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The Spoon

Daily news and analysis about the food tech revolution

delivery

Report: 70 Percent of Delivery Orders in 2022 Will Come From Third-party Services Like DoorDash

Restaurant food delivery from third-party services like DoorDash and Grubhub will account for 70 percent of all delivery orders by 2022, according to a new report from CBRE Group.

It’s a surprising prediction — said no one ever. CBRE’s new report, the third in the firm’s U.S. Food in Demand series, is one of many, many pieces of research confirming the central role third-party food delivery services now play in the restaurant industry. Off-premises ordering is expected to be the major driver of restaurant sales over the next decade. An undeniable part of that growth is delivery, which according to the CBRE report reached $34 billion in sales last year, up 13 percent from 2017.

DoorDash, Grubhub, and other third-party services remain an important — and obvious — element of this growth, and for good reasons. As CBRE points out, there are many elements of the delivery stack restaurants need to meet today’s demand, whether it’s technical logistics to process orders, marketing services to widen a brand’s audience, or couriers and drivers that place the actual food in customers’ hands. “Restaurants often lack the infrastructure for direct delivery and the customer reach that third-party delivery operators like Grubhub, Seamless, Eat24 and DoorDash provide,” the report notes.

However, these services are also expensive for restaurants to use. Controversial commission fees eat into restaurants’ overall profit margins, which are already thin. The third-party delivery model itself is also currently under fire from multiple angles — how it treats workers, what it does to the environment, and the increasingly important question of profitability. 

None of those issues mean third-party delivery services are going away any time soon. Instead, the model will evolve, so that by 2022 it will look substantially different from the one we use today.

Already, we are seeing clues as to what direction that shift will take. A growing number of restaurants are now adopting hybrid strategies, where customers place orders and pay for them through the restaurant’s own mobile app or website, which handles the technical logistics around processing and fulfilling that order. Third-party delivery companies, meanwhile, supply the last-mile logistics, including drivers and couriers. Some restaurants, notably Panera, work off an inverse version of this, with customers placing orders via the third party’s app and the restaurant handling that last mile itself. 

Both approaches have pluses and minuses. The general consensus is that the hybrid concept will continue to gain popularity over the next year, even as it too changes and evolves alongside the way third parties process, fulfill, and deliver our restaurant orders.

DoorDash, Impossible Foods Among the Fastest Growing Brands in the U.S. in 2019

Food tech companies have a major presence among the fastest growing brands in the U.S. in 2019, according to a new report from Morning Consult Brand Intelligence that ranks brands according to purchasing consideration among consumers. 

DoorDash took the number one spot for fastest growing brand in the U.S. this year, while Postmates clocked in at number three and Impossible at four. And those are just the top five. Among the top 20 fastest growing companies in the report, food and beverage companies nabbed 11 of the spots.  

According to the report, Morning Consult determines its rankings by which brands “have seen the biggest rise in purchasing consideration this year, how that is playing out across generations and which brands have seen a lift in brand identification, even if it didn’t translate to an increase in purchasing.”

Part of the reason for DoorDash’s top spot is no doubt its expansion strategy. Unlike Postmates or Grubhub and Uber Eats (the latter two also landed in the top 20), DoorDash has focused heavily on not just major metropolitan areas but also suburban areas across the country. It was the first third-party delivery service to become available in all 50 U.S. states and has over the last few years struck deals with major restaurant chains that cater to those areas. Think Chili’s, Outback Steakhouse, and Chick-fil-A. This is the second year in a row DoorDash — which to date has raised over $2 billion — has been ranked fastest growing brand in the U.S. for Morning Consult’s report.

The company was also, among food delivery companies in the report, the only brand to consistently rank at the top across generations, from Generation Z all the way up to Baby Boomers.

Even with high appeal among consumers, DoorDash faces multiple uphill battles going into 2020. The company is still getting backlash over its much-maligned former tipping policy, including recent charges brought by D.C. Attorney General Karl Racine. DoorDash is also one of a few companies that have pledged to fight California Assembly Bill 5, which reclassifies gig workers and in doing so turns the entire model by which third-party delivery services operate on its head — and further erodes the idea of these companies every becoming profitable. Appealing to consumers is a boost for DoorDash in 2019, but it’s appealing to investors that will make or break delivery companies in 2020.

Spoon Market Map: Ghost Kitchens in 2019

Just half a decade ago, the phrase “ghost kitchen” referred to restaurants that looked legit on Grubhub and Seamless but were actually digital fronts for unregulated kitchens. In other words, chicken tenders from what appeared to be a local restaurant might actually have been cooked in someone’s apartment.

Then the delivery boom went off, thanks largely to the growth of third-party services like Grubhub and DoorDash, and by the many digital channels through which customers could suddenly get food. Order tickets proliferated for restaurants, but so too did the stress around how to fulfill those orders without over-burdening the in-house kitchen staff.

The answer to the problem? Take the restaurant out of the kitchen.

In the last few years, restaurants have been moving many of their operations around delivery and to-go orders to dedicated kitchen spaces outside the main restaurant location. The name “ghost kitchen” has stuck around, but now it’s a health-department-friendly term for these spaces that act as hubs for off-premises orders.

But actually, there are many names nowadays for the concept: ghost kitchen, virtual kitchen, cloud kitchen, the (slightly nauseating) description “kitchen as a service.” All those phrases amount the same thing: a kitchen facility that exists solely for the purpose of helping restaurants cook and fulfill to-go orders and get them into the hands of delivery couriers. There is no dining room or front-of-house staff in a ghost kitchen, the tech-stack is more streamlined than that of a full-service restaurant, and, increasingly, the location is completely separate from a restaurant’s dine-in location(s). Now, too, there are also kitchens on (literal) wheels, which add yet-another piece of mobility to the business model. 

To help you navigate the evolving world of ghost kitchens, we’ve created a market map for your reference. This market map is intended to be a snapshot of the current ghost kitchen landscape in 2019. It’s not comprehensive, and we expect both it and the overall landscape to change drastically over the next 12 months. That means you can expect to see this map updated regularly. As always, we welcome suggestions for additional companies and players in this space.

Have suggestions? Drop us an email.

1. Kitchen Infrastructure Providers

The largest category in ghost kitchens right now, Kitchen Infrastructure Providers can be likened to cloud computing providers: they rent companies the space and tools needed to run a business, either as a flat-fee model for on a pay-as-you-go basis. 

Kitchen United, for example, charges a monthly membership fee that includes rent, equipment, storage, and services like dishwashing. Reef, which originally made a name for itself reinventing the concept of the parking garage, offers these things as well as direct partnerships with major third-party delivery companies like DoorDash and Postmates.   

Normally these facilities are large, warehouse-like buildings that hold multiple “restaurants” under a single roof. For large restaurant operators with multiple chains looking to fulfill extra demand brought on by delivery or test out new concepts without incurring too much risk, these are ideal.

Multi-unit chains can also use these spaces to reach customers in areas where they might not have a brick-and-mortar store. Chick-fil-A is widening its reach in the SF Bay Area by working out of DoorDash’s newly opened facility.

2. Restaurant-operated Kitchens

For some restaurants, running a ghost kitchen operation themselves makes more sense than teaming up with a third-party kitchen provider. This is often the case with smaller, independent restaurants, whose ghost kitchen might consist of nothing more than an area of the restaurant’s existing location(s) dedicated to fulfilling off-premises orders. Or it might apply to multi-unit chains who simply want to expand to new areas and don’t have the capital or inclination to deal with the burden of a full-service restaurant. Colombian chain Muy is one such company, having started as a dine-in restaurant before expanding its ghost kitchens to serve more areas of Latin America.

The most notable of all the companies in this category right now is Starbucks. In addition to building out “to-go” stores that exist solely for the purpose of fulfilling off-premises orders, the company has also partnered with Alibaba to turn parts of the latter’s Hema supermarkets into ghost kitchens in China.

The boundaries around this category are especially fluid. In other words, just because you operate your own ghost kitchen in one part of the country doesn’t mean you can’t team up with a third-party provider in another, as The Halal Guys and Chick-fil-A have done.

3. Virtual Restaurant Providers

This is where the lines really start to blur between restaurant, kitchen provider, and delivery company. Anyone can make a virtual restaurant, and as the category in our map shows, more than just restaurants are trying their hand at food concepts that can only be ordered through digital channels and are prepared in a ghost kitchen. Whole30, for example, is a diet concept better known for its cookbooks than its dealings with the restaurant industry. The folks behind that brand teamed up with Grubhub and restaurant company Lettuce Entertain You to create a virtual restaurant offering meals with Whole30-approved foods. 

On the other hand, a company like Keatz runs a network of virtual restaurants it houses beneath the roof of its own ghost kitchens. Taster, based out of France, creates native restaurant brands for food delivery companies like Uber Eats and Deliveroo. Food is cooked in Taster-run kitchens.

4. Mobile Kitchens

In slightly more its own category, companies like Ono Food Co. and Zume are creating robotic, self-contained kitchens on wheels that offer restaurant experiences that can be tailored to specific neighborhoods in a city and also plug into third-party delivery services.

Restaurants can also partner with these kitchens on wheels to expand their reach into new markets, as &Pizza has done by teaming up with Zume.

What’s Next for Ghost Kitchens

Ghost kitchens will become the norm for multi-unit chains. With off-premises orders expected to drive the majority of restaurant sales growth over the next decade, multi-unit brands (think Panera, Chipotle, etc.) will find ghost kitchens a cost-effective way to meet this demand without overburdening existing restaurants. The majority of them will rent space from kitchen infrastructure providers, as Chick-fil-A is currently doing with DoorDash. 

There will be an explosion of delivery-only brands. Since ghost kitchens provide a cheaper, faster way for food entrepreneurs and small restaurants alike to test-drive new concepts, we will see an influx of delivery- and pickup-only brands come out of these kitchens over the next year. Many will be born inside the walls of facilities like Kitchen United or CloudKitchens. Meanwhile, the number of virtual restaurant networks like that of Keatz will increase. 

Artificial Intelligence will be designed into the kitchen. AI is a really broad term that’s often misused. That fact aside, its presence in the restaurant industry is here to stay, and in ghost kitchens, it will prove itself valuable for everything from tracking ingredients to helping staff curb food waste. On the consumer end, we expect to see the technology more deeply integrated into the apps and websites from which customers order, improving recommendations and upselling opportunities.  

More non-restaurant food brands will launch virtual restaurants. In keeping with a trend recently made popular by Whole30 and Bon Apétit, food brands, diets, celebrity chefs, and other non-restaurant businesses will team up with third parties to launch delivery and pickup concepts. Grubhub and Uber Eats are two such third parties already doing this. Expect many more such partnerships — soon.

Bonus: The tech stack will get pared down. No front of house means no POS, right? Quite possibly. With less (or no) customer-facing technology like digital menu boards, self-order kiosks, and tabletop ordering, much of the restaurant tech on the market today becomes irrelevant in a ghost kitchen setting. As the folks at Reforming Retail noted recently, “under this scenario the POS is just an ordering node in the cloud that outputs your menu to a consumer and sends orders to your kitchen.”

That doesn’t mean restaurant tech is going by the wayside. Some ghost kitchens, like those of Muy, have a walkup option where customers order at kiosks onsite, and there will doubtless be new solutions created that are specifically for the ghost kitchen. But the tools of tomorrow’s ghost kitchen won’t look a thing like today’s bloated restaurant-management tech stack. For everyone involved, that’s a bonus.

McDonald’s and Uber Eats’ Latest Contest Is Another Play to Build More Brand Loyalty Online

If Thanksgiving leftovers aren’t your thing, consider entering McDonald’s latest contest, which gives Twitter users the chance to win free late-night food for an entire year from Uber Eats. 

The contest runs from today (November 27) through Cyber Monday (December 2), according to a McDonald’s press release. To enter it, fans must tweet two menu items they want delivered and include the following tags: #McDelivery, #Sweepstakes, @McDonalds and @UberEats. The grand prize is one year of free late-night delivery awarded as an Uber Eats promo code, along with a bundle of weird McDonald’s swag that includes, among many other items, a massage chair. An additional 50 winners will get a Late-Night Weekender Bag with a $20 Uber Eats promo code.

That’s a lot of burgers and fries, but in the bigger picture, this contest — like many other recent QSR promo efforts — isn’t about free swag or even free food. It’s about McDonald’s and Uber Eats finding new ways to brand themselves in a restaurant industry that’s increasingly moving online. Delivery and pickup orders placed via apps and websites are only going to increase over the next decade, particularly as a younger generation raised in a connected world comes of age. Sweepstakes like this one are as old as the QSR concept itself. McDonald’s and others are simply tweaking the concept to meet their audiences online, where they have the greatest chance of boosting brand loyalty.

More importantly, social media-based contests like these give QSRs more access to data on customer preferences. Having fans tweet the food items they want delivered late at night is, after all, a pretty clear-cut way to determine what people are ordering in the after hours. (Though AI does a pretty decent job of that, too.)

For Uber Eats, enticing more potential delivery customers is key, as the service’s longstanding exclusive contract with McDonald’s ended in July when the chain brought on DoorDash and Grubhub as additional delivery partners. And with customer loyalty to any one delivery platform not particularly loyal right now, these companies need every method they can get their hands on in order to keep existing customers firmly entrenched in their own ecosystems. I doubt contests basically giving away food and free massage chairs will be the strangest efforts we see as this trend continues to take hold.

Bite Squad to End Service in 3 Minnesota Cities

Around this time last year, we predicted that small- to mid-sized U.S. cities would be key battlegrounds in the war to win food delivery, and that this expansion would give smaller services a chance to stand out.

We were half right. Restaurant food delivery has indeed made its way to every conceivable corner of the nation, and the majority of restaurant growth over the next 10 years is expected to come from off-premises sales. But it looks like instead of benefiting from this expansion, smaller services are getting edged out by the usual suspects (DoorDash, Grubhub, etc.).

Case in point: this week, Minneapolis-based food delivery company Bite Squad said it was ending service in three Minnesota cities: St. Cloud, Rochester, and Duluth. The announcement comes mere months after Bite Squad launched services in these cities. 

“We were unable to grow the market fast enough to become profitable,” Bite Squad Media Relations Director Dean Turcol told the SC Times this week.

Bite Squad sent a bare-bones email to those partners in those cities saying only that the company is suspending service “indefinitely” and that its last day of operations will be December 5.

One year ago, Bite Squad was far more optimistic about food delivery and the company’s approach to the model, which has always been to focus on small and mid-sized cities in the U.S. rather than fight the competition in LA, NYC, and other major metropolises. At the time, Bite Squad’s Chief Marketing Office, Craig Key, said the company was “very bullish” on restaurant delivery across Middle America. “We’re confident in our position because we’re not haphazardly going into markets,” he told The Spoon.

Then Waitr acquired Bite Squad in December 2018 for $321 million, a deal that at the time seemed like a win for smaller delivery companies. Waitr has since written off much of that deal, laying off many of Bite Squad’s staff at the latter’s Minneapolis headquarters.

So who’s winning over Middle America and all the smaller cities in between the nation’s coasts? DoorDash. Despite recent controversies, the San Francisco-based company continues to seize the suburbs and lead the market for third-party restaurant food delivery. Unfortunately for companies like Bite Squad and Waitr, that doesn’t look likely to change anytime soon.

Newsletter: Will E-Bikes Take Charge? Plus, Precise Heating Comes Home

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Delivery robots like those from Starship and self-driving vehicles like Nuro‘s grab a lot of headlines when it comes to the future of food and meal delivery. And it’s easy to understand why–robots are cool, man! But I have one bit of advice when it comes to the business of food delivery as we head into 2020:

Don’t sleep on electric bikes. They could be a huge platform in cities.

This is a prediction I’ve made before, when Uber bought e-bike rental company Jump last year. But yesterday’s announcement that Australian company Bolt Bikes launched its e-bikes for delivery service in the U.S. and U.K. got me thinking about a potential bicycle boom in food delivery.

TechCrunch reports that Bolt rents out bikes for commercial use on a two-week contract for $39. As TechCrunch writes, “The Bolt Bikes platform includes the electric bike, fleet management software, financing and servicing. Subscribers get 24-hour access to the bike. A battery charger, phone holder, phone USB port, secure U-Lock and safety induction is included.” Postmates has reportedly been piloting Bolt Bikes in SF since June.

E-bikes are actually great for city environments. They are fast, nimble on traffic-choked streets and take (most of) the work out of going uphill. Plus they have human drivers, so you don’t have to worry about the potential human/robot issues that come with even small autonomous delivery vehicles.

Though they aren’t as well suited for longer distances, e-bikes could also work in some suburban areas with tightly packed homes (think: housing developments), especially as part of a hub-and-spoke model. Next summer, Uber Eats is testing drone delivery of food to centralized drop off points where delivery people pick orders up and drive them the last mile. Instead of cars rolling around the suburbs, an e-bike could make that last mile more economical, faster (no need to park) and more welcome for neighborhoods that don’t want a lot more delivery cars driving around.

Bicycles already have already enjoyed a place in food delivery, especially in more dense urban areas, but the advent of affordable e-bikes could really charge up their use for getting you fed.

Precision Temperatures

I’m going to steal from WIRED here for a moment, but:

TIRED: Heat
WIRED: Precise heat control to the exact temperature you want

We covered two different technologies this week deliver granular control to the way you heat either a beverage or your BBQ.

First up we took Ember’s new Travel Mug<sup>2</sup> out for a spin. The Tesla of travel coffee mugs runs a whopping $180 and keeps your coffee at a constant hot temperature of your choosing. This second-generation Ember mug features great design and clever controls, but sadly the promised three-hour battery life diminished pretty quickly in real world circumstances. Check out our full review.

On a much larger scale, the just-announced Weber SmokeFire grill features the connected cooking smarts of a June Oven. The two companies announced that the JuneOS will power the Weber Connect app that controls the SmokeFire. You can also get step-by-step instructions to become a master griller and dial in a constant temperature for those long brisket smoking sessions.

The Ember Travel Mug <sup>2</sup> is available now if you’re looking for a pricey stocking stuffer, and while the SmokeFire ($999) won’t be out until 2020, you can pre-order it on Cyber Monday.

The New Spoon Logo

A New Spoon

If you’ve been to our website this week, then you’ll notice an entirely new look and a new logo.

As Spoon founder Mike Wolf noted when introducing the new site yesterday:

We launched the Spoon in October 2016. At the time, we didn’t know what it would become, all we knew is that we wanted to tell the stories of the people and companies shaping the future of food and cooking.

He went on, saying:

With thousands of stories published and hundreds of thousands of readers per month, The Spoon is a big part of what we do and we figured it was time the site got a fresh coat of paint and maybe even a new beam or two.

The Spoon will remain the best place for all the food tech news and analysis you need to know, it’s just going to be easier to read and navigate. G’head and click through it and tell us what you think!

Speaking of our new logo, you’ll be able to see it on display in Vegas during CES at our second annual FoodTech Live. Last year we had over forty companies showing their stuff, so if you have new kitchen or food tech product and want to show off your wares, make sure to check out our event page!

D.C Attorney General Suing DoorDash Over Its Former Tipping Model

DoorDash and its tipping policies are at the center of controversy once again. This time, D.C. Attorney General Karl Racine has brought charges against the third-party restaurant delivery service, alleging that the company pocketed tips for workers and misled customers about where their tips went.

The company changed its much-maligned former tipping model earlier this year, but Racine is now seeking to recover millions of dollars in tip money DoorDash customers paid over the last couple years, calling the former model “deceptive.”

Here’s a quick recap:

Under the old tipping model, Dashers — that is, the folks driving/biking/walking DoorDash orders to customers — were guaranteed a minimum pay amount for each order they delivered. That minimum came not from an hourly wage but from a base fee paid by DoorDash then supplemented by workers’ tips. As the lawsuit alleges, “the only thing the consumer’s tip changed was DoorDash’s share of the worker’s pay. “

That lack of transparency for customers, who would have had to go through the fine print with an even finer-toothed comb to understand where their tip money was going, is a main point in the lawsuit:

“Any reasonable consumer would have expected that the ‘tip’ they added to the delivery charge through the DoorDash checkout screenflow would be provided to the Dasher on top of the payment promised by DoorDash for the delivery. But during the relevant time period, that was not the case.” 

A spokesperson for DoorDash responded to the lawsuit with the following: 

“We strongly disagree with and are disappointed by the action taken today. Transparency is of paramount importance, which is why we publicly disclosed how our previous pay model worked in communications specifically created for Dashers, consumers and the general public starting in 2017. We’ve also worked with an independent third party to verify that we have always paid 100% of tips to Dashers. We believe the assertions made in the complaint are without merit and we look forward to responding to them through the legal process.”

The lawsuit comes at a time when the debate around the ethics of the third-party delivery model has gotten louder, particularly when it comes to how workers are treated, paid, tipped, etc. The California Senate passed Assembly Bill 5 in September, which entitles gig workers like Dashers to minimum wage, workers comp, and other labor protections. DoorDash, Uber, and Lyft responded by pledging tens of millions of dollars to fight the legislation. 

Even if they succeed in overturning AB 5, these companies — and the business models to which they cling so tightly, will face more lawsuits, regulations, and legislation battles with time. And while bad press is one thing, the real danger for third-party delivery companies in all this is that legal and regulatory struggles could corrode that existing business model and undercut food delivery’s potential to be profitable (not that there is any profit at the moment).

Controversies haven’t yet gotten in the way of investment for DoorDash, which was valued at almost $13 billion in May of 2019 and recently raised another $250 million.

Chopt Is the Latest Restaurant Chain to Launch a Store Dedicated to Delivery and Pickup Orders

Chopt Creative Salad joins the growing number of restaurant chains building out brick-and-mortar stores completely dedicated to delivery and pickup orders. The fast-casual chain opened its first location for off-premises-only orders last week in Manhattan’s SoHo neighborhood. 

Customers of the Chopt SoHo store can order online or via the chain’s mobile app, bypassing the need to wait in line and interact with a cashier. Delivery orders are handled by the major third-party services (Grubhub, DoorDash, etc.), while the SoHo location will also feature self-order kiosks for those walking in off the street. Those kiosks will be able to accept cash in addition to cards — an important feature in an age where the debate over cashless payments is heated and chains like McDonald’s have come under fire recently for kiosks that won’t take good old-fashioned greenbacks. 

Chopt hasn’t said whether its delivery- and pickup-only store will provide a new model for future locations. CEO Nick Marsh told Forbes that, “It will be a significant part of our growth going forward, though we can’t give a percentage on how many of them will open.”

Chopt isn’t the only salad chain in NYC to be experimenting with off-premises order formats. In October, Just Salad teamed up with Grubhub to deliver a virtual restaurant brand called Health Tribes to NYC customers. Sweetgreen, who raised another $150 million in funding in September, has expanded its Outpost service, which entails placing pickup stations in office buildings. The chain also just opened its Sweetgreen 3.0 store, a so-called high-tech location that emphasizes self service and orders destined for outside the restaurant.

It all makes sense. Salad travels well — better than, say, french fries. But — and this is the understatement of the week — salad chains aren’t alone in embracing this off-premises store model designed to fulfill more delivery and pickup orders. Chick-fil-A has operated off-premises stores since 2018 and just announced it’s also working out of DoorDash’s new ghost kitchen in Northern California. Starbucks has a to-go-only store in China and one planned for NYC. Masses of other chains following this trend is pretty much a foregone conclusion.

In a place like NYC (or San Francisco, for that matter), the model allows restaurants to utilize smaller spaces and cut down on the amount of rent they pay to be in business. And as demand for delivery increases along with the expectation for online ordering and self-service technologies, this to-go concept will become a de facto part of most major chains’ strategies.

2ndKitchen Completes $4.35M Seed Round so Places Like Bars Can Serve Food from Nearby Restaurants

2nd Kitchen, the startup that enables establishments with no kitchens like pubs or bars to serve food from nearby restaurants, announced today that it has completed a $4.35 million seed round of funding. The round was led by Hyde Park Venture Partners with participation from MATH Venture Partners, Great North Labs, Bragiel Brothers, and M25.

The seed round actually kicked off in February of this year when 2nd Kitchen raised $1.35 million of the round. Here’s how we described the company back then:

It’s expensive for a bar or brewery to add its own kitchen facilities, so 2ndKitchen creates what could almost be considered a virtual food court. It connects a bar (or other business without a kitchen) with restaurants that are within walking or biking distance to curate a menu of items. Customers can order from this mini-menu via kiosks in the kitchenless establishment or a mobile phone app with the food delivered straight to their table.

Since then, 2ndKitchen has added other kitchenless locales like hotels, hospitals and co-working spaces to the place it serves. It’s free for a location to set up, and 2ndKitchen takes care of the menu, payments, and customer support. According to its website, 2ndKitchen charges participating restaurants a commission for orders it generates and restaurants can either make deliveries themselves or work with 2ndKitchen’s “delivery partner network.”

For anyone who’s ever had to cut short a good time at their favorite pub because it didn’t serve food, it’s easy to understand why this is a good idea. For location proprietors like bars, it keeps butts in seats for longer (ideally ordering more drinks) and adds food without needing to add all the expense of adding a kitchen. For restaurants, it’s easy to see some initial pushback in adding yet one more sales channel to its order tablet roster. But if the orders are placed from establishments close by, then it seems like 2ndKitchen could be a boon for restaurants looking to expand their customer base.

In its press release, 2ndKitchen said that it is rapidly expanding across the U.S. and will use the new funds to go after new business categories beyond bars, breweries, and hotels.

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

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

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

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

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

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

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

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

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

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

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

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

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

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

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

Uber Eats Using Discounts and Ad Space to Entice More Restaurants

Uber Eats and Ordermark announced a partnership this week that will offer service discounts to Ordermark restaurant customers who also leverage the Eats platform for their delivery needs. According to a press release sent to The Spoon by Ordermark, the partnership will make it “easy for restaurants to participate and manage off-premise orders.” It could also help Uber Eats woo more restaurants into becoming more loyal and longtime partners.

Ordermark’s technology helps restaurants centralize incoming orders from the many different channels in which they originate nowadays — in-house, delivery, takeout, etc. The technology pushes orders placed via Uber Eats directly to the kitchen without restaurant staff having to use an extra device or manually input the orders into the main POS system.

According to the press release, restaurants that sign up with Ordermark and request to use Uber Eats as a delivery partner can get their initial setup fees waived by Ordermark and are also eligible to receive a discounted rate on Ordermark services (actual discount numbers were not disclosed). While not the most earth-shattering news of the week, it’s also not insignificant, given the ongoing battle between delivery services and restaurants over sky-high commission fees and the fact that we’re seeing more companies like Ordermark come to market with solutions that promise to simplify both operations and financials for restaurants when it comes to delivery.

In another bid to entice more restaurant partners, Uber Eats is also reportedly selling ad space inside the Eats platform to restaurants. TechCrunch reported a job listing for an Uber Eats Ad Lead, which was confirmed by Uber. “There’s a bunch of different ways we can work with restaurants over time. If we have all the restaurants on the marketplace and we give them tools to help them grow, then this will be a very efficient marketplace,” Uber told TechCrunch.

Both developments come on the heels of Uber’s most recent earnings stats which, while not quite as abysmal as the previous quarter’s numbers still show the company posting more than $1 billion in losses. Losses for the Eats business grew to $316 million, up from $198 million one year ago.

Like Grubhub, who just saw its sharpest one-day decline in its entire history as a publicly traded company, Uber Eats is struggling to show investors it can be a profitable business. Firmly entrenching more restaurants into its ecosystem with discounts and ads could help Eats. Unfortunately, it’s a wait-and-see scenario as to whether that will be enough.

We’ve Seen the Restaurant of the Future. It Doesn’t Look Like a Restaurant

What will the typical American restaurant look like in 2030? Ask the National Restaurant Association, whose new report, “Restaurant Industry 2030” serves up some answers to that question.

Many answers, actually. The 80-page report gives us an in-depth look at everything from how the restaurant workforce will change to technologies that will become commonplace in daily operations, many of which we already see quite a bit of in 2019: self-order kiosks, dedicated areas for pickup orders, and digital drive-thru signage, for example.

Overall, restaurant sales are expected to reach $863 billion in 2019 and grow to $1.2 trillion in 2030, according to the report. The major driver of that growth will be off-premises ordering — delivery, takeout, drive-thru, and other mobile-centric experiences. That will, as the report states, change the definition of the word “restaurant”:

Some restaurants will morph into a hybrid model, offering counter service, full service, takeout and delivery, and meal kits. The delivery-only restaurant is on the rise through virtual restaurants and ‘ghost kitchens.’ New food halls feature retail and restaurant pairings to make it easy for people both to eat and to shop for food they can take home.

All of these things underscore the influence off-premises orders are having on restaurant business models. As the report states, “the shift affects everything from restaurant design to marketingtech investment, operations, and site selection.”

Take ghost kitchens as a prime example. Not so long ago, the idea of having a restaurant without a dining room for anything other than concession-type food was unheard of. Now, restaurants are not only using them to fulfill the influx of delivery orders, they are also testing out brand-new menus and, in the case of multi-brand companies, using the ghost kitchen concept to cross-promote and sell sister brands.

Third-party delivery companies, in particular, are capitalizing on the craze for ghost kitchens, with DoorDash opening its own facility in Northern California and Uber Eats and Grubhub teaming up with non-restaurant food brands to launch virtual concepts.

New business models aside, though, Grubhub et al. face a far more ominous prospect over the next decade: increased regulation of third-party delivery. The National Restaurant Association’s report notes that the restaurant of 2030 will see many a government mandate over the next decade around employees, the environment, and food service-related taxes. But the big one to stand out is the increased regulations for third-party delivery operators.

The debate over stricter regulations for third-party delivery is already in full swing. Earlier in 2019, Grubhub, Uber Eats, and indeed the entire sector came under fire when an oversight hearing was held in New York City that called into question the high commission fees these services charge restaurants. Since then, it’s been one headline after the next proclaiming antitrust issues, biased fee structures for restaurants, caps on delivery fees, ethically questionable tipping policies, and so much more.

The shift towards more regulations is already in place, most notably with California’s Assembly Bill 5, which reclassifies gig workers as employees and was signed into law in September. Third-party delivery companies are fighting AB 5, but even if they succeed, there will be virtually no end to new bills, laws, and other regulatory matters to fight over the next decade. Between that and the constant struggle for profitability for these companies, it’s safe to say the third-party delivery sector of 2030 will be markedly different from the one we know today. Which is to say, the very elements changing today’s food landscape will undergo there own change on the road to 2030.