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Daily news and analysis about the food tech revolution

delivery

Jimmy John’s Deal With DoorDash Boosts the In-House Delivery Concept

In a major about-face, sandwich chain Jimmy John’s this week announced a nationwide partnership with DoorDash to use the latter’s new Self-Delivery service. 

Through that service, Jimmy John’s will use DoorDash’s marketplace to process orders and reach new customers while still maintaining its own driver fleet and control of the last mile of delivery. The nationwide expansion follows a six-month pilot of 100 restaurants. DoorDash has also built a direct integration with Jimmy John’s POS system, so that delivery and pickup orders go straight to the main system rather than to an external tablet.

At one point, Jimmy John’s was famous for its refusal to use third-party delivery services, flatly stating in 2019, “We will never use third party delivery services.”

Two big things have happened since that statement, though: Inspire Brands acquired Jimmy John’s and the COVID-19 pandemic hit, decimating the restaurant experience as we know it.

Inspire, which also owns Arby’s, Sonic, and Buffalo Wild Wings, completed its acquisition of Jimmy John’s in September of 2019. At the time, Jimmy John’s successful in-house delivery program was seen as an attractive asset few other brands could offer. (Domino’s is the other notable example here.)

Then along came COVID-19, and even quick-service brands — which have fared much better overall than other restaurant formats — were forced to shift the majority of their focus to improving the off-premises experience, including delivery. 

Inspire Brands has long had an existing relationship with DoorDash, so given the state of the restaurant biz, it’s not terribly surprising Jimmy John’s would eventually get linked to the third-party delivery service. Reaching new customers via digital channels is a must nowadays, and Inspire acknowledged as much this week in its press release: “As part of a broader brand evolution, Jimmy John’s has been focused on continuing to reach new guests and refining its channels and operations to meet customers where they are while maintaining the unique Jimmy John’s delivery experience.”

The twist, of course, is the Self-Delivery program. Through it, Jimmy John’s can gain access to more customers via digital channels while still keeping high commission fees down by using its own drivers. Keeping the fleet in-house also gives the brand more control over the quality of its orders as they travel from kitchen to customer.

Jimmy John’s is in a unique position in that it has kept an in-house delivery fleet for years and can afford to continue that, even as the fallout from the pandemic continues. Other brands can’t necessarily afford that luxury, so it isn’t certain this deal will motivate other chains to adopt similar delivery strategies. A more common route to hybrid delivery will likely be restaurants processing orders and payments through their own digital properties and letting a third party handle the last mile.   

Zuul Teams Up With Thrillist to Launch Rotating Ghost Kitchen

Ghost kitchen operator Zuul announced this week it has joined forces with lifestyle brand Thrillist to launch a “rotational ghost kitchen” offering delivery exclusives from top NYC chefs and restaurants. The program will run on Wednesday, Thursday, and Friday nights from Dec. 9 – April 16, according to a press release sent to The Spoon. 

A series of 10 different NYC restaurants will each hold a two-week residency offering exclusive delivery-only meal offerings made out of Zuul’s ghost kitchen facility in Manhattan’s SoHo neighborhood. The idea is to highlight the ghost kitchen concept — which quickly evolved from an optional add-on to a must-have for many restaurants — as an important element of the pandemic-era restaurant businesses. 

Zuul and Thrillist said in this week’s press release that the program is also a way to lend support to struggling restaurants as they fight to keep the lights on in the wake of new COVID-19-related restrictions. Full-service restaurants have been hit particularly hard over the last several months, since the experience they historically offer has been tailored to the dining room and their food does not always travel well. The Zuul/Thrillist program is meant to help these restaurants “reinvent” themselves to better fit into a restaurant biz centered on off-premises orders.

To that end, Thrillist will cover the costs for food ingredients, labor, packaging, and delivery for participating restaurants. Those restaurants will be able to take advantage of Zuul’s all-in-one ghost kitchen facility, which provides not only space to make the food but also the technical infrastructure to fulfill delivery orders. That in turn will let Zuul show its ghost kitchen concept to more restaurants, a wise move considering the company’s ambitions to expand across NYC.

Customers can order from these rotating ghost kitchens here. For the swag-lovers out there, all orders contain “a special kit” that includes a t-shirt designed by a local artist, a reusable cutlery set, portable wine tumblers, and an insulated bag. 

Speaking of Ghost Kitchens…

Register for our Ghost Kitchen Deep Dive event on December 9th. Tickets are limited, so better hurry!

South Korea: LG’s Robots to Ride Elevators and Make Convenience Store Deliveries

Delivery robots are making their way indoors. At least, they are starting to in South Korea. ZDNet reports today that LG has started using its Cloi Servebots to make deliveries from a local convenience store to anyone within the LG Science Park in Seoul.

The Serve bot, which features a series of shelves to hold food and drinks, will be able to get on the elevator at the Science Park and navigate nine above-ground floors as well as the basement to make deliveries to people there.

Typically, food delivery robots stop outside of a building, requiring the recipient to come out to retrieve the order. But robots in South Korea are starting to cross that threshold, as it were, to venture inside office and residential buildings to make deliveries more direct.

Earlier this month, Woowa Brothers announced that it was working with HDC I-Controls and Hyundai Elevator to allow Dilly robots to enter a residential complex and autonomously work the elevator.

As with the Woowa deal, there are still some details left unclear by ZDNet’s report about LG’s machines. To use the Cloibot, a user places an order through the KakaoTalk chat app. A human at the GS25 convenience store packs the order into the robot and sends it off. Then, as ZDNet writes:

The robots will then depart and send their destination information to a nearby elevator wirelessly. Once the robots arrive at their destination, they will call and text the customer to notify them of their arrival.

As with Woowa, which didn’t mention how its robots would navigate to a specific apartment after getting off an elevator, we don’t know how far the LG bot will go. Will it travel to a lobby, or a conference room or to a specific desk? Hopefully we’ll see more details from LG soon.

The bigger point is that delivery robots are gaining the ability to traverse indoor settings at the right time. The pandemic has businesses looking for a way to reduce human-to-human contact to reduce potential virus transmission. Having a robot means that a store or restaurant doesn’t have to send one of its workers out to make deliveries, and office/residential buildings can cut down on the number of different people coming in and out its doors.

DoorDash Launches Initial Public Offering

DoorDash announced today it has launched the roadshow for its initial public offering (IPO). The company is offering 33,000,000 shares of its Class A common stock, with the initial public offering price expected to be between $75 and $85 per share, according to a company press release.

The San Francisco-based food delivery service confidentially filed for an IPO in February of this year and unveiled the public S-1 filing in November. The S-1 filing revealed that the company reported a profit for the first time in its history during the second quarter of 2020 — which coincided with the rise of the COVID-19 pandemic. It’s a noteworthy milestone in an industry that thrives on promising a profitability it hasn’t, for the most part, achieved yet.

For DoorDash, part of that trek towards profitability appears to be expanding its service to other areas of food delivery besides restaurants. In April, the company announced partnerships with major convenience stores, including Wawa and 7-Eleven, and in August, it launched a grocery delivery service. It even went as far as to open its own “ghost convenience store,” called DashMart, which is basically a virtual convenience store owned and operated by DoorDash.  

Those new sales channels may be necessary at a time when the restaurant industry faces new restrictions to help curb the spread of the pandemic. It is difficult to say at this point how many restaurants will shutter permanently when all is said and done, and delivery services may need to branch out further to keep on the road to profitability. 

According to the Wall Street Journal, DoorDash is aiming for a valuation of $25 billion to $38 billion. The company garnered $675 million in revenue and a profit of $23 million for Q2 2020. For Q3, it posted a net loss of $43 million for Q3, but still reported revenue growth of $879 million. The company has said in the past that COVID-19-related lockdowns have played a significant role in its growth. That could be the case for a long time yet.

HungryPanda Raises $70M to Provide Food Delivery to Overseas Chinese Customers

HungryPanda, a food delivery service catering to Chinese communities overseas, announced today that it has raised $70 million. The round was led by Kinnevik with participation from 83North, Felix Capital, Piton Capital, and Burda Principle Investment. 

The London, U.K.-based company will use the new funds to continue its global expansion, delivering authentic Chinese restaurant food and groceries to Chinese people living abroad. According to today’s press release, HungryPanda’s business is already profitable in the U.K. as well as other major cities, including NYC. The service is currently available in 47 cities across six countries. 

The HungryPanda app stands out in the food delivery space because of this specific focus on the millions of Chinese people living in other countries who might encounter cultural and language barriers when trying to order restaurant food or groceries via an app. CEO Eric Liu started the company in 2017 as a direct response to this issue, which he himself experienced firsthand. The goal was — and continues to be — to provide the Chinese diaspora with a food delivery service that can meet their needs not just for food but also for the experience of browsing a menu, choosing a meal, and paying for it.

To that end, the app and website that is entirely in Mandarin and connects people with authentic Chinese restaurants, grocers, and other food outlets. Business owners, too, can use the service to connect with a potentially more relevant base of customers than they might find on, say, DoorDash.

HungryPanda raised $20 million in February of this year. At the time, Liu said that the U.S. was “strategically important” and would be the company’s focus for 2020.

DoorDash to Pay $2.5M to Settle Lawsuit Over Former Tipping Policies

DoorDash will pay a $2.5 million settlement to the Washington, D.C. attorney general’s office over a lawsuit filed in 2019 about the delivery service’s controversial tipping policies. Attorney General Karl Racine announced yesterday that DoorDash has agreed to the settlement “to resolve allegations that it mislead D.C. consumers and used tips left for workers to boost the company’s bottom line.”

Racine filed the suit in November of 2019, not long after DoorDash changed its much-maligned tipping policy where it used workers’ tips to contribute to their base pay. The lawsuit alleged that “the only thing the consumer’s tip changed was DoorDash’s share of the worker’s pay.” Most of the buying public, meanwhile, had no idea their tip money was going towards, well, not tips. Racine sought to recover millions in that tip money.

Which he has. According to the press release from the attorney general’s office, DoorDash will pay $1.5 million in relief to delivery workers in D.C., $750,000 to the District, and donate $250,000 to District charities. DoorDash will also “be required to maintain a payment model that ensures all tips go to workers without lowering their base pay” and provide transparency around its payment policies.

“Today’s settlement rights a wrong that deceived D.C. consumers and deprived workers of monies that they should have been paid,” said AG Racine.

Color me cynical, but it doesn’t feel like as much of a victory as it might have even few months ago. It’s great workers are getting some of those tips back that were originally put towards their base pay. But $2.5 million ain’t a lot of dough when you consider that DoorDash (along with other gig economy companies) bankrolled Prop 22 for $200 million, the most expensive ballot measure in California’s history. It passed, meaning DoorDash drivers will remain independent contractors and the company is not on the hook to give its workers minimum wage, paid sick leave, and health care. 

In other words, the Prop 22 saga showed us that gig economy companies will pay hundreds of millions to effectively not take care of the folks on whose backs these businesses are built. DoorDash may have changed its tipping policy, but I doubt a $2.5 million settlement will motivate the company to further alter its approach to handling its workforce anytime soon. 

The settlement also comes just a couple weeks after DoorDash filed for its IPO. In that filing, DoorDash said that if it fails “to cost-effectively attract and retain Dashers,” the company’s business, operations, and financials could be “adversely affected.” Having an open lawsuit about a worker-treatment issue would have been counterproductive to that point, so the timing of the settlement isn’t likely coincidental. DoorDash said in its filing that it has over 1 million Dashers across all its markets. Attracting and retaining them is a key part of the company’s growth strategy — so long as it doesn’t chomp away at DoorDash’s profitability.

Report: Prep, Cook, Automate – Where Tech Is Leading the Restaurant Back of House

Back-of-house processes in the restaurant tend to involve a lot more legacy hardware and closed-loop systems, which present significantly different challenges than those at the front of house. That in turn has created a slower innovation pipeline and less interest from investors. 

This report will examine current back of house processes and technologies as well as the drivers for innovation changing those things. 

 Back-of-house operations present a huge opportunity for tech companies and other startups willing to tackle the many problems that have yet to be solved in the space. Additionally, technological innovations in robotics, AI and machine learning will change the physical restaurant kitchen along with its labor needs and cooking and delivery systems.

This report is available to Spoon Plus members. To learn more about Spoon Plus, go here.

DoorDash Files for IPO, Could Start Trading in December

DoorDash unveiled its public S-1 filing this morning after confidentially filing to go public earlier this year. The San Francisco-based third-party delivery service is expected to begin trading on the NYSE in mid-December.

Reports of the service going public as soon as 2020 first surfaced in August, along with hints that the company was trekking towards actual profitability, which is still something of an elusive concept in the world of third-party delivery. Today’s unveil of DoorDash’s S-1 filing shows that the company reported a profit for the first time in its history during the second quarter of 2020. The company garnered $675 million in revenue and a profit of $23 million for Q2 2020. The company posted a net loss of $43 million for Q3, but still reported revenue growth of $879 million and has ample cash to fund itself — $1.6 billion, to be exact, though DoorDash has said COVID-related lockdowns played a significant role in its growth and that growth rates in revenue could decline in future.

DoorDash’s forthcoming IPO arrives at a time when demand for food delivery apps is thriving. Data from September shows that sales for these services grew 125 percent year-over-year during that month. DoorDash earned almost half, or 49 percent, of those sales — a significantly higher number than the 22 percent of Uber Eats or the 20 percent of Grubhub.

Restaurant delivery remains the biggest slice of DoorDash’s business, but it’s no longer the only one. Perhaps because of the uncertainty of the current restaurant industry, the company branched out into grocery and convenience store delivery this year, too. It even went as far as opening its own “ghost convenience store” facility in August.

Though all this cash and profitability comes at a cost of its own, a human cost in this case. DoorDash helped bankroll Prop 22, which California voters just passed and which allows third-party delivery services to continue classifying their workers as independent contractors. In other words, they’re saving a lot of money by not shelling out for benefits like workers comp, health care, and paid sick leave. The company also remains steeped in controversy around the high commission fees it extracts from restaurants at a time when businesses are shuttering in record numbers because of the pandemic. 

Unfortunately, money usually talks louder than any other issue on the table. DoorDash’s filing today shows that despite these controversies, the company’s growth is unlikely to slow any time soon. 

Could Restaurants Hitch a Lower Cost Delivery Ride with Lyft?

If you ever want to get my colleague, Jenn Marston fired up, just bring up the topic of third-party delivery commissions. Sure, Uber Eats, DoorDash and GrubHub may make delivery easier for a restaurant, but they do so at a high price, charging as much as a 30-percent-per-transaction commission on orders. For an industry like the restaurant biz, which is built on razor-thin margins, that’s just not tenable.

So we took note when Lyft said this week that it might get more into the meal delivery game, but do so at a much lower cost to the restaurants. As Restaurant Dive reports, Lyft could do this by eliminating the consumer facing app and acting solely as a delivery mechanism.

In this scenario, a customer would not go through the Lyft app to find a restaurant and order from it. Instead, the order would be placed directly through the restaurant’s website or app, and Lyft would just provide the drivers (of which it has more than 1 million).

Hybrid delivery strategies like this, where the restaurant owns the ordering and customer relationship and a third-party does the driving, aren’t new. DoorDash launched a couple of high-profile hybrid delivery partnerships with Little Caesar’s and Outback Steakhouse, for example.

A high-profile company like Lyft jumping into delivery could help push hybrid strategies more into the mainstream. And since Lyft wouldn’t be charging high commissions begin with, they could avoid revenue hits from delivery fee caps that have been put in place in various cities around the U.S. during this pandemic.

Obviously all of this is just talk from Lyft right now. If the company is moving at all in this direction, it’s still in the early stages. But just as with Uber, Lyft’s main ridesharing business has been decimated by the pandemic, so there is an urgency for the company to open up new lines of revenue. Uber piloted a commission-free delivery program earlier this year, but the orders still flowed through the Uber app.

The advantage for a restaurant using a hybrid strategy like the one Lyft is suggesting, is that the restaurant gets to keep more money and all of that customer data. But the downside is that it has to have the means to create its own online ordering presence. That’s made easier thanks to services like Chowly and Toast, but then restaurants still need to market its online presence and get people to not use a marketplace app like Uber and DoorDash.

There are still a lot of details to be figured out about any restaurant program Lyft might put into place, but if it saves restaurants money, well, that’ll be enough to get Jenn fired up.

Chipotle Finally Launches Its Own Take on the Ghost Kitchen Concept

QSR brand Chipotle is a known leader in the restaurant industry’s current transition from dining room to off-premises formats, but the company has for the most part been quiet in the conversation around ghost kitchens. Up to now, that is. The company today revealed its Chipotle Digital Kitchen a pickup- and delivery-only restaurant that is essentially its own homegrown take on the ghost kitchen concept.

The new restaurant, located in Highland Falls, New York, will open this coming Saturday (Nov. 14). Chipotle said in today’s press release that the Digital Kitchen is meant to drive business in “non-traditional locations” such as dense urban centers that can’t hold a full-service restaurant.

While the restaurant does feature a small lobby with a few seats, there is no assembly line from which to order food and no cashier to ring orders up. Instead, customers must place orders digitally via the Chipotle app or website, or through a third-party delivery platform. Guests retrieve their orders from the aforementioned lobby that is “designed to include all of the sounds, smells and kitchen views of a traditional Chipotle restaurant.” The location can also fulfill larger catering orders.  

Chipotle’s news comes the same week McDonald’s unveiled plans for its own to-go-centric store format that will consist of a kitchen surrounded by drive-thru lanes and parking spaces for curbside pickup. Since Chipotle’s Digital Kitchen is, initially, at least, focused on urban settings with space limitations, it does not accommodate a drive-thru lane. That said, the company has been very public about its intentions to incorporate that format into its stores, and today’s release notes that the new store format “allows for flexibility with future locations.” Drive-thru may not be part of this first location, but it’s undoubtedly on the way as the company opens more of these new store concepts.

With the future of the dining room still very much unknown, there’s something of a mass exodus from that format happening among well-known quick-service brands. Burger King, Wendy’s, Dunkin’, Popeye’s, and Tim Horton’s are just a few names on the growing list of restaurants changing up their store formats.

Chipotle has been trekking towards this shift for some time. In December of 2019, the company announced a few different store format designs for to-go, drive-thru, and delivery orders. 

Make sure to join The Spoon’s Ghost Kitchen Deep Dive event on December 9th. Register here!

Grubhub Launches a New Grant to Get Restaurants Ready for Winter

Grubhub today announced the Restaurant Winterization Grant, a new program that will provide financial support to restaurants as we move into winter and outdoor dining becomes a challenge in many areas of the country.

Done in partnership with The Greg Hill Foundation’s Restaurant Strong Fund, the program will grant $10,000 to “eligible independent restaurants,” according to a press release sent to The Spoon. The funds are intended to provide restaurants with “additional infrastructure and equipment to extend outdoor dining” along with more personal protective equipment for employees.

Wintertime’s arrival coincides with record highs of coronavirus cases in the U.S. As far as restaurants are concerned, the combination of the two makes indoor dining risky in many cases, nonexistent in others. Up to now, restaurants have been able to offset some of that loss with new developments for outdoor dining plans. Now, businesses will need to innovate on those innovations in order to continue to serve customers without expecting them to eat in the midst of 30-degree temperatures or wintery mixes.

Grubhub’s new program is supported by a $2 million grant recommendation from its Grubhub Community Relief Fund, started back in March as a way to support charitable organizations helping restaurants. 

The new program joins other efforts around the country to winterize outdoor dining. Recently, the city of Chicago held a contest asking residents to redesign the outdoor dining experience for winter. Elsewhere, Washington D.C.’s Office of Nightlife and Culture announced a $4 million grant program to help restaurants cover the cost of tents, domes, heaters, furnishings and other outdoor-dining-related equipment. Grubhub is the first third-party delivery service to dedicate a fund towards outdoor dining.

Those interested in applying for funds can do so starting today through the aforementioned Restaurant Strong Fund. Restaurants located in Chicago, New York City, Boston, and Philadelphia, and which have “five or fewer” locations are eligible to apply. The application period ends Nov. 21, and Grubhub has said funds will be distributed by the end of the month. 

Nuro Raises $500M for its Autonomous Delivery Vehicles

Nuro announced today that it has raised a $500 million Series C round of funding. The round was led by funds and accounts advised by T. Rowe Price Associates, with participation from new investors that include Fidelity Management & Research Company, and Baillie Gifford, as well as participation from existing investors SoftBank Vision Fund 1 and Greylock. This brings the total amount raised by Nuro to $1.5 billion.

Nuro makes pod-like, self-driving, low-speed cargo delivery vehicles. Nuro’s R2 vehicle is roughly half the size of a regular car, is autonomous (there is literally no place for a driver to sit) and travels at 25 mph.

But equally as important as its technology is Nuro’s work around getting regulatory approvals for deliveries. Self-driving vehicles are new, and all levels of government are coming to grips with how to regulate the concept to ensure safety on public streets. In February of this year, Nuro got approvals from the federal government to drive on public roads. This was followed up in April when the state of California gave Nuro the green light to run on its public roads.

Nuro has also done a number of tests over the past couple of years, delivering food for Kroger and Walmart as well as Domino’s.

At the end of October, Nuro revealed that it had been running fully autonomous tests, meaning no drivers and no chase cars, successfully over the previous few months in Houston, TX, Phoenix, AZ and Mountain View, CA. You can see a video of the R2 in action here:

Nuro’s technology is certainly coming to market at the right time. The global pandemic has more people staying at home and thereby ordering more restaurant meals and groceries for delivery. Nuro’s vehicle can carry a full load of groceries directly to a customer’s curbside around the clock. The autonomous nature of the Nuro also means that delivery is contactless, an important feature as people look to reduce human-to-human contact in order to stem the transmission of the virus.

Nuro isn’t alone in the autonomous last-mile delivery space. Other players range from the small cooler-sized robots of Starship to the larger three-wheeled REV-1 from Refraction to the cargo vans of Udelv.

In other words, autonomous delivery is coming, and Nuro now has more money to assert its place when it arrives.