blowing how much energy and money and CO2 is part of the system of producing meat and animal protein. And we have the tools to make animal proteins and fermenters, so if you could have a fermenter in your home, and it just prints meat when you want it, I think that would be pretty cool. Technically the science is there, the engineering isn’t. And that’s the thing: with a lot of these things, the science is proven, but a lot engineering work still to do. But it’s, it’s feasible. All these things are feasible.

Friedberg on how the Production Board germinates ideas that ultimately become one of their portfolio businesses:

We do primary research, we spend a lot of time with scientists and researchers and identify new and emerging breakthroughs in science and technology. We also spend time in the markets we operate in: food, agriculture, human health, increasingly looking at things like energy materials. And then we try and identify what’s a better way of doing this thing in this market?

So using all these new breakthroughs using all this new science, using all this technology that might be emerging, how can we do something that can transform one of these markets and really do a 10x on it? If it’s not a 10x, if it’s just a 5% better model or a 10% better model, it’s not worth doing. If we can 10x the market – reduce cost or energy by 10 times – then it becomes kind of exciting. And so that’s how we kind of think about operating business opportunities.

The full interview and transcript are available for Spoon Plus customers. You can learn more about Spoon Plus here. 

Toast Announces $400M in Fresh Funds, Now Has a $4.9B Valuation

Restaurant-tech heavyweight Toast announced today it has closed a $400 million Series F funding round led by Bessemer Venture Partners, TPG, Greenoaks Capital, and Tiger Global Management. The round brings Toast’s total funding to $902 million. More importantly, as Toast’s press release notes, it boosts the company’s total valuation up to a whopping $4.9 billion.

Toast has long been a major player in the world of restaurant tech. It’s platform, which launched back in 2013 as a humble POS system, has expanded and evolved over the years to become an end-to-end restaurant-management stack that includes front-of-house, back-of-house, guest-facing, and back office software and hardware tools, as well as an extensive marketplace from which restaurants can choose additional features to integrate (e.g., delivery). 

That the company is now valued at nearly $5 billion also says something about restaurant tech in general. Restaurants in the last few years have added tech tools at an almost blinding pace as demand for delivery and takeout ramps up, orders arrive through multiple different sales channels, and personalizing the guest experience gets ever more important. 

Toast was wise to branch out from just being a POS maker when it did. Restaurant-tech tools may proliferate now, but some predictions suggest businesses have reached a point where they will start to add and evaluate their tech more strategically. Being an all-in-one solution that can address most needs for most types of restaurants have a bigger shot and surviving this ultra-saturated market than those that only cater to a few needs. Being valued at $4.9 billion doesn’t hurt, either.

Not that Toast is alone. Square does its own restaurant-management platform, as do Fourth and HotSchedules, who merged in 2019. Also in 2019, LimeTray brought its system to the U.S. (The company is already an established restaurant tech player in India, the UK, the UAE, and South Africa.) Let’s not forget Brightloom (née Eatsa), who struck a deal with Starbucks to integrate the latter’s mobile ordering and loyalty functions into Brightloom’s existing restaurant-management stack.

For its party, Toast has said it will use the new funds to design new products and capabilities, particularly those that can increase speed of service and restaurant revenue, decrease employee turnover, and help further help restaurants manage their financials. 

Week In Restaurants: Grubhub Says It Is Not for Sale, McDonald’s Creates a New Tech Department

Taco Bell bucked industry trends this week by announcing it will test paying select managers at some company-owned locations $100,000, which is roughly double the average salary for restaurant managers. Between that, new vegan drinks from Starbucks, and a slew of other announcements, much happened in the world of restaurants this week. Here’s a wrap of a few other stories from ‘round the web:

Grubhub Says It Is Not for Sale

Reports surfaced earlier this week that Grubhub had hired financial advisors to explore a sale or acquisition — news that sent the troubled delivery company’s stock surging. However, a spokesperson for the company told the folks at Restaurant Dive today that “there is unequivocally no process in place to sell the company.” The spokesperson added that Grubhub believes there will be acquisition opportunities this year and that the company’s profitability “remains secure.”

McDonald’s Is Creating a New Tech Department

Meanwhile, if there were any doubts former CEO Steve Easterbrook’s sudden departure would stall the mega-chain’s tech ambitions, those should be sufficiently quelled by this week’s news. On Wednesday, McDonald’s announced it is creating a digital customer engagement team and the role of Chief Digital Engagement Officer. Lucy Brady, who has spent the last three years as SVP of corporate strategy and business development at McDonald’s, will step into the new role. Brady’s group formerly led the development of McDonald’s delivery program as well as the $300 million Dynamic Yield acquisition that happened last year. The new team will oversee digital ordering, personalization, payments, loyalty programs, and delivery, and report directly to newly appointed CEO Chris Kempczinski.

Olo Supposedly Planning a 2020 IPO

Olo is said to be planning a U.S. initial public offering for this year, according to a Bloomberg article that cited “people with knowledge of the matter.” The company’s software streamlines the process of adding delivery partners for restaurants, among other things, and has been steadily gaining popularity in the restaurant tech world over the past few years. Sources say Olo had interviewed potential advisors at the end of 2019 and could seek a valuation of $1 billion for an IPO. Olo itself declined to comment on the story.

Wow Bao Expands to the East Coast

Fast-casual Asian-food chain Wow Bao will expand to the East Coast, with three new locations set to open in the first quarter of 2020, according to an email sent to The Spoon. Wow Bao is known for its tech-centric approach to fast-casual that leverages Brightloom’s end-to-end tech stack for restaurants. Given that focus, which includes self-order kiosks, pickup cubbies, and digital ordering, it makes sense the chain’s new planned locations will be in airports, where super-speedy service for high volumes of people is the norm — or at least the norm restaurants aim for. Planned locations are for Dulles International Airport, Boston Logan International Airport, and Raleigh-Durham International Airport, according to the press release. 


Newsletter: Back-to-School Delivery Apps and High-Tech Sushi Burritos

While my colleagues are across the Pacific this week at the SKS Japan show, I’ve been thinking about college. Specifically, how college and university campuses are a lucrative frontier for food delivery.

Unless you’re in an urban campus like NYU, where delivery, takeout, and street food options already abound, the average college campus has everything a food-delivery service could want in terms of customers: lots of bodies packed tightly together, pulling late hours in locations where food isn’t always a given (e.g., the library).

Third-party delivery services like DoorDash and Grubhub already provide a presence on campuses, along with a much-needed alternative to soggy spaghetti and stale Cheerios. But for bigger corporations who’ve long been a part of the university foodservice world, third-party delivery is a competitive threat to their very relevance on campus.

Not surprising, then, that some of these legacy foodservice companies are starting to respond with their own contributions to delivery. This week food services provider Aramark, who works with more than 400 universities in the U.S., announced it had acquired meal delivery company Good Uncle.

Via Good Uncle’s app, students can order chef-made meals and snacks that are typically cheaper than the average restaurant and don’t have delivery fees. While Good Uncle’s reach is relatively small right now, serving just eight campuses, its business model makes a lot of sense for an older company like Aramark trying to stay relevant to students in the food delivery era.

Exactly how Aramark will leverage this new acquisition remains to be seen, but it’s a smart move to get into the delivery space now. Grubhub has already been working its way onto campuses via its 2018 acquisition of Tapingo, and a growing number of delivery bots on campus brings both new ways to do food delivery for students and more competition for existing players. That includes Aramark rival Sodexo North America, who this year partnered with Starship Robotics to unleash fleets of wheeled bots onto college campuses.

An Eatsa-style Empire in Japan

But back to Japan.

My colleague Chris Albrecht got to experience not one but two awesome food-centric things this week: sushi burritos and high-tech restaurants.

Chris headed over to Beeat Sushi Burrito, a Tokyo restaurant that serves sushiritos and is powered by an end-to-end system that automates most of the order, pay, and pickup process for customers.

As Chris noted, though, UBO, the company behind the restaurant, is more focused on tech than food:

“Instead of selling sushiritos, UBO has developed the entire system from the software platform to the cameras installed in the cubbies that read the special QR codes that identify each order. UBO wants to license its tech stack to other restaurant chains, who can then integrate the automat style of eating into their own locations.”

It’s not unlike the Brighloom (nee Eatsa) system here in the U.S., which is an end-to-end restaurant tech stack that automates much of the customer’s restaurant experience and will do so even more now that it’s licensed some of Starbucks’ technology.

So while a sushirito empire isn’t the end goal for UBO, Beeat Sushi Burrito is another example of how the restaurant experience is getting automated and suggests we’ll see many more iterations of this in future, on either side of the Pacific. And, most likely, in colleges and universities, too.

Until next time,

Jenn

UBO is Using Sushi Burritos to Build an Eatsa-Style Empire in Japan

Unless you live in San Francisco, you may not be familiar with the concept of a sushirito. They are exactly what they sound like: sushi wrapped up like a burrito. A Tokyo-based company called UBO is hoping to leverage those delicious portmanteaus to help restaurant chains build out their own Brightloom (formerly Eatsa)-like experience across Japan.

I met with UBO CEO, Takehiro “Indy” Sato, at Beeat Sushi Burrito yesterday. The restaurant opened last December near the Akihabra district in Tokyo. There are no humans to greet you at the door or take your order. There are just two people tucked away working in the kitchen. To place an order, you visit the Beeat web site (no native mobile app yet), make your selection, tell them when you want to pick it up, and pay with a credit card or Amazon Pay (more on that in a second). Then you go to Beeat Sushi where there are some tables and rows of numbered cubby holes. A screen above tells you when your order is ready and which number box to pick it up from.

But UBO’s goal is not to create a Beeat empire; the restaurant itself is more of a proof-of-concept. Instead of selling sushiritos, UBO has developed the entire system from the software platform to the cameras installed in the cubbies that read the special QR codes that identify each order. UBO wants to license its tech stack to other restaurant chains, who can then integrate the automat style of eating into their own locations.

If that sounds like Eatsa Brightloom, well, you’re not wrong, though Sato said there are some differences between UBO and Brightloom. For one, the cubby holes at Beeat don’t have doors — the Japanese public health department wouldn’t allow them. Sato tried telling officials that other countries like the U.S. and China use doors, but the Japanese government said no.

Second, Sato isn’t repeating Brightloom’s mistake of trying to build his own restaurant chain. “We’re a tech company, not a sushi company,” Sato told me when I visited him at Beeat today.

To that end, the company has already iterated on its system and now offers a smaller version of its cubby system. Instead of taking up a wall, it’s more like a countertop display case with a tablet on the bottom. Sato says this diminutive footprint is better for restaurants in Japan, which are usually smaller. Restaurants could alleviate long lines and crowds by having people order ahead, then simply walk up and grab their food from the cubby.

Sato said UBO is fully self-funded right now, though the company is looking for venture funding to help scale up operations. Right now, UBO’s business model is to rent out its system at $2 per cubby per day with a two-year minimum contract. The company is currently running and planning tests with some unnamed customers.

I learned a few other interesting tid-bits about Beeat while chatting with Sato. Most surprising is that Amazon Pay is evidently super popular in Japan. Sato said that roughly 40 percent of his customers use Amazon Pay when paying for their meal. Additionally, UBO decided early on to not go with kiosk ordering. Sato didn’t think they were necessary after visiting the U.S. and seeing everyone just order with their phone inside Starbucks.

He also said that though they are connected with Uber Eats, only about 20 percent of their Beeat business is delivery right now. That was surprising to me because sushiritos are actually pretty perfect for delivery. They don’t have to stay hot and they come in a compact form factor that keeps the food in shape even when it’s jostled about. Most of all, they are delicious — you can tell they were developed by a Michelin-starred chef, Mizuguchi Kazuyoshi.

But people wanting to try a sushi burrito in Tokyo should do so soon, because if UBO’s licensing business takes off, there won’t be a need to keep Beeat open.

The Food Tech Show: The Perilous Existence of Bike-Riding Food Delivery Drivers

It’s been a big week in restaurant tech news, so the Spoon gang got together to record a podcast.

In this episode of the Food Tech Show, we discuss:

  • Starbucks deal with Brightloom (formerly Eatsa) and what it means for the restaurant tech market
  • The New York Times piece about a day in the life of food delivery drivers
  • Uber’s all-in-one app for food, bikes and rideshares
  • Mike’s first-world coffee machine struggle with whether he should have waited for the Terra Kaffe, even as the Spinn nears a ship date

As always, you can hit play below or listen to the Food Tech Show podcast on Apple Podcasts, Spotify or wherever you get your podcasts.

Pizza Hut Testing Brightloom’s Cubby Technology in Los Angeles

Pizza Hut announced in a statement this week that it is testing out Brightloom’s automated pickup cubbies at its Hollywood location. It’s the same technology currently used in chains like MAC’D and Chicago-based Wow Bao.

The point of Brightloom’s cubby system is to speed up service and give customers a way to order digitally then retrieve their food without every having to interact with a human being. Users can place an order via the Pizza Hut app or website, though Pizza Hut said in the statement they can still order via phone or in-person if they prefer.

Once at the restaurant, users find their designated cubby, which digitally displays their name on the door and is built with a special lining that keeps pizza hot and drinks cold. From there it’s just a matter of grabbing the pie and heading out.

The pilot kicked off yesterday. Pizza Hut says it plans to roll out more iterations of it in West Coast locations in 2020.

The pilot also follows the Brightloom announcement this week that the company formerly known as Eatsa has rebranded, raised $30 million, and is working with Starbucks to license the latter’s mobile order-pay-loyalty technology for its own system. Brightloom will in the near future license this newly revamped tech stack to restaurants.

Linking up with Brightloom is a smart move on Pizza Hut’s part. As my colleague Chris Albrecht said not long ago, “pizza continues to disrupt itself,” and there seems to be no end to national chains throwing new tech initiatives at the process of ordering, retrieving, and delivering pies to customers. Little Caesars’ Pizza Portal is similar to the Brightloom cubbies in that it’s a temperature-controlled, self-service pickup station that also allows users to order and pay digitally. Domino’s, meanwhile, has kept busy releasing everything from in-car ordering functionality to AI-powered scanners that check pizza quality.

But as we mentioned at the time of the Brightloom-Starbucks news, Starbucks is arguably the leader when it comes to mobile order, pay, and pickup technology, and combining it with Brightloom’s already-powerful end-to-end restaurant management platform could seriously raise standards around all restaurant technology. Pizza Hut hasn’t said if its subsequent cubby rollouts will include this new version of Brightloom’s platform, which will be unveiled in October. However, a relationship with Brightloom could help give Pizza Hut the competitive edge it needs when it comes to technology over the long term.

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.