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Daily news and analysis about the food tech revolution

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

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

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

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

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

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

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

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

Uber Launching Grocery Delivery in U.S. Amidst Record-Setting E-Commerce

Uber announced today that it will launch grocery delivery in select cities this month. The announcement comes at a time when the global COVID pandemic has spurred consecutive monthly record-setting grocery e-commerce sales in the United States.

From the Uber blog post announcing the news:

Starting today, in collaboration with our partner Cornershop, customers in select cities in Latin America and Canada can order groceries through both the Uber and Uber Eats apps. And starting later this month, grocery delivery will be available in Miami, FL and Dallas, TX. In those two cities Eats Pass and Uber Pass members will receive an additional benefit, free grocery delivery on orders over $30. 

According to Grocery Dive, the service will be available through the Uber and Uber Eats apps, where users can select a participating retailer and order their groceries. And though Cornershop is fulfilling orders now, Uber drivers will be able to sign up to make grocery deliveries.

Uber announced last October that it was acquiring a majority stake in Cornershop, an online marketplace for on-demand delivery from supermarkets across Chile, Mexico, Peru and Toronto. That deal still hasn’t gotten formal approval from the Chilean government, though Uber believes that will happen in a matter of days.

This grocery expansion news comes just one day after Uber announced that it was acquiring third-party delivery service Postmates for $2.65 billion. Both the Cornershop and Postmates deals show how Uber is bolstering its Eats delivery business at a time when the COVID pandemic and quarantining is hammering its ride sharing business.

The pandemic is also driving a grocery e-commerce boom. According to surveys from Brick Meets Click, online grocery shopping has had month-after-month of record setting sales as restaurants were shut down and people were forced to shelter in place. With the pandemic showing no signs of slowing down here in the U.S., getting into grocery is a smart move for Uber.

Uber is, however, facing stiff and well-funded competition. Last month, Instacart raised $225 million (and has raised $2.1 billion in total) as it has seen a surge in demand. It was also ratcheting its ranks to 750,000 Shoppers (the gig workers who shop and deliver) to increase delivery availability. Not to mention huge grocery retail players like Walmart and Amazon making and expanding their own delivery programs.

For its part, however, Uber does have a large installed user base from ride sharing and restaurant delivery that it can tap into. Now we’ll have to see what kind of an impact it can make when it comes to getting people groceries.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Square Launches New Service So Restaurants Can Take Delivery Orders Directly

Payment processing company Square announced today the launch of its new On-Demand Delivery for its customers using the Square Online Store. The service allows restaurants and other sellers to take and fulfill delivery orders directly through their own websites, rather than going through a third-party delivery service.

Off-premises eating had been a growing portion of the restaurant industry’s revenue before the pandemic hit. Once restaurants were forced to close down dine-in operations out of COVID-19 concerns, delivery and curbside pickup became the only way restaurants could stay afloat.

But typically if restaurants want to offer delivery, they need to sign up for a third-party delivery service like DoorDash or Uber Eats. Those third-party delivery services charge high commissions and fees that basically gobble up most of the money a restaurant earns and drives up the price for consumers.

Square is letting restaurants bypass some reliance on those third-party delivery services by letting restaurants accept delivery orders directly on their own websites. From a Square blog post today announcing the new feature:

When an order is placed on the seller’s online store, a courier from the restaurant’s delivery partner is dispatched to the business location, picks up the order, and delivers it to the buyer. The buyer receives text updates with links to live maps to track delivery progress. Sellers pay a flat fee of $1.50 per order to Square, plus a fee to their delivery partner that is calculated in real-time based on distance and other factors. Sellers can pass this fee entirely to the buyer or offer custom delivery promotions. When applied across hundreds of delivery orders each month, sellers can save a significant amount on per-order costs.

There are some devils in these details. For instance, Square’s On-Demand delivery is now powered by Postmates, which itself a third-party delivery service (Square says more courier services will be added). Per Square, the restaurant is still paying Postmates a fee “based on distance and other factors.” The question then is, how much cheaper is it for a restaurant to take the delivery order directly and just use Postmates as a courier than it is to take orders via Postmates? Because part of what you pay for with a third-party delivery service is access to their large marketplace of customers looking for something to eat. Will abandoning third-party services save enough money?

Regardless, this is another example of the continuing evolution of the restaurant industry trying to navigate this pandemic and beyond. Third-party delivery services were a hero, then the villain. Restaurants that had once outsourced delivery are now looking to bring it back in-house, or create some type of hybrid solution.

Square’s On-Demand feature is more fuel for even more change.

U.K. Regulators Grant Provisional Clearance to Amazon’s Highly Scrutinized Deliveroo Investment

The U.K.’s Competition and Markets Authority (CMA) has provisionally cleared Amazon’s 16 percent investment in Deliveroo on the basis that the deal would not likely “damage competition in either restaurant delivery or online convenience grocery delivery,” according to a statement from the CMA.

Amazon was set to be the largest contributor to a $575 million investment announced in May 2019. By July of the same year, British regulators were scrutinizing the deal, claiming there were “reasonable grounds” to suspect that Amazon and Deliveroo would “cease to be distinct” were it to go through. Many months and a pandemic later, the CMA provisionally approved the deal in April 2020. Grounds for approval were that, thanks to the pandemic decimating the restaurant industry, Deliveroo would have had to exit the food delivery market without Amazon’s investment.

Though it seems the stakes are actually less dire for Deliveroo. The CMA said today that it has revised its provisional findings from April and found that “Deliveroo would no longer be likely to exit the market in the absence of this transaction.”

Even so, a lot has changed in the third-party since Amazon first announced its plans to invest in Deliveroo. The biggest development (besides COVID-19) has been Takeaway.com’s acquisition of Just Eat that was approved in April and created one of the largest food delivery companies in the world. That deal alone makes the U.K. food delivery market more competitive, and renders Amazon (a little) less of a behemoth come to gobble up marketshare. Uber Eats also operates in the U.K., as do a handful of smaller players. 

Another concern of the CMA’s was that through its investment, Amazon would cease to be competitive with Deliveroo. Thanks in large part to the Just Eat-Takeaway.com deal, that appears to no longer be the case.

“Looking closely at the size of the shareholding and how it will affect Amazon’s incentives, as well as the competition that the businesses will continue to face in food delivery and convenience groceries, we’ve found that the investment should not have a negative impact on customers,” Stuart McIntosh, Inquiry Chair for the CMA, said in a statement.

The CMA will now ask for views on the new findings by July 10. From there, it will make its final decision, which is due by August 6, 2020.

Arcimoto and HyreCar to Make the Deliverator EV for Rent in LA

While the “Deliverator” sounds like something out of a Strong Bad cartoon, it’s actually a three-wheeled electric vehicle made by Arcimoto that could help speed up food deliveries.

Today Arcimoto and HyreCar, which allows people to rent cars they can drive for ridesharing services like Uber and Lyft, announced that the Deliverator will be available to rent in Los Angeles starting this summer.

The Deliverator features a 102 city mile range, can go up to 75 mph and has 20-plus cubic feet of cargo space. Because of its narrow footprint, it can be nimble and temporarily park in spaces where full-sized car can’t fit.

Gig workers in LA who want to get into grocery, restaurant or other delivery will be able to rent a Deliverator through the HyreCar platform starting this summer. Prices weren’t mentioned in the press announcement emailed to The Spoon, but a screengrab on the HyreCar website shows that renting a Toyota Prius for the day costs $35. A delivery driver would need to do the math to make sure they’d make enough revenue to make the Deliverator rental worth it.

Depending on the actual economics, adding the Deliverator seems like a smart play for HyreCar. The COVID-19 pandemic has meant increased restaurant delivery and record-setting grocery e-commerce. So there is more of a demand for delivery drivers than ever, and providing a small, zippy vechicle that can practically park anywhere could actually help speed up service.

The pandemic is accelerating the adoption of a lot of different delivery technologies. Postmates’ rover robot is now rolling around Los Angeles, making food deliveries. Refraction’s autonomous REV-1 is doing restaurant and grocery delivery in Ann Arbor, MI. And Nuro’s pod-like low-speed vehicle is now testing in California.

Getting Arcimotos into action to make deliveries is actually easier than some of these solutions because there is a person driving the vehicle rather than an AI. So there aren’t self-driving regulatory hurdles to overcome.

We’re looking forward to see how people take to the Deliverator’s not-quite–a-full-size-car option down in LA, and whether the program will expand to other cities. The program could wind up being a real homestar runner.

Report: DoorDash Raised $400 Million Amid Surge in Demand and Costs

DoorDash has raised $400 million in new funding, giving the third-party delivery service a $16 billion post-money valuation, according to a report in Axios’ Pro Rata newsletter. This latest round was led by Durable Capital Partners, with participation from Fidelity and existing investor T. Rowe Price.

Today’s Axios story follows a Wall Street Journal article last week that said the company was close to getting funding that would value the company at $15 billion. This round would bring the total amount of funding DoorDash has raised to $2.5 billion.

Back in February of this year, DoorDash had confidentially filed to go public. Around that same time, the COVID-19 coronavirus erupted into a global pandemic. With shelter-in-place orders instituted around the world, demand for food delivery skyrocketed. As Axios points out, along with this surge in demand came increased costs for DoorDash, which needed to implement new contactless delivery features and provide PPEs to its delivery drivers.

In addition to rising costs, DoorDash’s new funding comes amidst new regulatory and competitive issues. Just yesterday the San Franciso DA sued DoorDash over how the company classifies its workers as contractors and not employees (which would give them overtime pay and other worker benefits, which would cost DoorDash a lot of money). There has also been some consolidation in the third-party delivery space as last week Just Eat Takeaway acquired Grubhub.

There are still a lot of unknowns about how this pandemic will or won’t permanently alter our relationship with restaurants. A recent spike in coronavirus cases where states have re-opened may keep patrons away from dining out and drive them deeper into delivery. The question now is whether the massive amount of money DoorDash has raised is enough to keep it going through all of this change.

More COVID-Related Cuts for Food Delivery: Grab Lays Off 5 Percent of Its Workforce

Singapore-based food delivery service Grab is letting go of about 5 percent of its workforce and “winding down” several projects and functions, according to AgFunder News. 

The layoffs are part of Grab’s ongoing struggles with COVID-19’s impact on the global economy. Grab had previously asked its workers to accept decreased hours or take unpaid leave of absence in an effort to avoid having to reduce its workforce. The company also implemented pay cuts for senior management.

But in a letter to staff that was cited by AFN, Grab cofounder and CEL Anthony Tan noted that after trying everything possible to avoid staff reductions, the company now has to accept this reality. “In spite of all this, we recognize that we still have to become leaner as an organization in order to tackle the challenges of the post-pandemic economy,” he said.

Affected employees will receive “enhanced severance payments, expedited equity vesting, extended medical insurance coverage, and access to career advice and mental health support.”

Softbank-backed Grab bills itself as “your everyday everything app.” The company offers on-demand food delivery as well as ride hailing services in about 300 cities across Southeast Asia. 

And it’s hardly the first food delivery service to announce layoffs in the last few months. In India, the two major players in third-party delivery, Swiggy and Zomato, both announced layoffs in May. U.K.-based Deliveroo cut 15 percent of its workforce in April, citing coronavirus’s impact as the reason, and Uber recently laid off employees, including those working for the company’s Eats division.

At the same time, consolidation has come for the food delivery world, most notably in Just Eat Takeaway’s plans to acquire Grubhub. In 2019, Delivery Hero bought South Korean Woowa Bros.’ food delivery service, and Brazil-based iFood merged with Colombian service Domicillios.com.

Layoffs don’t necessarily signal that a company is about to get gobbled up by an acquisition, but the pandemic has certainly caused many on-demand businesses around the world to struggle, cut costs, and become leaner all around. Competition has long been fierce in food delivery, especially in Southeast Asia, where Grab competes with rival Gojek for dominance. Grab’s announced layoffs this week are hardly the last we’ll see in the coming months as the market for on-demand food delivery becomes even more cutthroat.

San Francisco DA Sues DoorDash Over Worker Classification

San Francisco District Attorney Chesa Boudin is suing DoorDash over misclassifying its delivery drivers and couriers as independent contractors, rather than employees, according to TechCrunch. The lawsuit seeks for DoorDash to stop classifying its workers as such or face a $2,500 fine for each violation.  

According to the suit:

“DoorDash’s misclassification of its Dashers was no mistake, but instead a calculated decision made to reduce the costs of doing business at the expense of the very workers providing the company’s core service of delivery: the delivery of merchandise from merchants to customers.”

The suit comes months after California’s AB 5 was signed into law. AB 5 lays out exactly which types of workers can be classified as independent contractors, using the ABC test as criteria. As the suit outlines, DoorDash’s workers don’t meet the criteria in the ABC test to be considered independent contractors. Instead, they should be assumed to be employees with the same access to healthcare, workers comp, overtime pay, and other benefits W-2 employees receive.

The issue of benefits for gig workers is an especially hot-button one right now, thanks to the pandemic. Gig workers delivering restaurant meals and/or groceries have so far been considered “essential” and allowed to continue making deliveries during shelter-in-place mandates. That put a lot of food on consumers’ tables, but it also put workers’ health at risk. As contractors, those workers don’t have automatic access to healthcare of paid sick leave. As one worker said at the beginning of the crisis, “Staying home won’t pay the bills.”

To be fair, most third-party delivery services responded to the issue back when the pandemic first accelerated, offering some financial compensation for workers affected by COVID-19. Other moves to better protect workers have been the result of government involvement, as when a New York Court ruled that Postmates drivers were eligible for unemployment during the pandemic.

DoorDash itself has been offering financial assistance through its COVID-19 Financial Assistance program. Dashers impacted by the pandemic can submit a claim and be eligible for up to two weeks of assistance. And the company recently entered into a public-private partnership with the Pennsylvania Office of the Attorney General to further expand financial, healthcare, and childcare assistance to Dashers.

All those efforts are specific to the pandemic, though. Boudin’s lawsuit seems aimed at the long-term situation of Dashers and other gig workers, and what protections they can receive when there isn’t a global health crisis in play.

Not every worker wants to be classified as an employee, though. A slew of responses to one of Boudin’s tweets this week shows that some gig economy workers prefer to be contractors. “Most of us drivers want to remain Independent Contractors because of the flexibility and because [w]e make more than minimum wage,” wrote one. Another responded that “As an independent contractor I’m outraged that you’re taking away my flexibility to barely afford to pay my health bills even though I’m working seemongly [sic] nonstop for the same one or two companies.” And in the words of another, “We didn’t fucking WANT relief. All he will accomplish here is making us unemployed and homeless.”

Plenty of other gig workers are in favor of laws like AB 5 (“Thank you! They stole my tips!” one person responded to Boudin’s tweet).

For third-party delivery services, turning contract workers into employees would be an expensive endeavor — more expensive even than spending $90 million to fight AB 5, which is exactly what DoorDash, along with Uber and Lyft, pledged to do. Having to pay workers health insurance, overtime, and sick leave would further erode these companies’ chances of profitability, which is another major issue in the gig economy world.

It recently came to light that DoorDash is near closing a new round of funding that would value the company at over $15 billion. The company filed to go public last year and, according to sources, is still planning on a listing for 2020. That would make the profitability issue even more pressing for the third-party delivery service, so we can expect DoorDash to continue fighting hard against AB 5.

Panda Express Launches Its Own Delivery Service. Other Restaurants Could Follow

Panda Express has, in its own words, “cut out the middleman” as far as restaurant delivery is concerned. This week, the QSR chain announced it has launched its own delivery service, and also said was planning for 30,000 new hires, according to a press release sent to The Spoon.

The chain, which is owned by Panda Restaurant Group, had actually been planning to launch its own delivery service in a year’s time, according to the press announcement. The pandemic accelerated this timeline. Even with dining rooms reopening, they’re doing so at reduced capacity, and many would rather order takeout or delivery and eat in the comfort of their own home. But fees for using third-party delivery services a la Uber Eats or Grubhub can stack up quickly. For consumers dealing with job uncertainty or unemployment — two widespread things right now, thanks to he pandemic — ordering delivery with any amount of regularly just isn’t financially possible right now.

Panda Express noted the exorbitant fees in its announcement, and said with this new delivery service, guests “will not incur additional fees typically found on third party sites.”

However, a Panda Express spokesperson confirmed to The Spoon that Panda Express will still be available on third-party delivery services, “such as Uber Eats and Postmates.” So this new delivery service could be the start of a slow transition towards bringing off-premises operations back in house.

Which is definitely a post-pandemic trend to watch. Not that we’re post-pandemic yet, one of the many flaws in our food system the COVID-19 crisis put a spotlight on is the relationship between third-party delivery services and restaurants. Sky-high customer fees, even higher commission fees for businesses, shady business practices, and tipping policies for workers are all griefs the restaurant industry has voiced in the past year. To offset some of the high costs of doing delivery, restaurants have to raise their prices for customers. 

Restaurants are being urged by many in the industry to try and pull some of their off-premises strategies back in house in an effort to regain some control over their operations and, more importantly, their customer data and relationships. One analyst recently went as far as to say that “In the longer-term, many restaurants are going to see the value of investing in an in-house system for delivery orders.”

That won’t happen immediately. For many businesses, in-house delivery is actually more expensive than using a service like Uber Eats. But it could well be that the pandemic, the subsequent restaurant industry meltdown, mass unemployment, and a recession spur more restaurant into action in terms of finding ways to take more control back of their off-premises operations. If nothing else, this will definitely be a trend to watch in the latter half of 2020.

As far as the 30,000 new hires, Panda Express told Nation’s Restaurant News that new positions will exist to “execute the new health and safety operations and procedures, such as contactless service, curbside assistance, drive-thru assistance, expediters for to-go and online ordering, as well as new cleanliness protocols.”

Gaming, Glass Houses, and Other Signals of Restaurant Recovery

Everyone’s talking about Just Eat Takeaway’s acquisition of Grubhub this week, so let’s talk about mannequins in restaurants instead.

At a virtual workshop for The Spoon this week, Max Elder, a Research Director at the Institute for the Future, referenced restaurants that are currently using mannequins to fill up tables left empty by social distancing rules. The example is what he calls a “signal.” Signals are, as Elder explained, “small or local innovations happening today, with potential to grow in scale and geographic distribution.” They are one small thing happening right now that can eventually accelerate into a widespread trend that changes an industry or, as Elder suggested, the entire food system.

The restaurant industry is full of these signals right now as businesses struggle to adjust to the new reality of reduced capacity in the dining rooms, an emphasis on to-go orders, and social distancing guidelines. Some things, like curbside pickup, have already become full-on trends everyone is doing. But plenty of restaurants are innovating on a much smaller scale, whether it’s through a new technology, product, or creative approach to social distancing. See the mannequins example above.

Will all of the signals currently out there in the restaurant industry become widespread trends? It’s too soon to tell, but they all provide some specific, granular detail on about new restaurant experiences and unique ways businesses are working to change the way we eat. In the spirit of that, here are a few noteworthy signals that may or may not become widespread but show us that innovation is alive and well in the restaurant biz.

Gaming gatherings. Fancy a little D&D with your to-go latte? Hex & Company, a board game cafe in NYC, set up an online gaming service to keep customers in touch with its brand (and also probably give them something to do) during shelter-in-place restrictions. 

People in glass houses. A shoutout to virtual workshop attendee QQ for bringing this up during the session. A restaurant in Amsterdam is making it safer for diners to eat out by enclosing them in tiny greenhouse-like glass structures while they eat. (See image above.) The concept is compelling because it serves up a unique restaurant experience that’s socially distanced at the same time.

Virtual tip jars. We’ve written about this one before. Out-of-work servers and bartenders can receive Venmo tips from folks they may never have served, thanks to efforts like this one in Chattanooga. The contactless aspect of these virtual tip jars could make the concept at attractive sell even once we’re past the pandemic.

Restaurant relief kitchen. When fine-dining restaurant Alma Cocina Latina had to close its doors because of the pandemic, owner Irena Stein turned it into a relief kitchen for food-insecure individuals around Baltimore. The concept was so attractive it eventually got the backing of José Andrés’ World Central Kitchen.

If eating inside a glass greenhouse or playing Magic the Gathering via your local coffeeshop’s server seems kind of strange, that’s good. One of my favorite moments of this week’s workshop was when Elder said, “Any useful statement about the future should at first seem ridiculous.” As the restaurant industry enters a new era, we’ll need as many left-of-center ideas as we can possibly get.

Another Day Another Grubhub Rant

OK let’s actually talk about Grubhub. Or rather, let’s talk about what Just Eat Takeaway inherits if its deal to acquire Grubhub is approved by shareholders and goes through.

To quickly sum up the news, this week Amsterdam, Netherlands-based Just Eat Takeaway confirmed its $7.3 billion deal to acquire Grubhub. The sale creates a combined 360,000 restaurant clients across 25 countries, and roughly 70 million customers. 

Just Eat Takeaway, which is itself a newly formed company, also gets an automatic in with some of the strongest food delivery markets in the U.S., New York City and Grubhub hometown Chicago among them. It gets access to other markets across North America and therefore can take a hefty swipe at U.S. market leader DoorDash, and it will become the largest food delivery service in the world outside of China.

The deal, which is expected to close in the first quarter of 2021, also means Just Eat Takeaway will inherit the many (many, many) highly controversial aspects about Grubhub.

Over the last year alone, Grubhub has been accused of using misleading websites and phone numbers to charge restaurants extra fees, listing restaurants on its site with which the service doesn’t even have a deal with, and it’s stood behind the arguably unethical commission fees it charges restaurants. When he pandemic struck the U.S. in full force and restaurant dining rooms closed down, Grubhub didn’t waver from those fees. It merely offered a vaguely worded announcement about deferring fees for a temporary period, and the company spoke out against the mandatory caps many city governments have placed on those fees.

Uber, a former Grubhub suitor, reportedly balked at these shady business practices, which were one reason among many that deal went south. Just Eat Takeaway hasn’t made any mention of them in official statements or interviews so far, though in an interview with NRN this week the company said it was attracted to Grubhub’s business model. It’s too soon to know what that means for restaurant clients, but it doesn’t exactly instill confidence that things will change.

Unless consumers themselves opt out of using those services. One of the things Elder mentioned in his talk today was that everyone has a stake in the future of food. For restaurants and delivery, that means customers can help dictate the direction of the industry by the places where they eat and and the services they order from. No, every consumer that reads about the above controversies won’t delete their Grubhub and/or Just Eat Takeaway apps. But it’s worth remembering, as we’re forced to redesign the food system, that everyone’s actions, right down to the $5 sandwich order, will have lasting impact on the future of food.

Tune Into The Spoon’s Startup Pitch Session

Let’s end on a non-rant this week by highlighting the wealth of startups out there working around the clock to help change the food system for the better. Next week, The Spoon will host a Startup Pitch Session you can tune into via CrowdCast to see what some of these companies are up to.

For this first-ever Food Tech Pitch Sesh, Better Food Ventures’ Brita Rosenheim and Sansaire founder Scott Heimendinger will judge three food tech startups pitching their products. It’ll be great fun, with lots of constructive feedback you’ll likely be able to take and apply to your own business.

Join us next week, on June 18 at 10 a.m. PST. Register here to save your spot.

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