Close Ad

The Spoon

Daily news and analysis about the food tech revolution

delivery

Drizly Raises $50M for Booze Delivery to Your Door

Drizly, the online booze shopping and delivery service, announced yesterday that it has raised a $50 million Series C round of funding. The round was led by Avenir with participation from Tiger Global and other existing investors. This brings the total amount raised by Drizly to $119.6 million.

The funding comes during what appears to be a bit of a boom time for Drizly. According to the company’s announcement, Drizly “has grown over 350% in 2020 as compared to 2019 while achieving sustained profitability.”

It’s not hard to believe those numbers for one big, awful reason: the pandemic. COVID-19 shut down bars and restaurants around the country, and even when some re-opened, they can be hotspots for virus transmission. The pandemic, of course, has kept more people at home and drove them into the arms of e-commerce for things like food and drinks and, evidently booze.

And of course, with the world as it is these days and anxieties running high, who could blame vast swaths of the population for taking the edge off with a little pinot greeezh.

It seems like all these factors are contributing to Drizly’s aggressive prediction that 20 percent of off-premise alcohol purchases will be online within the next five years, up from less than two percent in 2020. Actually, given everything going on in the world, 20 percent does not seem that outlandish.

Drizly is definitely scaling up to help facilitate those online sales. The company said it’s now up and running in 235 markets across North America via a network of 3,300 retail partners.

Of course, there are plenty of startups ready to take their shots at the online alcohol biz. There are wine services like Winc and Drinks.com, GrapeStars lets celebrities hawk their booze, and grocery delivery services like Instacart let you add booze to your weekly order.

With this pandemic showing now signs of slowing down, chances are good that Drizly’s drink delivery won’t be doing so either anytime soon.

Are Food Delivery Services ‘Violating’ Mandatory Fee Caps in NYC?

NYC regulators are demanding stricter oversight of the recently mandated caps on delivery commission fees, according to the NY Post. NYC Councilman and head of the small business committee Mark Gjonaj this week urged Mayor De Blasio’s Office of Special Enforcement to fine the offending parties (i.e., the delivery services) found to be violating the fee caps.

Which is apparently happening. At a hearing this week, OSE’s executive director Christian Klossner said his office had received two complaints from restaurants that were charged more than fee caps allowed by the delivery companies. Klossner said the companies (unnamed) had refunded the money, but Gjonaj demanded the OSE “consider fining the offending company.” 

Two restaurants isn’t a lot, but Gjonaj, seems to suggest the actual number of businesses being overcharged could be bigger. Speaking at the hearing this week, he said, “If these companies have done it to one restaurant, it must be widespread.”

While not proven, that point wouldn’t exactly surprise, since third-party delivery services have disregarded legislation before, most notably around worker classification. Fee caps are so new on the third-party delivery regulatory front that there hasn’t been much time for companies to flout the rules, or for restaurants to make known that they’re being overcharged. Part of Gjonaj’s call over more enforcement of the caps seems aimed at bringing any violations into the light. “How are you getting the word out to the thousands of businesses that they need to bring this to your attention?” he asked attendees at this week’s hearing.

Like a growing number of U.S. cities, the Big Apple imposed mandatory fee caps on commission fees at the peak of shelter-in-place mandates brought on by the pandemic. The aim of those fee caps is to help restaurants, who normally fork over as much as 30 percent per transaction to third-party delivery companies in commission fees. Needless to say, those commission fees were gutting the already decimated restaurant industry, hence caps imposed by NYC, San Francisco, Los Angeles, Baltimore, and many others. 

Those fee caps are for the most part meant to endure only as long as cities remain in emergency states around the pandemic. Soon enough, though, these cities will have to weigh the ups and downs of mandating — and enforcing — the caps over the long term, along with other measures that can better protect restaurants in a delivery-crazed world. 

Kiwibot Launches Equity Crowdfunding Campaign for its Deliver Robot Service

Kiwibot, which makes rover delivery robots, officially announced its equity crowdfunding campaign today, with the goal of raising a little more than $1 million via Wefunder.

As of this writing, the company had raised more than $150,000 of that goal (the company raised $148,000 before officially launching). Those interested, can invest a minimum of $100 in the company. (I’m not a financial advisor, all investments have associated risks, caveat emptor, and all that.)

Kiwibot’s financing move comes just weeks after the company rolled out its delivery robots on the streets of San Jose, CA. The company partnered with the City of San Jose, integrating with its municipal software systems to help better manage the fleet of robots and alleviate any hiccups that might occur (like a bot getting stuck on a street corner or something).

Indeed, Kiwibot lists regulatory hurdles as a risk for potential investors, saying:

Due to the actions of some of our competitors, delivery bots have proved controversial in some regulatory environments with some cities, like San Francisco, putting out laws that make it difficult for us to deploy. If this became widespread we would have trouble going to market.

As part of its filings on the WeFunder site, Kiwibot also published its finanials. The company says it generated more than $279,302 in 2019, with losses of -$2,621,693 during that year. Kiwibot says it has $232,562 in cash. According to Crunchbase, Kiwibot has previously raised $3.5 million in funding.

Equity crowdfunding has become a popular option for robotics companies. Miso Robotics, Small Robot and Piestro are all robotics companies that have run equity crowdfunding campaigns this year (both Small Robot and Piestro have met their goals).

Kiwibot’s timing with equity crowdfunding could be fortuitous. Delivery robots like Kiwi’s could be playing more of starring role in how people get their meals as restaurants and consumers look to reduce human-to-human contact. Robots don’t get sick and don’t cough all over your food.

The question now is whether Kiwi’s funding case is compelling enough for the crowd to deliver.

ShiftPixy Launches Ghost Kitchen Incubator

Gig economy engagement platform ShiftPixy announced today the launch of its Ghost Kitchen Incubator Project, which will provide advice and infrastructure to restaurants wanting to launch and/or improve their off-premises strategies. 

The incubator is part of ShiftPixy’s new Labs offering, which is a suite of marketing and support services designed specifically for QSRs. ShiftPixy says that through it, restaurants can get insights and advice on what exactly they need to operate an off-premises business. Via the Incubator Project, that means access to physical kitchen space as well as ShiftPixy’s technology, which connects restaurants to delivery drivers and couriers.

ShiftPixy differentiates itself from third-party delivery services like DoorDash or Uber Eats by hiring these gig workers (“Shifters”) as W-2 employees and facilitating the connection between them and the restaurant. Meanwhile, ShiftPixy’s tech platform doesn’t act as a consumer-facing marketplace for food delivery. Rather, it powers the back end of restaurants’ native mobile apps.

For those restaurants, the benefits of a system like ShiftPixy’s is avoiding the high commission fees associated with other third-party services and retaining customer data because orders are coming through their own digital properties. 

The benefits of this alternative delivery model are attractive at a time when most restaurants have been forced into doing delivery and other off-premises formats as a means of survival. Ghost kitchens, too, are growing more popular thanks to the pandemic, which has shuttered many restaurants and is now making many rethink how important the dining room is to their overall livelihoods. 

In the QSR realm, ghost kitchens are becoming especially prevalent, with Starbucks, Fat Brands, The Halal Guys, Chick-fil-A, Wendy’s, and an ever-growing list of others either turning their own stores into ghost kitchens or renting space from third-party kitchen providers.

But, as we discussed at length in The Spoon’s recent report on ghost kitchens, not every QSR needs one. And of those that do, the specific requirements for equipment, location, menu items, and other factors will vary from one chain to the next. 

ShiftPixy will undoubtedly address these and other issues through its new Incubator. Company CEO Scott Absher said in today’s press release that “if operators want to survive, they need to re-think their business processes, customer engagement and their approach to real estate.”

ShiftPixy hasn’t yet given full details on the new facility or said if any specific QSRs have yet signed onto the Incubator program. The company says it will “continue to issue updates” in the coming days, so stay tuned. 

iKcon Raises a $5M Pre-Seed Round for Its Ghost Kitchen Network

Cloud kitchen startup iKcon announced today it has raised a $5 million pre-seed round led by Arzan VC, AlTouq Group and Nazer Group. This brings iKcon’s total funding to $10 million. 

The Dubai-based company, founded in 2019 by CEO Khalid Baareh and COO Kareem Abughazaleh (pictured above), operates a network of 10 cloud kitchens across the United Arab Emirates.

The company says it “acts as a franchisee” on behalf of restaurant brands, catering to both chains with existing brick-and-mortar operations as well as delivery-only virtual restaurants. iKcon’s kitchens also provide space for some CPG brands. 

Besides expanding its kitchen network, iKcon notes it will also use the new funds to further develop its proprietary technology platform, which it says uses AI and data analytics to improve operations in the kitchen. 

That tech will be an important differentiator for cloud kitchen companies across the board to improve as time goes on. For all their promises of low overhead costs and streamlined setups, cloud kitchens are still operationally intensive businesses that rely on lots of humans to cook, package, and deliver the food. With many restaurants around the world in danger of shuttering permanently because of the pandemic, delivery-only brands look more promising every week for some businesses. And as we discussed in our recent Spoon Plus Guide to Ghost Kitchens, the industry as a whole is moving towards more tech and automation to bring down costs, whether they’re time, money, or resources.

The cloud kitchen market itself is inching towards $1 trillion by 2030. iKcon’s fundraise is just the latest, following Zuul’s $9 million round and Kitopi’s $60 million fundraise.

For its part, iKcon says says it plans to expand to Saudi Arabia in the fourth quarter of 2020 and to other countries in 2021. 

Uber Q2: Eats Generates More Revenue than Rides

There are two stories coming out of Uber’s Q2 earnings report today. The first is the straight ahead numbers: The company did $2.18 billion in revenue for the quarter, which was down 29 percent year-over-year, but beat analyst expectations. Uber’s net losses were $1.8 billion, narrower than the $2.94 billion in Q1.

Of course, much of this was due to the fact that the COVID-19 pandemic has hit the company’s mobility business. Uber’s mobility division had gross bookings of $3.046 billion for the quarter, which was a decline of 73 percent year-over-year. With people on lockdown, they had no need to hail a ride.

But while the coronavirus kept people from catching an Uber across town, it also pushed them to ordering more food delivery while they stayed home, which leads us to the other story.

Gross bookings for Uber’s delivery business (Uber Eats) hit $6.96 billion in Q2, which was up 113 percent year-over-year and up 54 percent over Q1 2020. That’s a lot of french fries delivered to people’s front doors.

In addition to getting a pandemic push, Uber Eats also streamlined some of its costs in Q2. The company ceased Uber Eats operations in eight different markets around the world where it wasn’t in a leading position.

In the Q2 earnings release, Uber also said that it now has more than 500,000 partnered restaurants on the platform, a 50 percent jump year-over-year.

With Q2 in the books, it’s time to look ahead to Q3 which will include the $2.65 billion all-stock purchase of rival food delivery service, Postmates, as well as the expansion into grocery delivery here in the U.S.

With DashMart, DoorDash is Creating its own Ghost Convenience Stores

DoorDash announced the launch of its new DashMart service today in a move that essentially has the delivery company creating its own ghost convenience store.

From a DoorDash blog post announcing the DashMart (emphasis theirs):

DashMart is a new type of convenience store, offering both household essentials and local restaurant favorites to our customers’ doorsteps. On DashMart, you’ll find thousands of convenience, grocery, and restaurant items, from ice cream and chips, to cough medicine and dog food, to spice rubs and packaged desserts from the local restaurants you love on DoorDash. DashMart stores are owned, operated, and curated by DoorDash.

DashMart is currently available in eight cities: Chicago, Minneapolis, Columbus, Cincinnati, Dallas, Salt Lake City, the greater Phoenix area, and Redwood City, CA. In the coming months, DashMarts will be coming to San Diego, Baltimore, Denver, Sacramento and Concord, CA.

I spoke with a DoorDash rep by phone today, who filled in a few more details. DashMarts are delivery-only, physical fulfillment centers that are stocked with big brand names (think: Snickers bars) as well as items from local restaurants (think: frozen slices of Cheesecake Factory cheesecake, or spices from local BBQ joints).

DoorDash has built out nine fulfillment centers, placed in locations where people don’t have easy access to a convenience store. Customers browsing the DoorDash app can select the DashMart and shop as they normally would.

That DoorDash is getting deeper into the convenience category isn’t a huge surprise. The company launched convenience store delivery in April of this year with WaWa, 7-Eleven, Circle K and more. In July, it expanded that program with a partnership with Walgreens.

Part of the reason for the expansion is pretty straightforward. The COVID pandemic shut down most of the restaurants across the country, accelerating the need for DoorDash to get into new markets. Convenience stores are a good fit for the DoorDash, which is all about fast delivery of smaller and/or last-minute items.

Today’s announcement brings more vertical integration into DoorDash’s convenience ambitions. DoorDash owns and operates these DashMarts, deciding which products gets stocked and controlling the whole endeavor from top to bottom. In addition to keeping all the revenue from sales through DashMart, DoorDash also gets more data around customers and purchases and can better optimize its own inventories.

Of course this isn’t the first ghost operation for DoorDash. In October of last year, the company opened up its first ghost kitchen facility in Redwood City, CA, which went on to house restaurant brands like Chick-Fil-A.

With the pandemic still running its course through the U.S., DoorDash’s delivery services will be in demand for the foreseeable future. So its not hard to imagine the company has plenty of time to build up a robust network of DashMarts in the coming year.

UK Regulators Finally Approve Amazon’s 16% Stake in Deliveroo

The UK’s Competition Markets and Authority (CMA) has at last approved Amazon’s 16 percent minority stake in food delivery service Deliveroo. The CMA’s findings, released today, note that the proposed Amazon-Deliveroo deal “has not resulted, and may not be expected to result, in a substantial lessening of competition (SLC) within a market or markets in the United Kingdom (UK) for goods and services.”

That concern — that Amazon’s investment in Deliveroo would lessen competition and consumer choices along with it — has hindered the investment since it was first announced back in May of 2019. For a quick recap, here’s how the saga has played out since then:

  • May 2019: Amazon announces its participation as the largest investor in Deliveroo’s $575 million Series G funding round.
  • July 2019: The CMA opens an investigation into Amazon’s investment, saying there were “reasonable grounds” that such a deal would mean the two companies would “cease to be distinct.”
  • October 2019: The CMA launches a formal probe into the deal.
  • April 2020: The deal gets initial approval, with the CMA citing “significant decline in revenues” for Deliveroo thanks to the pandemic.
  • June 2020: Regulators grant provisional clearance of the deal.

With this final approval, the CMA did warn Amazon that that increasing equity ownership of Deliveroo could result in further investigation, according to CNBC.

The approval comes at a time when consolidation is rampant among third-party food delivery services worldwide. The CMA finally approved the Takeaway.com’s acquisition of Just Eat, a deal that has created the largest food delivery service outside of China. The newly formed Just Eat Takeaway.com then swooped up Grubhub. Uber Eats, meanwhile, had been looking to buy Grubhub but backed away from such a deal in part because of the regulatory scrutiny the move would raise. Instead, it acquired Postmates in July.

With the pandemic still wrecking much havoc on the restaurant industry, we will probably see more of this consolidation — and probably a good deal of scrutiny, too — before the year is out.

Survey: Safety Is Now a Top Concern for Restaurant Customers Ordering Off-Premises

A quality off-premises restaurant experience is no longer just about food arriving on time and fries not being soggy. According to restaurant tech company Toast’s latest report, attention to cleanliness and safety is one of the top three concerns for restaurant guests for both delivery and takeout orders.

The Toast report, which The Spoon received a copy of, surveyed over 700 restaurant guests around how their expectations have changed as a result of the pandemic and what they consider to be an ideal restaurant experience today.

Almost half, or 48 percent, of guests surveyed placed cleanliness/safety as the top third concern for delivery orders, behind quality of food and ease of ordering. Another 40 percent placed it as the second main concern for takeout orders.

Seeing as we’re in the middle of a global pandemic, it makes sense that safety has wound its way to the top of the list for restaurant consumers. (As a category, cleanliness and safety were much lower on the list of concerns when Toast published a similar guest survey in January.) But Toast’s report also found that guests are ordering takeout more frequently than delivery.

From the report:

“7% of guests reported ordering takeout through a third- party app multiple times a day. 9% of guests reported ordering takeout through a restaurant’s app or website once a day. 16% of guests reported ordering takeout through a restaurant’s app or website multiple times a week. And 20% of guests reported ordering takeout through a restaurant’s app or website once a week.”

Cost, of course, remains a big issue with third-party delivery apps. That’s especially true now, with many restaurants trying to offset the high commission fees these services charge by raising delivery prices. But given the pandemic we are in, safety is obviously a growing concern.

One reason takeout might be more popular right now than delivery is that food goes through more touchpoints when someone drops it at your house, since the meal has to be collected by a driver. Issues around delivery drivers tampering with food abounded even before the pandemic. In response, some chains now offer tamper-free packaging. But even setting that aside for a minute, customers still have to worry about the cleanliness of the driver’s vehicle, whether or not that person is sick, and if they are wearing protective gear. Toast noted in its report that, at least for now, customers “might prefer the level of control over cleanliness and safety they get when picking food orders up themselves.”

Toast recommends that restaurants communicate frequently and clearly with customers about steps they are taking to keep their businesses safe. However, it can be tough to guarantee safety if the food is leaving their hands and going to the customer via a third-party delivery service. There’s no quick fix for that, unfortunately, since most restaurants can’t afford to keep their own delivery fleet. For now, restaurants should continue prioritizing cleanliness on takeout orders and hope their third-party delivery counterparts are doing the same.

Postmates Now Delivering Dodger Stadium Food to LA Doors

Dodger fans now can change up “Take Me Out to the Ball Game” with some new lyrics:

Take a walk down my hallway
Take a seat on the couch
Postmates and Dodgers now deliver snacks
Just in time now that baseball is back

Baseball fans may be stuck at home, but if you’re rooting for the Dodgers in LA, you can still eat like you’re at the stadium. Postmates announced earlier this week that has partnered with Home Plates to offer home delivery of Dodger Stadium food.

From a Postmates blog post describing the program:

Home Plates will serve Dodger Stadium fan-favorites like Dodger Dogs, micheladas, and garlic fries to go along with snacks, salads, bar, and dessert options. In addition to premium Dodger Dogs, items specially produced by Home Plates include individual thin-crust Brooklyn-style pizza, carne asada helmet nachos, and Dodgers’ blue gelato. Also, check out the family party pack and catering options.

Right now, delivery is only available in the Hollywood and West Hollywood neighborhoods of Los Angeles, with plans to expand to other areas of the city. Hollywood and West Hollywood, of course, are also the neighborhoods where Postmates uses its Serve robot to make deliveries. So your Dodger Dog may be brought to you by a cute robot!

This isn’t the first deal between Postmates and the Dodgers. Last year, the two teamed up for online ordering and food pickup inside Dodger Stadium. But with stadiums shut down, this is the next best thing for those wanting more of a realistic baseball experience while watching the games at home.

Postmates was recently acquired by Uber for $2.65 billion, which could buy a lot of peanuts and cracker jacks.

I say this without judgment, but given the greasy nature of stadium food, I’m curious as to how well it will travel for delivery. Obviously, downing a Dodger Dog on your recliner at home is a lot different from eating one amongst tens of thousands of your fellow fans. But will the food even be that good outside a stadium? If you’re in LA and try this out, drop us a line and let us know if it was a home run or a strikeout.

Coffee Bean & Tea Leaf Is the Latest Chain to Embrace Direct Delivery

The Coffee Bean & Tea Leaf announced today via press release the launch of its newly redesigned mobile app. Among updates to the UX and improvements to the chain’s digital rewards program, the standout feature of the redesign is direct delivery.

As a quick refresher, direct delivery is when a chain can process orders made for delivery directly through its own digital properties (i.e., app and/or website), rather than having to go through a third-party service like DoorDash or Uber Eats. The big upside here is that restaurants pay a lower commission fee to third-party services because DoorDash Et al. are only handling the actual delivery of the food, not the order processing and technical logistics. The Coffee Bean & Tea Leaf currently delivers through Postmates to California and Arizona. 

The new app can process delivery orders directly. Other features, according to today’s press release, include an order-ahead menu for pickup orders at physical stores, the ability to scan, earn, and redeem points from the app’s home screen, and more customization capabilities for food and beverage items.

Coffee Bean & Tea Leaf’s app revamp comes at a time when digital properties are the main channel through which most restaurants are connecting with customers. A rise in COVID cases coupled with extremely uncertain economics has forced restaurants to rethink their approach to the digital realm. Keeping a customer (and their data) entrenched firmly in a chain’s own ecosystem is becoming increasingly important, and is one of the drivers behind this adoption of direct delivery. Coffee Bean & Tea Leaf is the latest brand to adopt this strategy, but plenty others already offer a similar approach to delivery. Panda Express recently announced the launch of its own delivery service. Outback Steakhouse and Wendy’s offered direct delivery long before the pandemic.

The move towards direct delivery doesn’t just mean potentially better margins for restaurants. It’s also fueling the growth of a specific area of restaurant tech, namely delivery integrators that sell out-of-the-box tech solutions to help restaurants bring some functions around delivery back in house.

Coffee Bean & Tea Leaf did not say in the press release if it has redesigned its app completely in-house or if it used technology from a third party like ShiftPixy. But it’s entrance into the direct delivery space is a sign that we’ll see similar moves from other regional chains in the near future as the dining room reopening remain in a constant state of flux.

A Railway Lunchbox Company In Japan Reinvents Its Packaging to Fight Coronavirus

Not all food tech needs to be high tech when it comes to creating novel solutions that aid against coronavirus infections. Awajiya, a Kobe, Japan-based company that delivers meals to railway stations, announced last week it had developed new packaging for its bento box meals aimed at shielding customers from potential infections.

Awajiya makes and sells ekiben, which are portable meals historically sold on trains and in railway stations. But while ekiben might function as a quick bite for eaters on the go, the boxes are quite a few steps up from “fast food.” Typically, the ingredients in an ekiben reflect the flavors and culture of the region in which they are sold. Ditto for the packaging, which often looks like a work of art, not a to-go box.

Awajiya’s new bento box reflects all of this. The lunches are sold at railway shops and in some department stores, most of them in and around around the city of Kobe. According to the company’s website, meals incorporate meats, seafoods, and other ingredients specific to Kobe and its surrounding areas.  

When folded according to the instructions, Awajiya’s lunchbox creates a three-sided shield-like structure around the box that can keep any airborne droplets from nearby people out of the food. It also guards against the eater’s own germs from spreading to others. Awajiya says the box is the same size as a regular bento box, making it easy to use on trains. 

While not the most high-tech development, Awajiya’s box is nonetheless a reminder that fighting COVID-19 in the food realm can be as simple as reimagining a piece of packaging or the layout of a physical space. After all, we’re in a time when reusable coffee cups are currently frowned on or outright prohibited, when menus have to be disposable or digital, and sit-down restaurants are getting reformatted for off-premises orders. A simple lunchbox may not stop coronavirus in its tracks, but it’s incremental developments like these that, when working together en masse, can go great distances to keep the world’s population a little safer.