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Daily news and analysis about the food tech revolution

delivery

Uber Q3: Delivery Up 190 Percent Year-Over-Year

Uber reported its third-quarter earnings today, and as expected during this ongoing pandemic, the company’s delivery business, which includes Uber Eats continues to be its moneymaker.

Here are the topline Q3 stats:

  • Uber Delivery’s gross bookings grew 135 percent year-over-year, hitting $8.55 billion
  • Delivery’s adjusted net revenue grew 190 percent year-over-year, hitting $1.14 billion in revenue.
  • Restaurant partners on Uber Eats grew by more than 70 percent year-over-year

For comparison, in Q2 of this year, gross bookings for Uber’s delivery business was $6.96 billion.

Adjusted net revenues for Uber’s mobility, which includes its ridesharing business, declined 52 percent year-over-year, to $1.37 billion. Overall, Uber lost $1.09 billion, which is better than the $1.16 billion lost over the same time last year.

That delivery continues to be the main driver (pardon the pun) for Uber isn’t surprising. Though the pandemic flattened a little bit during the three months ending September 30, people just are not traveling as much as they did pre-pandemic. They are, however, getting restaurant delivery to eat at home, which kept Uber Eats busy.

Something to keep an eye for next quarter is whether Uber Eats’ expansion into grocery in Florida, Texas and New York City will have any impact on earnings. It’s been a record-setting year for online grocery, the winter months are just about upon us and the pandemic resurging. Will all these factors make Uber’s nascent entry into the grocery biz pull big numbers?

It should be noted that Uber’s Q3 earnings report is coming out the same week that it won a victory at the ballot box in California. Prop. 22, which Uber backed, was approved by the state, allowing the company to keep its drivers classified as independent contractors and not employees. That means it won’t have to pony up for benefits or other protections. While this is good for the company’s bottom line, Prop. 22 could have more unfortunate results overall.

GoPuff Acquires BevMo for $350 Million

Delivery startup, goPuff announced today that it is acquiring booze retailer BevMo for $350 million. Bloomberg was first to report the story earlier today, with goPuff sending out press release confirming the news later this morning.

GoPuff is a delivery service that has a network of more than 200 micro-fulfillment centers serving more than 500 U.S. cities. The service is available 24 hours a day to deliver everyday goods like groceries, baby and pet products and booze within 30 minutes. Each delivery carries a $1.95 delivery fee ($10.95 order minimum), and there is a subscription option for $5.95 a month.

With the acquisition, goPuff will get an accelerated entrance into the California. BevMo has 161 stores throughout California, Arizona and Washington state. Not only does this give goPuff access to the “millions” of BevMo customers, but all those BevMo buildings can serve as fulfillment centers to deliver bottles of wine and baby bottles.

GoPuff raised $380 million in new funding last month and has raised a total of $1.2 billion. It’s deep pockets and purchase of BevMo continue the accelerated evolution of convenience store delivery we’ve seen during the pandemic.

DoorDash and Instacart both offer delivery from convenience stores now. DoorDash even took things a step further with the creation of its own chain of dark convenience stores from which the company operates delivery services.

GoPuff is also part of the burgeoning micro-fulfillment trend, which forsakes huge, centralized warehouses in favor of smaller, neighborhood facilities that don’t house as many items. Grocery retailers H-E-B and Albertsons have both announced micro-fulfillment centers to process online orders.

According to today’s press announcement, goPuff’s acquisition of BevMo is expected to close within 30 days.

Inhousedelivery.com Launches Beta Service, Aims to End 30% Commission Fees for Restaurants

With delivery and to-go orders essential to most restaurants’ businesses right now, the last few months have seen an influx of tech services that promise to alleviate some of those restaurants’ reliance on third party delivery. The latest is inhousedelivery.com, a San Diego, Calif.-based company that today launched the beta version of its delivery platform. The service is available to U.S. restaurant customers as of today for a flat $99/month, according to a press release sent to The Spoon.

The inhousedelivery.com platform bills itself as “a driver management and dispatch solution” that restaurants can integrate with their existing tech stack to better manage online orders, drivers, routes, and scheduling. To be clear: the inhousedelivery.com platform does not actually process online orders coming to the restaurant. Rather, it integrates with existing ones a restaurant may be using. At the moment, that list includes ChowNow, Delivery.com, Drizly, Toast, Squarespace, and Grubhub, among other platforms popular with restaurants.

The bulk of the inhousedelivery.com platform is geared towards managing the last mile by providing driver scheduling, route optimization, and real-time tracking of orders. However, as today’s press release rightly points out, most restaurants cannot afford their own fleet of delivery drivers, hence the reliance on third-party services like Grubhub and Uber Eats. Currently, Grubhub is the only one of the big four of these services in the U.S. that integrates with inhousedelivery.com.

Addressing this issue of drivers, inhousedelivery.com also said today it has opened registration for its secondary platform, Driversharing.com, which lets restaurants share drivers. Theoretically, at least, that means multiple restaurants on the same city block could share a pool of drivers and bypass using third-party services altogether, so long as they were using an alternative service (e.g., ChowNow) for the order processing step.

That combination would fulfill inhousedelivery’s promise on its website to “bring delivery in-house” and eradicate the 30 percent-per-transaction fees restaurants typically pay third-party delivery services. This is a claim more and more restaurant tech companies are making these days as Gruhub et al. come under fire for what many see as predatory business practices at a time when restaurants need the delivery format. Several of those companies, including Square, ChowNow, and Toast, all pitch the same benefit of lower commission fees to restaurant customers with their restaurant customers.

For now, these companies can only lower those fees, not eradicate them, since restaurants still need drivers and third-party delivery services can most easily provide them. Inhousedelivery.com’s Drivesharing.com platform is only open for registration at the moment, so there’s no telling whether it could provide an alternative pool for drivers that truly manages to do away with sky-high commission fees. 

Mobile Servers and Menu Innovation: Crave’s Virtual Food Hall Brings Fine Dining to the Delivery Realm

A new concept is taking shape in the world of virtual restaurants: the fine-dining virtual food hall. That idea might have been outrageous one year ago, but it’s practically necessity now, thanks to the pandemic-induced meltdown of the restaurant industry. In response, third-party hospitality and restaurant tech companies are emerging to assist these high-end concepts with the makeover they need to exist — and, more importantly, thrive — in an off-premises-centric world.

One such concept comes from Crave Hospitality Group, which will officially launch its first ghost kitchen-meets-virtual restaurant initiative in Boise, Idaho next month.

On a call last week, Crave cofounder Devin Wade talked me through the details of the operation, which he says is “hard to categorize” but probably closest to a “virtual food hall” in name. The Boise facility will house 16 restaurant concepts, including ones from James Beard nominee Lincoln Carson, Food Network Pizza Champions Challenge gold medalist Tony Gemignani, and award-winning restauranteur Michael Mina.

Chefs and their culinary teams cook and prepare the food, assisted by a tech stack that manages order fulfillment and deliveries. On the consumer-facing side, guests ordering through the Crave app can mix and match their menu choices, bundling different meals from different concepts into the same order. Food is delivered via Crave’s own fleet of drivers, and there is also a pickup option. 

The official launch of the Boise location comes as full-service restaurants, including fine and higher-end ones, faces more permanent closures and, in some cities, new restrictions. The most recent numbers from the Independent Restaurant Coalition note that revenues for these businesses still “remain 60 percent lower on average than last year’s levels, with many remaining closed at a 100 percent reduction in revenue.”

The high-end restaurant experience faces an additional challenge: it is designed for a dining room, not a to-go box.

That’s a problem Wade said he had been thinking about long before COVID-19. As delivery and ghost kitchens grew in popularity over the last few years, he kept returning to the issue that delivery as-is would not work for high-end dining, and that there had to be a model where the relationships between chefs, their restaurants, kitchen providers, and delivery services was based on collaboration rather than the obsession with speed and efficiency. 

Menu design was one major consideration. Award-winning chefs are “known for certain dishes,” according to Wade, which had to be accounted for on the menu. At the same time, Wade pointed out the inherently creative nature of chefs, and that this asset led the company to work with its chosen restaurant concepts on new menu items “designed to travel.”

Crave also built its own proprietary tech stack to power the Boise facility that includes everything from order processing for back-of-house management, like designating fire times for each individual food item in process. Wade says the goal of Crave’s technology is “Using tech not to dominate and push [chefs] away but to extend their food outside their restaurants.”

Part of that extension, of course, is getting the food through the actual last mile of delivery. Here, too, Crave is aiming to replicate the fine-dining experience in a to-go setting. Instead of using DoorDash or Uber Eats drivers, Crave employs its own couriers, which it calls “mobile servers.” They are W-2 employees, and many are former servers out of work because of the pandemic. They work regular hours, earn server-level wages, and follow many of the same processes they would inside a brick-and-mortar restaurant. For instance, servers meet before each dinner service so chefs can go through the night’s features. “They should know customers names, suggest a follow-up item [to customers],” says Wade, adding that the whole point is to mimic the customer-server relationship that takes place in a restaurant. 

The concept is practically unheard of in the world of delivery, where nowadays many customers hit the “contactless” option in their delivery app and expect food to be dropped on the doorstep. The idea of getting to know your delivery driver seems counterintuitive to social distancing, but the decision to go this route also seems like something of a long-term play for Crave and its restaurant partners. Fear of human-to-human interaction won’t permeate the restaurant experience forever. Delivery, on the other hand, is here to stay. Over time, Crave’s efforts to mimic the server-customer relationship for delivery orders could be a bridge between those two factors.

We will have a better idea of the concept’s short-term success over the next few months. The Boise operation, which Crave has been piloting since June, just moved into its permanent space and will have its grand opening on November 17. From there, Crave plans to scale quickly: Wade says the company already has the next 15 locations mapped out, with four deals already well underway, two in the Dallas, Texas area and two in Salt Lake City, Utah.

Right now, Crave doesn’t have any real competitors in terms of operating a virtual food hall like a fine-dining restaurant. Lunchbox recently teamed up with C3 for a high-end food hall, but the higher-end part of that concept exists mostly in the food itself.

That makes Crave a rather unique player in an increasingly crowded world of ghost kitchens and virtual food halls. If its approach to delivery proves profitable for those involved, full-service restaurants may discover they have one more option when it comes to keeping the lights on during the ongoing fallout.

Ordermark Raises $120M to Build More Virtual Restaurants

Restaurant tech company Ordermark announced today it has raised a $120 million Series C round led by the Softbank Vision Fund with participation from existing investor Act One Ventures. According to a press release sent to The Spoon, Ordermark will use the new funds to “help more restaurants transition to online ordering during the COVID-19 pandemic and beyond.”

Ordermark has been helping restaurants incorporate off-premises orders into their operations since long before the pandemic. The company’s hardware-software combo consolidates all order tickets (delivery, takeout, in-house, etc.) into a single channel to make the management of these tickets easier for restaurant staff.

The company has also been something of a trailblazer in the world of virtual restaurants through its Nextbite platform, which is Ordermark’s portfolio of delivery-only brands. Most recently, Nextbite launched rapper Wiz Khalifa’s Hotbox restaurant concept, much to the delight of munchies fans everywhere.

Ordermark/Nextbite relies on underutilized kitchen space in restaurants to fulfill orders for these virtual brands, which gives the restaurants themselves a chance to build up some incremental revenue. While today’s press release did not specifically name new brands or restaurant partners, the company is clearly looking to build out this virtual restaurant portfolio. Jeff Housenbold, Managing Partner at SoftBank Investment Advisers, said in the release that Softbank will “support [Ordermark’s] mission to help independent restaurants optimize online ordering and generate incremental revenue from under-utilized kitchens.”

Alex Canter, Ordermark’s cofounder and CEO, added that restaurants “must get creative by embracing technology and new sources of revenue generation to reach customers outside of their four walls.”

Ordermark said that since the start of the COVID-19 pandemic, Nextbite has launched 15 brands and has added over 1,000 delivery-only restaurants nationwide.

DoorDash’s Launches Its ‘Reopen for Delivery’ Program for Independent Restaurants

Today, the third-party delivery service DoorDash announced its Reopen for Delivery program. Through it, restaurants that were forced to close due to COVID-19 can “re-establish their foot print in their city” by reviving their businesses as virtual restaurants run out of ghost kitchens, according to a press release sent to The Spoon.

The program will select restaurants that were forced to close because of the pandemic and pair them with ghost kitchens and virtual restaurant facilities around the country. For example, Chicago-based Krazy Hog BBQ, the first restaurant to join the program, is operating its delivery-only concept out of virtual kitchen company Á La Couch’s space. Á La Couch is also home to restaurant brands like Wow Bao and Mac’d.  

DoorDash said it will use this model of pairing restaurants with kitchen providers for other businesses, though it hasn’t named any besides Krazy Hog at the moment. DoorDash operates its own ghost kitchen facility in Northern California but has not said whether the location will play a part in the Reopen for Delivery program.

In addition to kitchen space, restaurants will also have the option to cook and fulfill their own orders or outsource that work to the kitchen facility’s existing staff. DoorDash will, of course, provide the technical logistics for order processing and the drivers for the last mile of delivery. 

The program is reminiscent of Deliveroo’s “Restaurant Rescue Team” initiative from 2019, where the UK-based service would nab struggling restaurants and rebrand them as delivery-only concepts under Deliveroo’s ghost kitchen program. 

Like Deliveroo’s program, Reopen for Delivery is one way restaurants can continue serving customers without incurring some of the high overhead costs of running a full brick-and-mortar location complete with front-of-house space and staff. 

The deal, of course, comes with some compromises. Since DoorDash is powering Reopen for Delivery, restaurants that sign up with the program are to some degree locked into the delivery service’s infrastructure. And they’re presumably still going to pay the high commission fees that have caused so much controversy of late.

For many, though, there may be no other options right now. Ghost kitchens and virtual restaurants are currently being hailed as a lifeline for many restaurants struggling in the wake of the pandemic. But setting up a ghost kitchen operation requires a certain amount of demand and capital not every business has. Having a third party like DoorDash facilitate that process is, for better or worse, a cheaper, faster way to fulfill off-premises orders while we wait for the restaurant biz to get back on its feet. 

In-House Delivery Needs to Disrupt Delivery

Some of the talk at last week’s Smart Kitchen Summit revolved around two newish concepts that are especially compelling when it comes to thinking about restaurants: in-house delivery and disrupting third-party delivery. Together, the two could substantially shift the the off-premises meal journey of the future.

Technically, in-house delivery — also called “native delivery” or “direct delivery” — is a decades old practice championed by Domino’s, Jimmy John’s, and other restaurants that have always used their own staff to ferry orders to customers’ doorsteps. But ever since customer demand for delivery went through the roof and then some, most restaurants have found it more economically feasible to offload delivery operations to third-party services like DoorDash and Uber Eats. 

As we cover ad nauseam around here, third-party delivery comes with its own lengthy catalog of grievances, and many restaurants don’t actually make money from those orders. On top of that, they lose control of customer relationships and oftentimes their own branding. 

In-house delivery 2.0, then, is all about restaurants bringing some of that control back under their own rooftops. One SKS panelist mentioned fast-casual chain Panera as a pathbreaker in this area, as the chain still uses its own drivers for many of its orders and only offloads the technical logistics of processing an order to third parties. Bloomin’ Brands, parent company of Outback Steakhouse and Carrabba’s, also handles many of its delivery orders in-house, and Panda Express recently launched its own program that handles the entire delivery journey, from order processing to food transport.

Simultaneously happening is the rise of services like ShiftPixy, which use their technology to power custom-branded websites for restaurants that can process ordering and payments. ShiftPixy also works with restaurants to provide them with drivers, erasing third-party delivery from the process.

All of these approaches to in-house delivery were mentioned during SKS. In a discussion about the rise of ghost kitchens and virtual restaurants, one set of panelists agreed that in the future we will see a wider range of restaurants — major chains and independent mom-and-pop stores — gravitate to in-house delivery as a way of controlling their customer relationships and branding, to say nothing of dodging predatory commission fees from third-party services.

The mention of mom-and-pop shops is important to note. Right now, most can’t afford to build out their own mobile ordering and payments system and pay employees to deliver the food. That territory currently belongs to the Paneras and Panda Expresses of the world, which brings me to our second point: disrupting third-party delivery.

At SKS, more than one person I spoke to predicted that the act of unseating third-party delivery apps’ dominance over restaurants won’t come from imposing more rules and regulations, but from someone bringing a better, cheaper solution to the table. As more restaurant chains with deep pockets take back more of their delivery stack, those solutions might very well surface in the process. 

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Del Taco Is Launching a Drive-Thru-Only Concept

Following in the footsteps of KFC, Chipotle, Burger King, and other chains, Del Taco is doubling-down on the drive-thru as an important source of sales in the future. The Lake Forest, Calif.-based chain announced on its recent Q3 earnings call it will build a drive-thru-only prototype that can be placed at Del Taco locations with a smaller physical footprint. CEO John Cappasola said during the call this prototype will include “a modernized design, improved functionality, and other operational enhancements,” though he didn’t get more specific than that.

If this story sounds somewhat familiar, it’s because other chains have made similar announcements in the recent past. Most notable among them is Burger King, who several weeks ago announced its own drive-thru-centric design prototype meant to take up less physical space and serve more drive-thru orders in a shorter amount of time. 

Drive-thru has been the most important sales channel for QSRs during 2020’s lockdowns and continued uncertainty over the dining room. However, QSR Magazine’s recent 2020 Drive-Thru Study found that drive-thru times are nearly half a minute slower than they were last year, so it’s not a surprise more chains are redoubling their efforts to make the experience faster and more efficient. With winter fast approaching, outdoor dining is about to get way less appealing to consumers in many regions. Chains will need every order they can get from drive-thru, curbside, and other off-premises channels to make up for lost sales in the dining room/patio over the next several months.

Restaurant Tech ‘Round the Web

A wider slowdown could erase up to 2 million jobs restaurant and retail, according to new research from Gusto cited by Restaurant Dive. The losses could total roughly $190 billion.

Following openings this year of three off-premises stores in Chicago, P.F. Chang’s will expand its to-go-concept to 27 locations by 2021. The company is also testing an in-house delivery service at 10 of its locations in the U.S.

As we reported this week, Burger King is piloting reusable cups and sandwich containers in New York, Portland and Tokyo next year. The program is being done in partnership with TerraCycle’s Loop, which is also doing the McDonald’s reusable cup trial in the U.K.

SKS 2020: Ghost Kitchen’s Changing Tech Trends

The definition of “ghost kitchen” is changing rapidly as more restaurants go off-premises and even non-restaurant food entities, like grocery stores, hop onboard the trend.

But as was discussed during our ghost kitchen strategy panel at SKS 2020 this week, the common denominator beneath all shapes and sizes of ghost kitchens is the technology powering them. As Ashley Colpaart, CEO of The Food Corridor, said on the panel, ghost kitchens are all about “going direct to the consumer through technology platforms.”

Joining Colpaart and myself were Michael Schaefer, global lead for food and bev at Euromonitor, and Bolt Kitchen CEO Nick Avedesian. Everyone agreed there is a lot of technology being thrown at restaurant owners and ghost kitchen operators nowadays. This makes sense because, as Schaefer said, more of our dining experiences are getting mediated by the smartphone. Keeping that in mind, panelists pointed to a few different areas of tech that are especially important to the ghost kitchen operation right now.

One is software that can integrate the many different channels orders flow through from customer to kitchen. Most restaurants, large and small, work with more than one delivery partner, which causes a deluge of different orders from different channels in what’s commonly referred to as “tablet hell.” Using a delivery integrator (Olo and Chowly are two such companies) lessens the chance of an order getting lost in translation on its way to the kitchen and, Avedesian said, creates “a better experience for your staff.”

It’s not just the back-of-house that needs optimizing, though. Colpaart mentioned the need for “the shopping experience” — that is, the experience a customer has finding and ordering from a restaurant — to be as easy as possible. Along the same lines, restaurants themselves will need technologies that can help them become more visible in this brave new world of online delivery marketplaces and virtual food halls. Some solutions, like Lunchbox, are working very closely with restaurants on this visibility and marketing aspect.

Then there’s delivery, one of the restaurant biz’s most controversial topics right now. Among the (many) griefs with third-party delivery services a la Uber Eats and DoorDash right now is that restaurants can’t control their own branding or customer experience through these platforms. Some white label delivery services, like DoorDash Drive, are emerging to address this. Avedesian said said we will see a lot more of these white label, custom-branded solutions in future.

We may also see more delivery go in-house at restaurants. That trend was actually happening long before the pandemic, with Panera being a notable early adopter of the practice. Now, panelists said everyone from large enterprises to mom-and-pop shops are considering the native delivery experience. One group we may see doing this in large numbers in future is QSRs like the aforementioned Panera or Panda Express, which recently launched its own delivery program. 

Not discussed on the panel but something that sprang to my mind is this: Is this shift to native delivery creating an opportunity for restaurant tech companies to improve the in-house delivery experience? And will those innovations be enough to disrupt third-party delivery as we know it?

Stay tuned on that one.

SKS 2020: Shipt CEO Says Company Not Interested in Robots

Shipt’s CEO, Kelly Caruso told audiences at the Smart Kitchen Summit today that her company is not interested in implementing robot or drone technology.

“Shipt will use technology in order drive efficiency,” Caruso said, “But that technology will be more in line with machine learning, AI and VR,” as opposed to something like drone.

Caruso continued by saying that Shipt, which is an independent unit of Target, was not going to replace their human shoppers (the gig workers who go into stores and make the deliveries). “They are critical to our success,” Caruso said.

That Shipt is focused on its human workforce is not that surprising, given that just last week the company announced it was adding an additional 100,000 shoppers to its ranks in time for the holidays. The additional headcount will bring the total number of Shipt Shoppers to 300,000.

It’s also not too surprising that Shipt will rely more on people than robots, at least for right now. While the pandemic has accelerated the desire for contactless technologies, autonomous delivery robots like those from Nuro and Starship are still in their infancy. There also remain a number of regulatory and technological hurdles that need to be overcome.

What we should keep an eye on is whether Shipt’s parent company, Target, adopts some sort of robot-powered automation to fulfill e-commerce orders. Target is a bit different from other grocery retailers because it sells so much more than foods. In other words, a micro-fulifllment center using totes and rails in the backroom of a Target can’t exactly grab a bunch of bananas and a patio furniture set.

Having said that, Shipt works with a number of different retailers, grocery and otherwise. As grocery e-commerce continues to grow into a projected $250 billion sector, both retailers and Shipt will adapt to serve customers’ evolving needs.

Kroger Partners With ClusterTruck for In-Store Ghost Kitchens

Grocery mega-retailer Kroger announced today it is launching ghost kitchens at two of its Kroger retail stores. The kitchens will be done in partnership with delivery-only restaurant service ClusterTruck and provide Kroger customers prepared meals free of delivery fees, according to a press release sent to The Spoon.

Kroger and ClusterTruck have been piloting their partnership since 2019. Through it, ClusterTruck sells its restaurant-quality meals via the Kroger Delivery Kitchen website.

To be clear, the ClusterTruck platform is not a tool for selling meals from other restaurants. Rather, ClusterTruck handles the entire meal delivery process, from conceptualizing a menu to ordering the ingredients, cooking the food, and getting meals into customers’ hands. The company also uses its own proprietary tech stack to update menus and process orders and payments. ClusterTruck, which is headquartered in Indianapolis, Ind. and has a sizable presence around the Midwest, brings this end-to-end delivery concept to the Kroger ghost kitchens. The ClusterTruck menu will be available via the Kroger Kitchen Delivery site.

According to today’s press release, the new concept repurposes roughly 1,000 square feet at each store (a typical Kroger store is about 160,000 square feet). This repurposed space will be dedicated to ClusterTruck staff, who will prepare meals for delivery and in-store pickup.

In theory, at least, that means Kroger would not have to rely on third-party delivery services like DoorDash and Postmates for any part of the delivery process for these ghost kitchens. Interestingly, this comes at a time when some of those third-party delivery services are trying to diversify their platform by offering grocery delivery.  

For Kroger’s two new in-store ghost kitchens, one will be located in Indianapolis and the other in Columbus, Ohio. These will follow an on-premises ghost kitchen already open in Fishers, Ind., and one in Dublin, Ohio, which is set to open later this year.

Today’s news is also another piece of evidence that the lines between grocery store and restaurant are overlapping. In addition to the aforementioned third-party delivery services shuttling some grocery orders to customers, Texas-based chain H-E-B recently opened a food hall that delivers restaurant meals, and grocery service Cheetah added restaurant meals to its available offerings. And though the blurring of the lines between restaurants and groceries is a direct result of the pandemic’s closing restaurants and keeping people at home, the trend is unlikely to reverse, even when restaurants can operate at full capacity once more.

One reason for the continued merging of grocery stores and restaurants is the surging popularity of ghost kitchens. Euromonitor recently predicted that the ghost kitchen market will be worth $1 trillion by 2030. That number factors in not just ghost kitchens for restaurants but also spaces for food producers and retailers. The $1 trillion figure may seem a little absurd now, but if more partnerships like the Kroger-ClusterTruck deal emerge, it may soon seem a less outlandish number and more a reality for both the restaurant and grocery industries.

Some NYC Restaurants May Close Again Due to COVID-19

Nine New York City neighborhoods are at risk of having to shut down both indoor and outdoor dining due to rising COVID-19 cases, according to a Sunday press briefing from Mayor Bill de Blasio. Pending approval from New York Gov. Andrew Cuomo, NYC will close schools and nonessential businesses in those nine zip codes, which are in Brooklyn and Queens, starting Wednesday.

The affected neighborhoods are those neighborhoods where the test positivity rate for COVID-19 has been “above 3% for the last seven consecutive days,” Mayor de Blasio told CNN.

The proposal comes just one week after NYC allowed restaurants to reopen dining rooms at 25 percent capacity. If it goes through, restaurants in those nine zip codes would have to return to offering delivery and takeout meals only.

The news is just the latest blow to NYC restaurants, which have taken some of the hardest hits of the industry-wide meltdown brought on by the pandemic. Recently, the New York City Hospitality Alliance said that 87 percent of the 457 restaurants, bars, and nightclubs it surveyed could not pay their rent for the month of August. And at the end of last week, the Alliance released a new report jam-packed with some unsettling stats. As of Aug., employment in the restaurant industry was only 55 percent of its pre-pandemic level from Feb. 2020. Meanwhile, nearly half, or 44 percent, of NYC restaurants have used outdoor seating. It need hardly be said that shutting down that outdoor dining will be another serious blow to business across those nine zip codes.

Offering delivery and takeout bring in some revenue, but as we’ve discussed before, those formats are not yet enough of a lifeline to save a business. In some cases, delivery — an area plagued by controversy and sky-high commission fees for restaurants — can do more harm than good to a business’s margins.

Nor do many independent restaurants have the money to invest in some of the recent developments around off-premises ordering, like GPS-enabled pickup systems, sophisticated digital-ordering technology, and native delivery platforms. Meanwhile, Paycheck Protection Loans are running out, which means so is any hope of governmental assistance. Last week, the U.S. House of Representatives passed the updated $2.2 trillion HEROES Act, which would include $120 billion in relief for independent restaurants. However, it is not expected to be taken up by the Senate.  

NYC Ghost Kitchen Company Zuul Launches a Virtual Food Hall

NYC-based ghost kitchen operator Zuul announced this week that its virtual food hall, Zuul Market, is now live.

The new initiative is a cross between an online marketplace and a white-label delivery platform. The marketplace sells a limited number of items from restaurants that are currently members of Zuul’s ghost kitchen facility in SoHo, including Junzi Kitchen, Stone Bridge Pizza & Salad, and Sarge’s Deli. Zuul has also worked with its member restaurants to co-create virtual brands, which are also available through the marketplace. For example, Stone Bridge also operates the virtual-only Rival Sandwich Co.

All food is prepped and cooked in the SoHo kitchen facility. Zuul then delivers the food at scheduled times to drop-off points located in office buildings as well as residential properties around NYC. Zuul controls the entire process, from order processing to fulfillment to the last-mile delivery.

The idea is to provide a more efficient system for delivery, where meals from multiple restaurants going to multiple different people can be bulked together and taken to a single location. To do this effectively, Zuul has partnered with Silverstein Properties and Broad Street Development, both major property developers in NYC that own both office buildings and residential properties. Zuul Market menus will be available to residents and employees throughout those companies’ properties. For example, Silverstein integrated Zuul Market into its Inspire app for tenants as a building-wide amenity across its buildings. 

How successful this delivery strategy is in office buildings depends a lot on how many people actually wind up going back to the office. Right now, it’s not many. But residential properties could be a lucrative area for delivery and commerce during the pandemic, and probably after. Folks are spending more time at home these days, and with colder weather coming, that’s likely to increase. So whether it’s automated convenience stores, contact-free delivery pods a la Minnow, or a virtual marketplace like Zuul’s, more and more companies are finding new ways to bring the restaurant experience into the home. 

Zuul said it plans to build additional food hall partnerships with both restaurants and properties in addition to more ghost kitchen facilities across NYC in the future.