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Daily news and analysis about the food tech revolution

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New Data Tells Us What We Already Knew: Delivery Won’t Save Independent Restaurants

Only 1 in 5 restaurant owners believe with certainty that they’ll survive the COVID-19 pandemic, according to new survey data from the James Beard Foundation and the Independent Restaurant Coalition (IRC). 

Since the pandemic broke out and states mandated dining room shutdowns, IRC and the James Beard Foundation have been polling chefs and restaurant owners. A total of 1,4000 owners from mostly small and/or independent restaurants responded to the latest survey, which closed last week on April 13.

“The data is clear: The Paycheck Protection Program isn’t working as designed for restaurants and Congress needs to fix it,” Clare Reichenbach, CEO of the James Beard Foundation, said in the survey announcement. 

Some of that data includes:

  • Nearly 80 percent of independent restaurant owners said that government stimulus assistance won’t save businesses from shuttering permanently.
  • Over 38 percent of respondents said they have closed temporarily or “potentially permanently.”
  • Over 77 percent said they have seen at least a 50 percent reduction in sales. 
  • More than 5 in 10 restaurant owners estimated needing $100,000 or less over the next quarter to remain viable to reopening.

Some argue that delivery and off-premises orders are vital to restaurants’ survival during this time and indeed one of the only lifelines businesses have while dining rooms remain shuttered. None of that is untrue. It’s just that said lifeline provided by delivery and takeout isn’t as helpful as some folks — usually delivery companies and delivery integrators — make it out to be. 

Case in point: two-thirds of restaurants surveyed by the IRC and James Beard are “uncertain” that off-premises can sustain their business until they reopen. 

“Staying open is going to require a rethinking of our business models,” said IRC founding member Kwame Onwuachi.

Rethinking business models so that they’re geared towards delivery and takeout models means not just having the cash to pay the commission fees third-party delivery services charge (which only some services are currently waiving). It also requires an operational overhaul and retraining of staff, while simultaneously trying to keep everyone safe and maintain high cleaning standards.

Some restaurants are visibly struggling to even offer takeout meals efficiently. Others have closed up shop entirely for the time being, citing concerns over workers’ health. And, to beat a dead horse for the hundredth time this month, the fees lobbed at restaurants by third-party delivery services can go as high as 40 percent per transaction. As one restaurant owner told me, delivery doesn’t make money, at least not for the bulk of independent restaurants. 

So what do we do?

Average consumers can jump online and contribute to relief funds and charities for restaurants, and order directly from restaurants for pickup. Really, though, this is one problem tech can’t solve. As IRC and James Beard note, the industry, and especially independent businesses, need adjustments made to the PPP loan program and probably much more. 

Curbside Bots and Contactless Everything: What the Post-Pandemic Restaurant Will Look Like

Even an introverted work-from-home veteran like me is starting to get kind of daffy during this here quarantine. But I will say that being stuck at home has given me a lot of time to think (and write) about the state of the restaurant industry, and I catch myself imagining what eating out will be like once we’re past this pandemic. So when Starbucks CEO Kevin Johnson posted a letter this week to employees about the chain’s future, it caught my attention.

In his letter, Johnson more or less said the chain is planning to reopen some of its locations and outlined a plan for doing so. To be clear: Johnson uses the words “open” and “reopen” several times in the text, but at no point promised that your local Starbucks will reopen overnight with the usual setup and operations that existed before the pandemic. 

Which is why I’m singling out Starbucks in the first place. As an international chain that has already dealt with this recovery process overseas, and as a leader in digital business and operations, Starbucks’ plans for reopening stores give us a good hint of what we can expect restaurants to look like once the process of opening the economy begins.

Pulling from Johnson’s letter as well as numerous statements and activities from other restaurants, tech companies, and governments, we put together some predictions for what the post-pandemic restaurant experience might entail.

Note that most of these predictions are around operations and the customer experience. There are a host of other issues, from labor to food waste, I’ll be unpacking those over the next few weeks, so stay tuned.

More space, fewer tables. This is less prediction and more fact, with public figures like California Governor Gavin Newsom saying restaurants will have more space between tables and fewer seats, to ensure social distancing when eating out. Separately, the WSJ noted that restaurant chains may operate at half capacity going forward, and include things like plexiglass shields between booths. That could also spell the end of buffet-style dining and family-style seating. Golden Corral, that bastion of all buffet restaurants, has closed all units for the time being. Even before state-mandated shutdowns, other businesses were nixing community seating. And grocery stores are closing down hot bars.

Lots more mobile payments. Some restaurants are already pushing customers to use their mobile apps to order and pay for food, eliminating the need to touch a kiosk or swipe a credit card. Granted, you have to have a well-designed, easy-to-use app in order to do this, which means we’ll see a surge in smaller restaurant chains developing and/or improving their own mobile experiences for customers, whether in-house or through a third-party service. I expect we’ll also see an uptick in mobile-only locations (though it’ll vary based on state laws around cashless businesses).

Curbside delivery for all. Curbside pickup was once the territory of Sonic and the odd McDonald’s location. With dining rooms shuttered these last few weeks, restaurants have had to find other ways of bringing food out. And since not all of them have been equipped with drive-thru, curbside pickup has become the default option for many. This is one of the methods Starbucks has put into practice over the last few weeks, in some cases even taking it a step further to offer “entryway pickup” for locations without parking lots.

Contactless everything. “Contactless delivery” barely existed as a phrase before China implemented it during the peak of its fight against the novel coronavirus. Now, everyone from Instacart to Pizza Hut offers it, and I doubt we’ll revert back to the old way of handing goods off between courier and customer. For contactless to live up to its name, though, brands need to think about the technical logistics behind the operation. Restaurants’ online order systems need to have the option built right into the checkout process. They should consider providing additional features, such as push notifications to alert customers when and where their order is ready. Contactless will stick around permanently for delivery and curbside orders and, when companies figure out how, probably for in-store purchases, too.

More drive-thru lanes. Austin, TX-based chain Torchy’s Tacos explained to me recently that once the chain was forced to shut down dining rooms, it quickly opened drive-thru windows in locations that had always had the feature but had never utilized it. Many restaurants set up shop in locations that were once a Wendy’s or other fast-food chain. If they haven’t already, they could utilize that space to start offering drive-thru on the regular to customers.   

Gloves and face masks for workers. Restaurants I’ve spoken with over the last couple weeks are quick to emphasize the steps they are taking to protect both customers and workers when it comes to health. Gloves and face masks nearly always come up in that conversation. They’re also part of Gov. Newsom’s plan for restaurants, and will definitely make their way into other states’ frameworks for reopening business.

Robot staff.  Having said that, though, some might just opt for robots when it comes to who’s going to handle your food. My colleague Chris Albrecht recently pointed out that dining customers might prefer “the cold sterility of a robot” to a server wearing a face mask and gloves. Robots, of course, bring up the whole loss of human jobs angle. However, as Chris notes, with fears around the virus and human-to-human contact unlikely to subside for some time, for those restaurants that can afford it, robots might be an appetizing option, at least where city laws permit. Somehow I think they would come in especially handy for running curbside orders to cars.

Okay, wait a minute. Does all this mean my future restaurant experience will involve ordering food ahead of time via an app, then waiting at a plexiglass-encased table for a wheeled bot to roll up with my burger? That sounds lonelier than a month in quarantine.

I doubt it comes to that scenario, though. The COVID-19 situation changes daily, which mean so do expectations about what restaurants will look like when the economy reopens. Maybe all of these predictions will come true. Possibly none of them will. The most likely scenario is that a few of them, like curbside pickup and mobile payments, will become industry standards, and restaurants will use a mixture of the others based on time, money, and customer volume. As states begin discussions around reopening the economy and more chains like Starbucks start outlining their plans, we’ll get a clearer picture of what to expect in the the post-pandemic restaurant experience.

Thanks to Tech, Restaurant Employees Are Accessing Earnings Faster

One area that’s part of any good discussion about the future of the restaurant concerns employees — that is, the servers, baristas, drivers, managers, and others who make up the backbone of the industry.

How they get paid is something that’s fast changing as the industry grapples with dining room closures, mass layoffs, furloughs, and general economic tension. This week, we wrote about Domino’s teaming up with challenger bank Branch to offer employees instant access to their earnings via the Branch app.

Branch is one of a few apps out there that lets hourly workers — who often live paycheck to paycheck — get faster access to much-needed cashflow. DailyPay, which we’ve written about before, is another popular one.

I see an uptick in restaurants making it possible for employees to use these types of apps in future. As everything in the previous section of this newsletter suggests, the restaurant model is rapidly changing, and it’s hard to guess now which formats are most likely to be around next week, next month, or even next year. That means it’s also hard to predict how many people a restaurant will need on staff, and how many hours those individuals can work.

With so many questions up in the air, the least restaurants can do is integrate with one of these apps to get their employees paid faster.

Coronavirus is ‘a Wakeup Call’ for Restaurants When It Comes to Their Customer Data

Of all the tidbits of advice and information to come up in conversation with restaurants over the last few weeks, “communicate with your customers” is across the board the most popular mantra uttered.

There’s just one problem. In a restaurant industry currently powered by off-premises orders largely fulfilled by third-party services like Grubhub and DoorDash, restaurants can’t communicate directly with their customers because they have no data on who those people actually are.

One restaurant tech cofounder and CEO — namely Scott Absher of ShiftPixy — believes now is the time for restaurants to rethink the way their approach to customer data. Among other things, the crisis stemming from the novel coronavirus should be a wakeup call for these folks about how they treat their customer data — and how willingly they part with it.

Recently over the phone, he noted restaurants should “own those relationships” with customers and that “they need to rethink how they’re connecting digitally with their customers.”

Say a restaurant wants to promote pickup orders, which unlike third-party delivery can actually make restaurants a little money right now. Said restaurant might even offer some special deals or promotions for customers who order through the businesses own mobile app and opt to pick up the order. Trouble is, if the restaurant has left most of its off-premises management to Grubhub, it won’t have a way of communicating those deals in the first place. Customers may not even know the restaurant has its own mobile app that’s an alternative to Grubhub. 

Absher, who spends a lot of time talking to restaurants and has of late heard “some really frightened conversations,” believes now is the time to rethink both the concept of restaurant tech and the role customer data plays within it.

He calls this “destiny technology.” Websites and mobile apps are real estate customers visit just as they would a brick-and-mortar location. They will form opinions about their overall experience and share those opinions with others, and a restaurant should have access to that feedback much as they would have had to a comment card in the ‘80s.

“This is your new frontier,” Absher says. “It’s just as important as [physical] location is.” 

ShiftPixy has some skin in this game. Outside of being a platform for restaurants to find on-demand workers to fill shifts and combat turnover, the company also helps restaurants get up and running with delivery. Its own architecture runs behind the scenes of a restaurant’s in-house mobile app, which means instead of relying on Grubhub et al for delivery, restaurants can pay ShiftPixy a flat fee to manage the technical logistics of delivery orders and provide drivers. More important, because orders go through a restaurant’s own app, those businesses are keeping their own data.

The debate over who should own restaurant customer data isn’t new; COVID-19 just intensified it.

Right now, of course, many restaurants are just struggling to keep their doors open in some capacity. But with every new story that suggests an abuse of power on the part of third-party delivery companies, the question of who gets to own restaurant customer data (including menu prices, in some cases) becomes ever more important. And with mobile orders expected to proliferate in the post-pandemic restaurant industry, expect an uptick in solutions that promote native restaurant apps and offer businesses more control over their own data.

ChowNow Partners With Instagram for Online Ordering Via Stories

Online ordering platform ChowNow today announced a partnership with Instagram to offer restaurant orders through the social media app, according to a press release from ChowNow.

Participating restaurants that are also ChowNow clients can add an “Order Now” button or sticker to their food images and videos on Instagram. When a user clicks the button, they are directed to the restaurants online ordering platform, which is powered by ChowNow and can process the transaction, including payment. 

One of ChowNow’s big selling points is the commission-free aspect of its online ordering systems. Restaurants partner with ChowNow and pay the company a flat fee to power their online ordering, bypassing the need to use third-party delivery services like DoorDash or Grubhub. That means restaurants focusing on takeout or that operate their own delivery fleet can (in theory, at least), ditch those third-party delivery services, whose commission fees are the subject of much controversy. (Restaurants that drivers would still have to factor in that cost with third parties.)

Small restaurants in dense, urban areas like NYC that don’t need scores of drivers could especially benefit from a system like ChowNow’s. And with the current global pandemic shutting dining rooms down and forcing restaurants to get creative about how they do business, more and more in the industry are promoting the importance of takeout orders.

Whether they’re doing takeout, delivery, or some combination of both, restaurants would be wise to take advantage of the new ChowNow-Instagram partnership. Instagram has become an invaluable marketing tool for restaurants over the last few years. Now, as today’s press release notes, “food images and videos are a mainstay of Instagram Stories.” That’s more true than ever, at a time when people are staying home and people are spending even more time on their devices.

Instagram users will also be able to re-share restaurant Stories that include Order buttons on their own Stories. The new feature is effective today for ChowNow restaurant clients.

‘Building the Plane as We Fly’: How Torchy’s Tacos Is Pivoting to Survive a Pandemic

Focus, over-communication, and flexibility. Among other initiatives, those are the things currently driving the decisions of one chain — Austin, TX-based Torchy’s Tacos — as it navigates a pandemic-era restaurant industry. And whether that means slimming down the menu or creating an ad hoc tech system to handle neighborhood delivery orders, the mid-level chain says the results of its sudden shift to off-premises has been better than anyone could have imagined.

“I would say it’s surpassed everyone’s expectations with how well our operating partners have adjusted,” Chief Marketing Officer Scott Hudler said on the phone this week. Citing a phrase the folks at Torchy’s are using a lot these days, he adds, “We’re building the plane as we fly.” 

Torchy’s operates 74 units across five states: Texas, where it was founded, Arkansas, Colorado, Oklahoma, and Louisiana. Since it first opened in 2006, the chain has become known not just for its queso but also its cheeky, at times irreverent sense of humor and its punchy tagline: “Damn good tacos.” Now one of thousands of restaurants trying to survive a simultaneous pandemic and industry meltdown, Torchy’s has quickly had to become damn good at off-premises operations, too.

Hudler told me that pre-COVID-19, Torchy’s typically saw two thirds of its sales from dine-in traffic and one third from off-premises orders. As it has for many, that changed in a matter of days as states mandated shelter-in-place orders and restaurants found themselves having to quickly pivot to 100 percent off-premies orders. An existing partnership with DoorDash has helped, but it’s just one tactic Torchy’s latched onto in order to transition.

Adding new products is another. Torchy’s is among those chains tweaking their menus to include family-style packs that feed four to six people. Hudler said the chain has also introduced alcohol delivery, and in Texas, a full Margarita kit that arrives with both booze and all the elements to recreate the chain’s signature drink at home. Hudler says this item, especially, has been popular with consumers.

And as far as actually getting the food to customers, the introduction of curbside pickup and drive-thru lanes has been a big step for the chain. “Our concept wasn’t really designed for that,” Hudler says of drive-thru. Operators quickly changed their mindset once the dining rooms closed down, either retrofitting existing drive-thru windows that had never been used or creating new ones on the fly. Curbside order and pickup, equipped with iPad-carrying staff who walk to customers’ cars, is another addition. “We almost look like a Sonic,” Hudler jokes. “[Customers] pull up and we can take your order and bring it to your cards. We just need some roller skates.”

He adds that part of this flexibility can be attributed to Torchy’s management structure. Rather than general managers, the chain’s store operators are actually managing partners who receive a portion of the operating profits each month. “They’re going to take a much different approach to working through some of these challenges and figuring it out,” he says. Another way of putting it: they have skin in the game and are willing to try new moves if there’s a chance of saving/improving the business during an economic crisis.

Which brings us to Torchy’s neighborhood delivery concept, an initiative born from talking to customers about what they want in terms of service during this time. Through the program, customers can order and pay for food ahead of time, then go to a designated drop-off point in their neighborhood and pick the food up. “You literally go to a central meeting location in your neighborhood and we drop the food off there to you right away,” says Hudler.

To technologically pull this off, Hudler says they are using a number of different technologies (“we MacGyver’d them together”) but noted it will soon be “a more sophisticated system.” He adds that this neighborhood delivery program, which doesn’t rely on DoorDash or any other third-party service, is also a way to personalize the guest relationship right now. “We are a group of managing partners who are small business people in the communities and we think that the neighborhood delivery program really helped up solidify that.” Though he’s quick to add that Torchy’s doesn’t plan on becoming either a restaurant tech company or a delivery logistics operation.

Hudler made a point during our conversation to underscore the safety aspect of all these off-premises operations. Currently, Torchy’s requires all staff to wear masks and gloves on the job and adopt more rigorous cleaning processes. These, like many other policies, will likely carry on even when the pandemic has subsided.

And looking forward, Hudler isn’t alone in pointing out that once dining rooms re-open, fewer consumers may want to actually sit in them. (They may operate at reduced capacity, too.) By his reckoning, things like curbside pickup and contactless delivery will continue well into the future. Meanwhile, the old two thirds dining room, one third off-premises sales divide on which the company operated previously may wind up being more of a 50/50 split.

Pre-pandemic, Torchy’s had a five-year plan to open between 160 and 165 new restaurants across 17 different states. Hudler says that despite everything, the chain is still on track with this goal. “We feel like we’ve done a number of things to make sure that when we come out of this, we come out a stronger brand and that we are ready to pick that growth back up.”

Grubhub, DoorDash, and Other Delivery Services Are Getting Sued Over Restaurant Prices

A class action lawsuit filed Monday alleges that third-party delivery companies DoorDash, Grubhub, Postmates, and Uber Eats are using their market power to push menu prices higher during the coronavirus pandemic, according to Reuters. 

The three consumers who initiated the suit allege that third-party delivery companies dictate in their contracts the prices restaurants can charge for orders — even those placed directly with the business and not via delivery apps. These terms along with sky-high commission fees that can reach 30 percent or higher for each transaction, are in turn forcing restaurants to raise menu prices across the board. Paying customers ultimately shoulder that cost, whether they’re getting food delivered or eating in the restaurant dining room.

Of course, no one is eating in the restaurant dining room at the moment, but that’s another motivating factor behind the lawsuit, which has been filed against the backdrop of a global health crisis that’s shut down dining rooms and sent the entire restaurant industry spiraling.

With off-premises orders one of the few lifeline’s restaurants have right now, more businesses are forced to work with these third-party delivery services in an attempt to keep from going under. Customers ordering directly from the restaurants is better for business, but when third-party companies are dictating the menu prices, the cost hike ultimately falls on the consumer.

As the lawsuit, notes, third-party delivery apps offer “a devil’s choice” to restaurants: “In exchange for permission to participate in defendants’ meal delivery monopolies, restaurants must charge supra-competitive prices to consumers who do not buy their meals through the delivery apps, ultimately driving those consumers to defendants’ platforms,” it said. 

The lawsuit is just the latest addition to an ever-growing list of griefs advocates, lawmakers, customers, and the restaurants themselves have with third-party delivery companies. Many of those griefs, such as the high price of commission fees, are even more pronounced now that dining rooms are shuttered and some restaurants are having to close their doors permanently.

Meanwhile, reading any announcements about “relief” companies like DoorDash or Uber Eats are providing restaurants during the pandemic has become an exercise in reading between the lines to decipher the fine print. Case in point: Grubhub said in March it would provide relief by deferring commission fees for restaurants. Those fees have to be paid back within four weeks of the relief period ending, and simultaneously lock restaurants into a full year of being on Grubhub’s platform.

Last week, San Francisco introduced an emergency measure to cap commission fees from third-party delivery services at 15 percent. Some services, notably DoorDash and Postmates, are cutting down or waiving those fees for a set period of time. However, those measures are band-aids to a problem that existed long before the pandemic hit and will persist long after it subsides.

Unless enough customers get fed up with third-party delivery tactics. This week’s lawsuit suggests that is already happening. As of last week, 17 million people have filed for unemployment in the U.S., and analysts expect that number to keep rising. Many consumers are finding themselves in a position where it will be hard to pay the bills, let alone a hiked up menu price on a bowl of pasta from their local restaurant. And if a restaurant doesn’t have the power to change the price on that pasta, everyone loses out, and the power of these delivery companies has, in the words of this week’s suit, “come at a great cost to American society.”

San Francisco Places Emergency Caps on Third-Party Delivery Commission Fees

San Francisco Mayor London Breed issued an emergency order at the end of last week to put temporary caps the delivery fees that third-party services charge restaurants. The order is effective now and dictates that delivery services must cap these commission fees at 15 percent if they want to continue doing business in San Francisco as the city shelters in place.

The point of the order is to help restaurants as they struggle to stay alive during state-mandated dining room closures. Many have turned to delivery and take-out models to try and make up at least some of their lost sales, which for most businesses means partnering with third-party services like Grubhub and Uber Eats. However, those services charge as much as 30 percent per transaction in commission fees.

“We’ve listened to our restaurants and the struggles they’re facing during this unprecedented time,” Supervisor Ahsha Safaí said in the official announcement about the order. “The high commission fees being charged to our businesses remains unchanged and that cannot continue as every dollar can mean staying open or laying- off more staff.”

Of the major third-party delivery companies, some have already made moves to address high commission fees. Postmates is temporarily waiving those fees for new merchant partners operating small businesses in San Francisco. And last week, DoorDash, which owns Caviar, said it would cut commission fees by 50 percent for restaurants with five or fewer locations in the U.S., Canada, and Australia. 

In a move that should surprise no one at this point, Grubhub is opposing the order — and urging its customers to do the same. As Eater SF noted, the Chicago-based service claims caps on commission fees will increase customer fees by $5–$10 and “immediately cripple delivery orders, outweighing any potential benefits when takeout is the only option restaurants have to stay open.”

The trouble with that logic is that it seems to assume delivery and takeout will actually save restaurants during this time, which is far from certain. Transactions for full-service restaurants — many of which have quickly had to pivot to an off-premises model — have dropped 79 percent, according to NPD Group. Even after the switch to off-premises, restaurants are struggling to ensure smooth, safe operations. Others are simply shutting down temporarily, citing health concerns for their workers. Still others are closing their doors permanently, already unable to weather the storm. 

San Francisco’s emergency order to cap commission fees seems aimed at trying to ensure more restaurants won’t have to permanently go under during shelter-in-place orders. And actually, while SF may be the first city to actually pass such an order, it’s not the first to consider it. In August of 2019, the New York State Liquor Authority (NYSLA) proposed adding a 10 percent cap on the commissions that full-service restaurants pay delivery services.

At the time, I wrote that a measure like that passing could have a ripple effect on other cities around the U.S. The same is true of San Francisco’s emergency order. As more time passes and more data surfaces about how dire circumstances are for most restaurants, other major cities — Seattle, Los Angeles, NYC — could be motivated to put similar measures in place. They won’t necessarily turn delivery into a thriving business for all, but they might lessen some of the damage these commission fees are wrecking on an already damaged industry.

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

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

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

Selling groceries is one way.

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

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

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

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

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

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

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

Small Restaurants Turn to Big Grocery

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

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

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

DoorDash Slashes Restaurant Commission Fees By 50%

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

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

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

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

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

Keep on truckin’,

Jenn

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

The Food Tech Show: Going Off-Premise During a Pandemic

With dine-in still shut down in most places around the US (and the world), restaurants are trying to survive by going off-premise through a combination of delivery and takeout. The Spoon’s Chris Albrecht caught up with Chowly‘s Sterling Douglass to talk about the rapidly changing restaurant landscape and to discuss strategies for going off-premise.

This conversation took place as part of The Spoon’s COVID-19 Virtual Strategy Summit. If you missed the summit and would like to see some of what you missed, all the sessions are now available to watch.

You can get this episode on Apple Podcasts, Spotify or wherever you get your podcasts. You can also download direct to your device or just click play below.

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GrapeStars Lets Celebrities Sell Booze to You Through Social Media

Have you ever wanted to buy gin endorsed by Ryan Reynolds? Or a nice bottle of sauvignon blanc curated by Sarah Jessica Parker? Now’s your chance. GrapeStars, the online marketplace for celebrity-endorsed brands of booze, is live to make sure you never have to go without a glass of wine supported by a famous person, even in the time of COVID-19.

Based in Miami, GrapeStars had its soft launch this week. Initially they’ll ship to 45 states in the U.S. The company has plans for a formal launch in mid-May 2020 with a portfolio of 1,495 products from 203 celebrities.

Here’s how it works: consumers can either purchase directly through the GrapeStars app, which currently works on iPhones or Google Play, or they can click on links embedded on celebrity’s social media profiles to be redirected to their GrapeStars store. From there they select their star-supported booze of choice, which is shipped to their door. Cost depends on weight, distance, and timing (e.g. overnight, 2 day, etc), and GrapeStars pockets 15 percent of each sale.

According to an email conversation with a GrapeStars rep, the startup recently closed a seed round, raising $3.7 million with a mix of convertible debentures and equities. The company will launch a Republic Crowdfunding Campaign to raise an additional $1 million sometime in the next few weeks.

This concept is obviously on the sillier side, but GrapeStars may actually hitting the market at an ideal time. Since everything is stressful right now and meditation apps can only do so much, sales of alcoholic beverages in the U.S. rose 55 percent in the week ending March 21, according to Nielsen data. Since bars are no longer to sell you the good stuff, people are turning to grocery stores and e-commerce to get their booze fix. Consequently, online alcohol delivery services like Drizly and Minibar are seeing a huge spike in sales. Wine subscription services, like Winc and Vivino, are also seeing rapid increases in sales and higher ticket sizes.

Plus, since everyone is turning to social media to feel connected amidst social distancing, celebrities may find themselves with a captive audience that’s bored enough to, say, order specialty booze endorsed by their favorite movie star.

Is GrapeStars going to solve any of the very significant challenges that COVID-19 is imposing on the food system? Absolutely not. But is it fun, entertaining, and a relevant service in our new Netflix-fueled normal? You bet.

Get Alerts on When Delivery Slots at Amazon and Whole Foods Open Up with This Free JavaScript Tool

Like a game of whack-a-mole, people who are flocking to e-commerce for their grocery shopping in this time of pandemic are encountering a new headache: longer-than-normal wait times to get their food actually delivered.

Once you’ve placed your order, it can be one if not two weeks before a delivery window opens up. This a problem for people who really shouldn’t go to the grocery store (think: elderly parents, or the immunocompromised) or those who can’t get there because of essential work or family. The fact that grocers aren’t exactly great at alerting you that an item has gone out of stock between the time you order and the time you get your delivery only complicates the problem.

There may be a small fix for this. CNBC reports on a new tool you can run on your computer to make finding a delivery window a little bit easier.  Adrian Hertel built a downloadable program that alerts you when delivery slots in Amazon Fresh or Whole Foods open up. Hertel told CNBC he built the tool out of concern for his parents, who have immune deficiencies.

Now, before you get too excited, the tool, plainly dubbed Amazon Fresh/Whole Foods Delivery Slot Finder, is not some slick app that you install on your phone. It’s a JavaScript tool that you have to download from GitHub, and it only works via Script Editor on a Mac running Safari.

Once you download and run the Slot Finder, you have to visit Amazon/Whole Foods in the Safari browser. Then you have to go through the whole checkout process and stop once you get to the delivery options. Once there, you run the Slot Finder script.

Here’s how the script works, according to Slot Finder’s GitHub page:

  • It opens the checkout page in a new window, minimizes it, and then refreshes every ~60 seconds in the background.
  • Once it finds an open slot it alerts you by putting a notification on your screen and playing a sound, and opening the checkout page. You can choose to receive text messages when a slot is found
  • You can choose to have the tool ignore out of stock notifications and continue searching uninterrupted
  • Once you’re notified, quickly select a slot and finish checking out because available slots are snagged almost instantly.

It’s not the most elegant solution, and though I downloaded and set it up, I can’t test it out since Amazon Fresh/Whole Foods doesn’t deliver to my area. If you try it out, drop us a line and tell us how it went!

While the Slot Finder may be rough, it does highlight how people are getting creative in solving everyday problems caused by this pandemic. Hopefully, as the likes Amazon and Walmart hire hundreds of thousands of new workers to keep up with demand, delayed delivery windows will be a thing of the past.

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McDonald’s Slows Development on Its Tech-Forward Store Remodels

In an effort to reduce capital expenditures by $1 billion, McDonald’s is slowing the development of its Experience of the Future store remodels across the U.S., according to a press statement the company sent out today. 

The move comes in the wake of the mega-chain, not to mention the entire restaurant industry, having to adjust both operations and expectations to serve customers during a global health crisis. Restaurant sales are down 80 percent, and many establishments are having to quickly pivot to delivery and takeout models in order to stay in business. 

Unlike smaller restaurants with shallower pockets, McDonald’s isn’t a newcomer to the off-premises world or the technology that powers it. Up to now, the company was running a $4 billion digital business driven largely by delivery orders. Acquisitions in 2019 of Dynamic Yield (AI tech) and Apprente (voice tech) further enhanced the chain’s to-go-friendly business model, and Experience of the Future stores are meant to encompass all these elements under one roof. They also feature self-service kiosks, curbside pickup areas, improved drive-thru lanes, and many other things meant to make the customer experience at McDonald’s as speedy and efficient as possible.

Then came COVID-19. In addition to closing dining rooms across the U.S., McDonald’s has also halted operations entirely at many stores, including 50 in the U.S., and every single one in the United Kingdom. Those shutdowns also include drive-thru and delivery.

“We entered 2020 in a strong position, but of course the world has since changed,” CEO Chris Kempczinski told Nation’s Restaurant News. “While our January and February global comparable sales were strong, changes in consumer behavior and the various restrictions in place by governments around the world have led to a significant decline in sales.” 

To that end, McDonald’s says it plans to build fewer Experience of the Future stores, whether new locations or remodels of old ones, worldwide.  

Whether this is a sign of things to come from other similar chains depends. One of the major factors of Mickey D’s remodels is how costly they are — over $700,000 per store, in some cases. Not every chain’s digital business reinvention requires an architectural overhaul as well, especially if a brand is more interested in improving things like delivery and loyalty programs. That said, we may see fewer Chipotlanes and Starbucks Express Stores rolling out for the rest of 2020 — and possibly beyond.