Close Ad

The Spoon

Daily news and analysis about the food tech revolution

delivery

Flipdish Raises €40M to Help Restaurants Process Digital Orders In House

Flipdish announced that it has raised €40 million (~$48.5 million USD) from Tiger Global Management to expand its software platform that lets restaurants create their own branded digital properties instead of having to rely on third-party platforms for online orders.

The company said today in a blog post that it will use the new funds to build out its team, expand operationally, and improve services to its existing customers. Currently, the service operates in the UK, Germany, France, Ireland, Spain, and the U.S. 

Flipdish’s promise to restaurants is that its software will help them easily set up and manage digital properties in order to bring digital ordering in-house, rather than leaving it to third-party marketplaces like Deliveroo and Uber Eats. Restaurants using software can build a website and mobile app that features their own branding but is powered by Flipdish’s technology on the back end. The system also includes built-in marketing and analytics tools. 

It does not, however, appear to completely eliminate reliance on third-party delivery providers. Instead, restaurants can process orders through their own (Flipdish-powered) apps and website, and Flipdish then partners with “a number of food delivery service providers” to power the last mile. Many of those are smaller, regional on-demand delivery services, though DoorDash’s Drive service makes an appearance. 

This hybrid approach isn’t unusual in the restaurant tech space. Few companies actually provide their own driver fleet along with their software stack to restaurants, ShiftPixy being the notable exception. Others, including Lunchbox, Orderslip, and Toast, integrate with some of the major third-party platforms in order to fulfill that last mile. That particular setup is unlikely to change soon, since few have the money to actually maintain a national (or international) driver fleet.

Flipdish, at least from its messaging, seems to understand that. The company noted in today’s blog post that its system isn’t just about addressing “the huge commissions taken by those marketplaces – although that is certainly part of it. It’s also about enabling those businesses to build a closer relationship with their customers.”

To date, the company has raised a total of €47.5 million, or roughly $58 million USD.

Ordrslip Announces Integration With DoorDash for Restaurant Delivery

Restaurant tech company Ordrslip this week announced a partnership with DoorDash’s white label fulfillment platform, DoorDash Drive. Through the partnership, restaurants with mobile-order platforms powered by Ordrslip’s technology can use the DoorDash network to fulfill delivery orders.

Ordrslip’s pitch to restaurants is that the company’s technology allows businesses to create their own branded mobile apps without having to invest the millions of dollars and countless hours typically required to create sophisticated order-and-pay apps from scratch.

From the restaurant customer’s perspective, the app looks and functions as if it were completely owned and powered by the restaurant. On the back end, the Ordrslip SaaS system powers each transaction, and provides features such as order-ahead and payment capabilities, POS integration (with Clover or Square), order tracking, and, of course, delivery integration.

Ordrslip announced a similar partnership with Postmates (now a part of Uber) in 2020.

Giving restaurants the ability to process transactions in-house has become an increasingly important topic since the start of the industry-wide shift to digital. Doing so lets businesses pay less in commission fees to third-party delivery services. It should be noted, however, that some commission fee is still required on orders that utilize DoorDash or Postmates for the last mile of delivery. Other systems, such as those of Toast and Ritual, offer similar packages. For a restaurant to entirely bypass a commission fee on delivery orders, they would have to conduct delivery via a service like ShiftPixy, which provides drivers in addition to powering restaurants’ digital properties.

Restaurants that do large volumes of takeout orders would benefit from a technology like Ordrslip’s, since a third-party service like DoorDash is not involved in the process. However, said third-party services appear to be getting hip to this idea: just this week, Uber Eats announced it is waiving the commission fee for pickup orders through June 30, 2021. Doubtless the battle over who owns the takeout/pickup order process is just heating up.

Ordrslip licenses its tech to restaurants for a flat $100/month fee and is available to restaurants across the entire U.S. 

Uber Eats Launches Campaign to Support Independent Restaurants

Uber today announced Eat Local, a campaign the company says will support independent restaurants financially impacted by the COVID-19 pandemic. 

As part of the Eat Local package, Uber will donate $4.5 million to the Local Initiatives Support Corporation (LISC), which will in turn distribute financial assistance to U.S. restaurants facing COVID-19-related challenges. Restaurants must be on the Uber Eats and/or Postmates platforms to be eligible. 

According to the LISC website, the applications process for grants opens on Feb. 16. The grant program will offer to help restaurants meet certain expenses, such as payroll, rent, utilities, outstanding debts to vendors, and upgrading technology systems. 

Restaurants must have been active on Uber Eats or Postmates since Jan. 1, 2021 in order to be eligible for the grant. Businesses must also have less than five locations and not be affiliated with a national brand. (The full list of eligibility requirements is on LISC’s site.)

In keeping with earlier relief efforts from 2020, Uber’s Eat Local package also includes waived and reduced fees for restaurants around restaurant pickup orders and for orders placed via a restaurant’s own website but delivered by Uber Eats. Restaurants can get daily payouts instead of the standard weekly ones, and Uber will also continue matching donations made by customers via the Eats app’s Restaurant Contribution feature.

Uber (and newly acquired Postmates) along with Grubhub and DoorDash first began offering relief packages for restaurants back in March 2020, when shelter-in-place mandates first went into effect in the U.S. Since then, these services have launched various grant programs and assistance efforts, including Grubhub’s Winterization Grant and DoorDash’s ongoing Main Street Strong program.

All of these efforts go some ways towards helping small and independent restaurants, which have been most damaged by the pandemic. What remains unclear is how much grants and relief efforts help when stacked up against the high commission fees third-party delivery service continue to charge these smaller restaurants. That factor remains likely to be a point of heated debate long after the worst parts of the pandemic have subsided.

The Delivery Robot Market Report

Allowing robots to handle the last mile of these deliveries could do much to make restaurant and grocery delivery faster, enable those deliveries to occur around the clock, and bring down both labor costs and prices for consumers. Self-driving delivery vehicles could also reduce congestion on city streets and bring more equity to our food system. 

But the biggest factors currently driving the acceleration of autonomous delivery vehicle adoption aren’t technological. Rather, like so many other aspects of our lives, the COVID-19 pandemic is increasing the demand for both grocery and restaurant deliveries and fueling the desire for fewer person-to-person interactions in the process. 

Market research firm, Second Measure, reports meal delivery sales grew 125 percent year-over-year in September of 2020. With people forced to stay at home more, 34 percent of U.S. consumers ordered from a delivery service, up from 26 percent during the same time last year. 

Grocery delivery also saw surges in demand, particularly in the early days of the pandemic. While not all of the record-setting grocery e-commerce sales were delivery (curbside pickup was also a popular option), they made up a large portion of those sales. In April, grocery delivery service Instacart commanded 57 percent of the grocery e-commerce market. 

Robots, especially for one-off meals and small basket orders, have the potential to expand delivery options. They are small and nimble and can run all day, opening up new opportunities for retailers and restaurants. Grand View Research estimates that the global autonomous last mile delivery market size will hit $84.9 million by 2027 (includes both drone and ground-based robots).  

Before we can get to that idealized vision of delivery, there are still a number of challenges to overcome. State and city regulators need to establish rules and standards around infrastructure and safety while simultaneously maintaining revenues that might otherwise be lost. 

Though fleets of autonomous vehicles winding their way across city streets and bringing last-minute lattes is already happening, their mainstream presence in our lives is far from inevitable. This report will give readers an overview of the current state of food delivery by robotic vehicles, the key players in the space, as well as challenges and opportunities for the sector.

The full report is available for Spoon Plus subscribers. To subscribe or learn more about Spoon Plus, click here.

Uber Lays Off More Than 180 Employees of Postmates

Uber has laid off about 15 percent, or roughly 185 people, from its Postmates division, according to a report this weekend from the New York Times. The layoffs come just a couple months after Uber completed the $2.65 billion acquisition of the rival delivery service.

The NYT noted that the cuts are part of the integration process of Postmates with Uber Eats. On the front, consumer-facing end, Postmates will still function as its own app, separate from Eats. However, it will now share back-end infrastructure with Eats’ existing technologies and operations.  

Postmates founder Bastian Lehmann is among the individuals that made a decision to depart the company. Other executives “will leave with multimillion exit packages,” according to NYT sources, who added that more exists could be possible in the coming months. 

For now, Eats remains Uber’s key money-making business, having overtaken the company’s ride-hailing service last year in terms of revenues. The pandemic, of course, helped the popularity of the Eats Business as more consumers stayed home and ordered delivery and the restaurant drastically shifted focus to off-premises formats in response.

Because of that shift, food delivery is more popular than ever, and Uber faces significant competition from services like DoorDash, which went public in December, and Grubhub, which was recently snapped up by global delivery service Just Eat Takeaway.com.

To remain competitive, Uber has made a number of cuts in recent months to parts of its business. For example, it got rid of its autonomous vehicle division and is spinning off Postmates’ robotics division into a separate entity.

Update: An earlier version of this story said that Postmates founder Bastian Lehmann was laid off. Lehmann has made the decision to depart the company on his own, according to an Uber spokesperson.

Glovo Lands Real Estate Deal to Expand Its Ghost Convenience Stores

Barcelona, Spain-based food delivery service Glovo has inked a deal with Switzerland-based real estate firm Stoneweg. The latter will invest €100 million (~$121 million USD) to help Glovo expand its network of ghost convenience stores. 

As part of the deal, Glovo will occupy the Stoneweg real estate locations for an unspecified period of time. Stoneweg will build and refurbish these real estate locations in key Glovo markets to help the delivery service expand its reach with these delivery-only convenience stores. Right now include Spain, Italy, Portugal, and Romania, with other European countries planned for the future. Glovo intends to have 100 different locations by the end of 2021. It has just 18 right now.

Glovo launched convenience store delivery in 2019 as a way to stand out from other Europe-based competitors (e.g., Delivery Hero). The company’s promise is to deliver goods one might find at a convenience store in 30 minutes or less to customers’ doorsteps. To do that, the Glovo operates these dark convenience stores from which customers can only order online.

The company’s increased focus on quick convenience store delivery — what it calls “Q-Commerce” — is at least partly in response to the pandemic’s impact on how consumers get food items and household goods. Certain countries, such as Spain and Italy, have had far stricter lockdowns during the pandemic than many U.S. states. Those restrictions around leaving one’s house have in turn created an environment where it makes more sense to order groceries, snacks, and household goods for delivery, rather than venture out oneself. 

That said, Europe isn’t alone in this shift towards ghost convenience stores. Most Notably, DoorDash began operating its own version of the concept in the U.S. in 2020. In South Korea, customers can even get convenience store goods delivered by robots courtesy of LG. 

For its part, Glovo believes these dark stores are the future of retail, hence the company’s new deal with Stoneweg. According to Bloomberg, Glovo’s Q-commerce orders have grown 300 percent from one year ago, and the company plans to hire 500 people for the Q-commerce business by the end of the year. 

Delivery Hero Launches its Own VC Fund, DX Ventures, to Invest Across Food Tech

Global food delivery service Delivery Hero announced today the official launch of its own venture capital fund that will invest in food, delivery, and other areas of the food industry. Called DX Ventures, the fund has a dedicated pool of long-term capital to devote to companies working in on-demand services, food tech, fintech, artificial intelligence, and logistics, according to a press release sent to The Spoon.

Duncan McIntyre, Managing Director of DX Ventures, said the fund was something Delivery Hero has been thinking about for a number of years, and that investments into other companies is a strong part of how the service has been built over the years. “We’ve made about $500 million [in] minority investments over the last couple years,” he told me over the phone recently. Out of the success of those investments came the next obvious step: formalizing the concept of Delivery Hero as an investor. Hence, DX Ventures.

The fund will start off with a focus on early-stage companies, such as those at Series A level. “The aim of the fund is to look at industries and areas that are going to be disruptive over the next 10 years,” McIntyre said. That could include food delivery, but it might also include adjacent areas, such as alternative proteins, packaging alternatives, or supply chain features.

He added that DX Ventures will also look for companies that compliment the core Delivery Hero platform. Delivery Hero, for example, has added grocery delivery to its list of services (see the company’s $360 million acquisition of InstaShop last year). McIntyre suggested that companies contributing to the grocery delivery sector might be appropriate candidates to receive investment from DX Ventures. Other examples might include companies that can improve the restaurant delivery experience by providing better tracking, shorter delivery windows, lower price points, or healthier food options. “There’s a lot of efficiency to be gained in the food system,” said McIntyre.

All of the above examples are hypothetical at this point, as DX Ventures has yet to announce any companies it is investing in. At the moment, the fund is actively looking for companies in which to invest over the long term.

Potential companies can be located anywhere geographically speaking, though the fund will also focus on markets where Delivery Hero already has a presence. At the moment, that includes no less than 50 countries across Asia, Europe, Latin America, the Middle East, and North Africa. 

DX Ventures will be independently managed from Delivery Hero.

Delivery Hero Gets Approval for the $4B Woowa Bros. Deal, Will Sell Its South Korea Business

Delivery Hero will sell its South Korea-based food delivery app Yogiyo as part of the conditions for getting regulatory approval on its $4 billion deal to buy Woowa Bros., which owns the country’s largest food delivery service Baedal Minjok. Final written approval on the deal is expected to happen in the first quarter of 2021, according to an official announcement from Delivery Hero.

The Korea Fair Trade Commission (KFTC) flagged the deal in November over concerns about its impact on competition in South Korea’s fast-growing food delivery space. Were Delivery Hero to hang onto Yogiyo, the combined user bases of that app plus Baedal Minjok’s would have given Delivery Hero 97 percent of the marketshare in South Korea. KFTC approved the Woowa Bros. deal on the condition that Delivery Hero offload the entirety of its own South Korea business.

Delivery Hero cofounder and Chief Executive said in a statement that his company was “deeply saddened by the required condition to divest Delivery Hero’s subsidiary.” However, Delivery Hero will nonetheless sell off Yogiyo within six months, per KFTC’s terms. 

Even with the requirement to sell 100 percent of its stake in Yogiyo, Berlin-based Delivery Hero will access a massive user base with the purchase of Woowa Bros.: roughly 15.8 million monthly active users, or 82 percent of the marketshare in South Korea.  

The South Korean food delivery market, meanwhile, is the world’s third largest, behind China and the U.S. Coupang Eats, backed by Softbank-owned e-commerce company Coupang, is the country’s third largest player, and will be Delivery Hero’s chief rival going forward.

Delivery Hero has six months from the time it gets written confirmation of regulators’ decision to complete the sale of Yogiyo.

Report: Foot Traffic to Major QSRs Down by 50 Percent from Start of Year

It’s probably not much of a shocker to learn that far fewer people are venturing inside quick service restaurants (QSRs) these days. There is, after all, a global pandemic that continues to rage across the U.S. But Yahoo Finance posted a story over the weekend with actual data showing just how precipitous the drop in foot traffic has been for a number of major QSR brands.

According to location intelligence service Gravy Analytics, as of December 8, foot traffic to Burger King, Popeyes, KFC, Pizza Hut, Taco Bell, Domino’s, Papa Johns and Starbucks fell 50 percent compared to February 2020. Furthermore, Gravy Analytics reports that foot traffic to Chick-Fil-A, McDonald’s, Wendy’s, Dunkin and Chipotle dropped more than 40 percent compared with pre-pandemic levels.

Obviously the key word here is “pandemic,” which forced big changes to restaurants of all sizes here in the U.S. Early on in the pandemic, restaurants in various parts of the country were forced to close dine-in operations entirely. Though many have reopened, most dining rooms still operate under reduced seating capacity and other restrictions as states continue fighting the virus. [I REWROTE THIS GRAF FOR CLARITY]

Given that fewer people could physically stand and sit inside a restaurant, it makes sense to see the kind of drop in foot traffic that Gravy Analytics reported. And as we learn more about COVID, especially how it travels farther and faster inside restaurants than previously thought, these types of limitations are likely to stay in place until the vaccines are widely available. The question now is, even when the vaccine arrives, will people still want to dine in, or equally as important, will QSRs want them to?

In response to the pandemic, QSRs have been aggressively pivoting away from dine in and more towards drive-thrus and delivery. In the back half of this year, McDonald’s, KFC and Burger King have all announced various plans for future store designs to emphasize pickup and drive-thru operations rather than dine in options. At the same time, the rise of delivery services like DoorDash and Uber Eats means that hungry consumers don’t even need to leave their couch if they want a Big Mac or a Whopper.

With 2020 almost in the rearview mirror (thankfully), and the aforementioned vaccine on its way, hopefully the numbers we see from QSRs and all restaurants will be a lot better.

Ritual Teams Up With NYC to Provide Commission-Free Delivery to Restaurants

Online ordering system Ritual has teamed up with New York City to offer restaurants in the Big Apple access to its platform for delivery and pickup orders at no extra cost. The deal is part of the second phase of New York’s Empire State Digital Initiative, which is providing support for restaurants and foodservice industry businesses impacted by Covid. Restaurants can use the Ritual platform free of charge from now until April 2021, according to a statement from New York Governor Andrew Cuomo. 

Ritual brought its online order platform to the U.S. earlier this year. The software plugs into a restaurant’s main system and enables the business to process delivery and takeout orders through its own website, rather than those of the major third-party delivery platforms. It’s another example in the recent wave of technologies dedicated to native and/or hybrid ordering, where restaurants get to manage orders through their own digital properties and need only rely on Grubhub, DoorDash, and others for things like the last mile of delivery.

Right now, with the pandemic numbers still rising and indoor dining once again banned in NYC, cutting away at least some of third-party delivery’s control over the restaurant industry is important for a couple of reasons. For one, it lets restaurants own their interactions, and therefore the data on those interactions, with customers. Most importantly, decreasing reliance on delivery apps also diminishes the commission fees restaurants must pay. As we discuss ad infinitum here at The Spoon, those fees are highly controversial because they can stretch as high as 30 percent per transaction, further decimating what little margins restaurants have left (if any). 

NYC imposed mandatory caps on these commission fees several months ago. However, the city also just shut indoor dining down once more in an effort to curb the spread of the pandemic. This time, the shutdown is indefinite, with some calling it a “death blow” to businesses, especially the independent ones. Once again, restaurants have to rely on delivery and takeout as their only channels for business. 

Ritual’s commission-free order platform may not be able to save every business, but it could quite possibly pull a few back from the brink by saving them a little money that would otherwise go towards lining the pockets of DoorDash et al.

For restaurants that join the platform through the Empire State Digital Initiative, Ritual will waive setup, subscription, and some credit-card processing fees. 

DoorDash Stock Pops Upon IPO

DoorDash’s stock got the much sought after pop after the startup IPOd on the New York Stock Exchange today. DoorDash shares were priced at $102, and started trading at $182 today, giving the third-party delivery company a market cap of $57.8 million.

Founded in 2013, DoorDash had raised $2.5 billion in funding prior to going public. Today’s IPO puts a bow on what has been a busy year for the third-party delivery service. The COVID-19 pandemic forced closures of dining rooms at restaurants, pushing those businesses to offer more takeout and delivery options. That plus stay-at-home orders earlier in the year had more people order delivery around the country and translated into a lot more business for DoorDash. As CNBC writes:

DoorDash reported $1.9 billion in revenue for the nine months ended Sept. 30, according to its IPO filing. That’s up from $587 million during the same period last year. As its revenue grew, DoorDash also narrowed its net loss to $149 million over the same period in 2020. In 2019, DoorDash had a net loss of $533 million over the nine-month period.

In addition to coronavirus-driven business, DoorDash also expanded into new categories beyond its core delivery business. As the restaurant industry cratered, DoorDash added delivery from drug stores, convenience stores (it’s even building its own brand of delivery only convenience stores) as well as on-demand grocery delivery.

DoorDash’s road to IPO hasn’t been without its controversy, however. The high commissions that DoorDash and other third-party delivery services charge restaurants came under even closer scrutiny earlier this year as restaurants just tried to survive the initial fallout from the pandemic. Some cities even implemented fee caps to help restaurants stay afloat. DoorDash was also a backer of Prop 22, a California ballot measure that sought to get gig-economy services exempted from Assembly Bill 5, which requires companies to reclassify contract workers as employees (thereby giving them benefits and more protections). That measure passed. And just last month, DoorDash agreed to pay a $2.5 million to the Washington D.C. attorney general’s office as a settlement over its tipping policies.

DoorDash now joins other publicly traded third-party delivery services such as Uber and GrubHub.

Homemade Food Delivery Service WoodSpoon Raises $2M

WoodSpoon, an NYC-based service that delivers meals made by home chefs, announced today it has raised $2 million in seed funding. The round was led by World Trade Ventures with participation from Silvertech Ventures. 

According to a press release sent to The Spoon, the funding round will help WoodSpoon expand both in the New York area and into other states in the future. The company’s platform connects home chefs — both professionals and hobbyists — with local customers who can purchase available meals in their area via a mobile app. WoodSpoon, which launched this year, says it now has about 100 chefs on its platform, including those who have worked at Nobu, Cipriani, The Modern, and other notable restaurants. 

The legality of meal services for home chefs varies from state to state in the U.S., largely due to safety concerns. Speaking to the safety issue, WoodSpoon CEO and cofounder Oren Saar told me earlier this year that his company conducts a rigorous vetting process that includes interviews, evaluation of the food itself, and kitchen inspections. All chefs also have to be in compliance with NYC’s regulations and permit requirements, which vary depending on the type of food the chef plans to make from their home. Saar said many of WoodSpoon’s chefs, which include a number of individuals out of work because of the pandemic, will often use their own commercial facilities to fulfill orders.

The business for homemade delivery meals isn’t widespread in the U.S. yet, for the aforementioned legality issues. California is another state where it’s possible to make money as a home chef. To that end, a company called Shef, based in the San Francisco area, also recently raised a seed round of funding. 

Back east, WoodSpoon is currently available in Manhattan, Brooklyn, Long Island City, Hoboken, and Jersey City. The service will soon expand to Queens and The Bronx.