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The Spoon

Daily news and analysis about the food tech revolution

digital ordering

I, Restaurant

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This week’s virtual Spoon event was a goldmine of information for restaurants and restaurant tech companies, or really anyone who wonders what the word “digitization” actually looks like in action in a restaurant.

Once an industry reticent to adopt any new technology, the restaurant biz has been forced into using all manner of digital tools — from delivery apps to contactless ordering platforms — to stay afloat in the troubled waters brought on by the COVID-19 pandemic. As one of the event’s panelists, Ian Christopher of Galley Solutions, put it, there is now a “survive or die” mentality when it comes to digitization for restaurants.

Front-of-house technologies get the bulk of the investment money right now. But as Christopher, along with Martin Flusberg of Powerhouse Dynamics, SousZen’s Stephen King, and The Spoon’s Mike Wolf discussed, the reinvention of the back of house is arguably more important. 

As the panelists noted, 75 percent of a restaurant’s costs are in the back of house. If restaurants can’t address those, they’ll never get a good handle on their margins. Meanwhile, the pandemic has made those margins even thinner, intensified the labor shortage issue, and accelerated the widespread rise of ghost kitchens, which consist of nothing but the back of house.

How can more technology in the back of house assist in those areas and others? Here are a few takeaways from this week’s event:

More automation. Back of house automation isn’t just about robots making burgers. It has much more to do with digitizing operational processes to make them more efficient. That could mean a robotic arm doing manual tasks. But it could also mean using tech to replace paper-and-pen accounting books or taking a better, more granular analysis of food inventory to cut down costs.

More operational efficiency. Related to automation, the back of house will become more about making operational processes faster and more efficient. One of the panelists went as far as to say efficiency is the biggest thing for restaurants to get right. That’s especially true with fewer people eating in dining rooms and instead ordering takeout or delivery meals that are constantly evaluated for convenience and speed in addition to quality.

More transparency. The pandemic has arguably brought a greater desire for transparency when it comes to our restaurant food, and tech-savvy companies will respond with a variety of solutions. That could include installing software in a restaurant that can tell a customer exactly where their order is at any given moment (e.g., “on the grill,” “out for delivery”) or a tool that better informs them of a restaurant system’s security measures.

Will everyone in the restaurant industry welcome these changes with open arms? Absolutely not. Panelists said we can expect some pushback at the individual level from different folks in the restaurant industry, and one can hardly blame them. After all, what I just laid out above sounds more like a manufacturing facility than a restaurant. 

And to be honest, part of me balks at this new restaurant “experience” where speed and convenience rule and the majority of meals are flung together in ghost kitchens and delivered to me in a cardboard box. But listening to today’s panelists, it’s also clear that digitizing the restaurant biz could mean more businesses being able to stay open (in some fashion), more entrepreneurship, less waste (food and money), and safer procedures for everyone. At a time when the entire industry hangs in the balance, those factors provide some welcome sense of optimism.

80% of Restaurant Jobs Could Go to Robots

On the subject of digitization, this week, the Spoon’s Chris Albrecht wrote about some new numbers that claim 80 percent of restaurant jobs could be taken over by automation. That includes cooking, serving, and prepping jobs.

While the 80 percent figure is high, it doesn’t feel all that surprising. Automation was already coming for the restaurant industry, and robots specifically have been in use for the consumer-facing side of the business for some time (see Starship’s delivery bots or Chowbotics’ Sally).

The pandemic has obviously accelerated that. Reduced dining room capacity, full-on restaurant closures, and a move towards the so-called “contactless” experience has amplified the labor shortage. Throw in the above discussion about efficiency being the number one priority for many restaurants, and it’s easy to see why the industry’s automated future seems a foregone conclusion at this point.   

Restaurant Tech ‘Round the Web

Pacific Northwest chain Duke’s Seafood has installed a pathogen-filtering system in all of its restaurants “to kill COVID-19 particles.” The filtration process uses needlepoint bipolar ionization (NPBI) to reduce airborne pathogens, and is the same system installed in the White House, the Mayo Clinic, and some airports.

Hospitality platform BentoBox this week launched its own take on the contactless dining experience, according to a press release sent to The Spoon. The company’s Dine-In Ordering product features customized QR codes and digital menus, as well as complimentary tabletop signs with a restaurant’s branding.

Adobe Spark this week released a guide that, according to a press release, “covers everything small business owners and marketers need in order to implement QR and other touchless efficiencies right now.” Restaurants that sign up for a free Spark trial can access templates for in-store signage, mobile menus, and other graphical elements needed to communicate social distancing and contactless ordering.

 

Shake Shack Pivots to Drive-Thru, Adds Direct Delivery

Shake Shack said on its earnings call yesterday that it will start opening restaurants with drive-thrus, with the first of them slated to open in 2021. The chain didn’t name a location, though CEO Randy Garutti said on the call the chain plans ”to lead with traditional suburban high-traffic quarters.”

This is pivot for Shake Shack, a New York City-based chain that’s historically served urban settings. And unsurprisingly, the move is largely in response to the pandemic’s effect on in-house restaurant dining. Garutti said on the call that fewer than half of all Shake Shack’s have opened their dining rooms, and that while urban Shacks have been heavily impacted by social distancing restrictions, suburban locations are recovering faster.

The company released a rendering of the new drive-thrus (see above) that suggests these would have dedicated lanes for mobile orders as well as traditional ones. It’s a strategy already in use by chains like Dunkin’ and Chipotle. 

Shake Shack had a 49 percent nosedive in same stores sales for the second quarter, though that number is slowly improving, the company said. Digital and off-premises are a big reason the figure wasn’t lower.

And drive-thru lanes are just one piece of that off-premises strategy. On the call, Garutti highlighted the brand’s recent efforts, which include curbside pickup, Shack Tracks, a ghost kitchen in the U.K., and increased focus on digital ordering. In the second quarter, sales through the brand’s own app “more than tripled” compared to the same period last year. 

Perhaps most important, Shake Shack will start offering direct delivery via its own digital properties. Garutti plainly stated that the motivation behind this move is “keeping guests within our native infrastructure and deepening our ability to connect directly with them over time.” 

Direct delivery is becoming an increasingly important part of major restaurant chains’ digital arsenal, and is already in use by Panda Express, the Coffee Bean & Tea Leaf, and others. The benefits of direct delivery, where orders go straight to a restaurant’s own app, rather than getting funneled through a third-party delivery app, are obvious. Restaurants pay lower commission fees, since third parties like Uber Eats are only delivering the food, not processing the order. And brands retain valuable customer data they would otherwise not be able to access. 

None of Shake Shack’s announcements this week are particularly eyebrow raising, which is in itself an important point. Every day, off-premises gets further entrenched in consumers’ minds as the de facto restaurant format for quick service and fast casual. Adding drive-thru or curbside, doubling down on digital, and exploring direct delivery are quickly becoming the standard for those chains that can afford them. Those standards were emerging long before the pandemic arrived, and will exist long after it leaves.  

Chipotle Forges New Ways to Reach Digital Customers With Its Concierge Bot

The pandemic hasn’t done much to slow Chipotle’s digital business, which just had its best quarter ever in terms of sales. In the wake of that, the chain has steadily continued releasing new features to its app and this week brought a few more, including the launch of the Chipotle app in Canada and yet-more features for all users of the chain’s mobile app.

The standout of those new features is Pepper, a so-called Concierge Bot, which customers can use via Facebook Messenger to order food. Once a user selects the “message us” button on Chipotle’s Facebook page and gives Pepper their location, the bot will pick the nearest available Chipotle store and walk the customer through the order process. According to a press release sent to The Spoon, that process is supposed to mirror Chipotle’s in-restaurant make line, where guests move down the assembly line specifying which ingredients they want and how much of each to include. Alternatively, customers can use a natural language option and simply describe what they want to Pepper. Guests can pay directly through Pepper.

This new channel for customers to order, pay, and receive their meals introduces Chipotle’s mobile order ecosystem to yet-another potential digital audience. And while Facebook is a third-party platform, orders placed via Pepper get funneled through Chipotle’s own Page, allowing the restaurant to directly interact with those customers. Chipotle said in its release today that this new feature is meant to make “online ordering easier and more convenient for fans.” But I’ll wager it’s as much about taking back control of customer relationships (and data) as it is about giving Facebook diehards an easy way to order burritos.

The addition of Pepper also makes Chipotle the latest big-name restaurant chain to start reeling certain parts of delivery and digital ordering back under its own roof. For the last few years, managing the order-pay-dropoff process for off-premises orders has largely been the territory of third-party services like DoorDash and Uber Eats. But in the last few months, that’s started to change. Several chains, including Panera and Bloomin’ Brands restaurants, use hybrid delivery strategies, where third parties only handle a piece of the delivery operation. In some cases that’s the technical infrastructure; in others, it’s supplying drivers for the last mile. Others, notably Panda Express this week, have launched their own in-house delivery stack that manages the entire process, from ordering to dropping off.

For a deep-pocketed brand like Chipotle, this business of slowly shifting off-premises in-house is probably most about getting back control of customer relationships. The pandemic has forced restaurants to rely a whole lot more on their digital properties. Through those properties, brands must be able to offer contactless ordering and payment functionalities, and they must be able to clearly communicate with customers about those features. That’s a little tough to do if your entire customer base resides on a third-party platform like DoorDash that’s merely telling you to make the food. As one industry executive noted when we spoke a couple months back, restaurants ” need to rethink how they’re connecting digitally with their customers.”

Other announcements from Chipotle this week also emphasized Chipotle’s digital strategy and how it wants to connect with its customers in a post-pandemic restaurant industry. As well as Pepper, Chipotle also released a new group-ordering feature where multiple people can hop on the same order and everyone has the ability to track their food. 

For all digital orders placed via the Chipotle app, guests will be able to round up their order total to the next highest dollar amount and donate the extra to “organizations advocating against issues like systematic racism and inequality,” according to the press release. Chipotle will kick this program off with donations to the National Urban League.

And, as mentioned above, Canadian Chipotle fans can now use the Chipotle app or order food via Chipotle.ca, Uber Eats, and DoorDash.

Chipotle’s business didn’t suffer terribly during shelter-in-place orders, largely because so much of the chain’s work over the last two years has been around developing an insanely ambitious digital strategy. This week’s news suggests the company isn’t planning to rest on its laurels anytime soon.

Ritual Brings Its Online Order Platform to the U.S., Makes It ‘Free for Life’ for Restaurants

Today, online ordering app Ritual announced the U.S. launch of Ritual ONE, its online order platform that lets restaurants host and process digital orders through their own websites rather than using a third-party delivery service. That includes takeout, curbside pickup, delivery, and other off-premises formats, according to a press release sent to The Spoon.

The Ritual ONE tool will first be available in the U.S. to restaurants in Chicago, IL.

Based in Toronto, Ontario, Ritual’s order-ahead app has up to now been mostly geared towards the office lunchtime crowd, allowing workers in the same office or location to piggy back off one another’s orders.

Ritual ONE actually integrates directly into a restaurant’s main system, effectively becoming a piece of the business’s tech stack, rather than an add-on that has to managed separately. For businesses that are not already online, Ritual can create a customizable menu.

Ritual created its Ritual ONE service in response to the COVID-19’s devastating impact on the restaurant industry. The tool is actually a joint effort by Ritual and the City of Toronto. Through it, restaurants can accept digital orders through their own digital properties, rather than having to go through a third-party delivery service like DoorDash or Uber Eats to process delivery and pickup orders (though they would in most cases have to use those services for the last mile of delivery).

Lower commission fees is the big selling point here. Typically Ritual charges restaurants a $49 monthly fee for each location for Ritual ONE. However, given the ongoing state of the restaurant industry, the company noted in today’s announcement that “any current or new Ritual customers in the Chicago area will receive the service for free for life if they sign up by July 10.”

That, too, could be a major selling point. One of the major beefs with third-party delivery is the staggering commission rate those services extract from restaurants — up to 30 percent of each transaction, in some cases. Small and/or independent restaurants, in particular, can have their bottom lines decimated by such fees. The shift towards more off-premises orders has only made the issue worse, since restaurants that could previously get by on dining room sales are now forced to offer takeout and delivery. Usually, that means working with third-party services and handing over those hefty commission fees. 

Helping restaurants bypass those fees, at least in part, is something many restaurant tech companies say they can do nowadays. Toast, ChowNow, and others have all made announcements for restaurant tech packs that gets rid of the high commission fees charged by third-party delivery services. Though no one yet has gone as far as to promise free software for life, as Ritual just did. That could be incentive enough for restaurants to try the service out as they struggle to find ways to meet the new expectations around off-premises orders.

Hold the Phone. Soon it Will Be Your Restaurant’s Menu

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A couple of years ago I came across a restaurant in Dallas, Texas that featured a menu written entirely in emojis. It was unexpected and creative, yet clear enough that a server didn’t have to come over and re-explain everything on the page.

I’m not (necessarily) advocating we battle the current restaurant industry fallout with emoji menus, but maybe we could use some of that outside-the-box thinking when it comes to revising menu formats to fit the new reality we live in. 

Since reusable menus are basically germ repositories, it’s no surprise they’re out now that dining rooms are reopening. The CDC’s recently released guidelines for reopening suggest restaurants “avoid using or sharing items such as menus” and to “instead use disposable or digital menus. . .” The National Restaurant Association’s guidelines tell restaurants to “make technology your friend” and suggest mobile ordering, and every other restaurant tech company that contacts me these days is offering up some form of digital menu for restaurants to integrate into their operations. 

A lot of restaurants will definitely start out by offering simple disposable menus. Paper is cheaper than software most of the time, and typing up and printing out a menu is faster than onboarding your business to a new tech solution.

Over time, though, that could change. As more emphasis gets placed on digital ordering for everyone, we’ll access more restaurant menus through our own phones and mobile devices. That opens up a whole world of possibilities in terms of what restaurants could one day offer on their menus beyond just the food items themselves.

Just a few examples: Menus could provide in-depth information the ingredients in a dish, like where that cilantro came from and how many months the apple traveled before it hit your plate. Menus might also include ratings from other customers, and Amazon-esque “you might also like” recommendations could show up on the screen. Maybe you could dictate the portion size you want, thereby reducing food waste.

With AI making its way into restaurant tech more and and more, restaurants could also build dynamic pricing into menus, based on time of day, foot traffic, weather, and offer coupons and promotional offers in real time. And sure, if someone really wanted to, an emoji menu would probably fly right now in more than a few places.

Most of these things exist already, though they’re not widespread and some are still in conceptual stages. The massive overhaul of the restaurant menu is a chance to start bringing those disparate pieces together to revamp the way we order our food.

Kitchen United Is Open for Business in Austin

One effect of this whole pandemic is that we’ve seen an uptick in to-go orders, and that trend won’t subside anytime soon. That makes now a good time for restaurants — some of them, at least — to consider adding a ghost kitchen to their operations. 

Those in Austin, TX can add Kitchen United to their list of choices when it comes to choosing a facility. The company, which provides ghost kitchen infrastructure (space, equipment, etc.) to restaurants announced this week its new location near the University of Texas is open for business. 

A number of restaurant chains have either already moved into the space or plan to do so in the coming weeks. Kitchen United has also allocated one of the kitchens in the new space to Keep Austin Fed, a nonprofit that gathers surplus food from commercial kitchens and distributes it to charities. As part of the deal, Keep Austin Fed will be able to “rescue” food from restaurants with kitchen operations inside the new KU facility. 

A press released emailed to The Spoon notes that “additional kitchen space is currently available” for restaurants that want to expand their off-premises operations. On that note, a word of advice for restaurants: make sure your restaurant is actually in need of a ghost kitchen before signing up with one. Kitchen United’s own CEO, Jim Collins, told me recently that restaurants need a certain amount of customer demand in order for the economics of a ghost kitchen to make sense. It’s not a small demand, either. In times like these, where the future of all restaurants is uncertain and what little money there is needs to be spent carefully, it pays to exercise some caution, even when it comes to an enticing new trend like ghost kitchens. 

Los Angeles Moves to Cap Third-Party Delivery Commission Fees

Behold, more fee caps for third-party delivery companies. This week, the Los Angeles City Council voted 14–0 to ask attorneys to draft a law that caps the commission fees delivery services charge restaurants at 15 percent. “Why should restaurants, and their customers, be put in a position to subsidize delivery app companies? We need to level the playing field,” Councilman Mitch O’Farrell told the Los Angeles Times.

This week’s proposal would also require that 100 percent of the tips customers leave on delivery orders through these apps go directly to the driver, which is pretty standard nowadays but caused some ruckus in the not-so-distant past. The fee caps would end 90 days after Los Angeles lifts its dining room closures. 

Needless to say, the move — which several other cities have already made — is not popular with delivery companies. Postmates, which is LA’s most popular third-party food delivery service, said governments setting a price on fees threatens jobs and creates “a false choice between local restaurants and the delivery network companies that support them.” The service wants instead to have a fee charged in delivery orders that would assist restaurants. That in turn would translate to yet-another fee for the customer, and be yet-another way in which restaurant food delivery services will suggest/try anything to avoid having to shoulder some of the burden the pandemic has brought on the restaurant industry.

As restaurants slowly reopen and the industry starts to adjust to its new normal, now we’ll begin to see if fee caps actually make a difference for struggling restaurants, and if they are here to stay for the long run.

CardFree’s Streamlined Platform Hints at the Restaurant Tech Stack of the Future

We’ve said it before, we’ll say it again: in today’s pandemic-stricken restaurant industry, restaurant tech companies have to fight hard to stay relevant, and only those solutions that can help restaurants make their digital operations truly efficient will be left once the fallout is over.

CardFree, a company based in San Francisco and something of a restaurant tech vet, is hoping to make the transition to digital easier for restaurants. The company makes an all-in-one mobile merchant platform that integrates digital ordering and payments, coupons, and loyalty programs into a restaurant’s existing setup. It also offers a pay-at-the-table function that uses a customer’s own mobile device, rather than a tabletop kiosk (aka germ repository). It also recently added a new way for customers to process payments — not through any earth-shattering new technology but via some good old-fashioned SMS messaging with its new text-to-pay function.

The company was founded in 2012, a time when the concept of mobile payments via a smartphone was first gaining attention and many wondered if the credit card would disappear entirely. It didn’t. In fact, CardFree’s CEO and cofounder Jon Squire told me over the phone this week that the company saw “early resistance” even to pay-at-the-table concepts, where a user processed the payment themselves instead of handing over a credit card.

As global health crises do, though, the COVID-19 pandemic changed everything. Digital orders were up 63 percent in March, according to NPD Group, and one recent survey found that 73 percent of consumers ordering takeout and delivery said they would be more inclined to get takeout (over delivery) if the experience were contactless. Meanwhile, the National Restaurant Association’s restaurant reopening guidelines clearly state that “Contactless payment systems, automated ordering systems, mobile ordering apps, website updates and simple texts can help you to communicate and conduct business with reduced need for close contact.”

CardFree’s platform is one of many out there offering tools to make the restaurant experience more contactless. A restaurant can choose one or more of the technologies the company offers (mobile ordering, payments, etc.) and add to the stack over time. Squire said that of all the technologies out there, mobile ordering itself is probably the most important one for restaurants to add right now, though in terms of a solution, “You’re going to want something you can expand.”

As I mentioned above, that expansion might include some SMS messaging. CardFree has launched what it calls a pay-to-text feature, where customers call in a to-go order and can receive a link via SMS to pay for their meal. This is less cumbersome than reading a credit card number over the phone, and more sanitary than passing one between customer and cashier at the actual restaurant.

“Almost all the folks we’re working with are taking the person’s cell phone number as part of the order process,” says Squire. Once the phone number hits CardFree’s system (which is integrated with the restaurant POS), the user receives a text with a link they can click through to pay using Apple or Google Pay or their credit card:

Squire said that of the restaurants he’s talked to, many still see “about 60 percent” of orders placed ahead of time come via a phone call to the restaurant, not placed through a digital property like a mobile app. Finding a way to make the telephone experience more contactless from start to finish will be important going forward. That said, not many restaurant tech solutions pushing “contactless” bundles currently offer any kind of feature that addresses phone orders. That gives CardFree something of a leading edge here.

Squire doesn’t necessarily believe the pandemic and seismic shifts in the restaurant biz will render the credit card obsolete, as some have suggested. Of going “card free,” he said “Doing it’s our name and we’ve been doing it for 10 years and [credit cards] still exist. I’m reticent to say they’ll go away.” 

Regardless, restaurants will need to go more digital, even if they’re accepting credit cards. And to help make that possible for cash-strapped businesses that are currently lucky to keep the lights on, CardFree has been giving away its products for free for small-to mid-sized independent restaurants. While there is technically a three-month time stamp on the free period, Squire suggests that’s a fluid deadline where certain restaurants are concerned. For CardFree, which has historically worked with enterprise-level brands, this is a way of helping the whole restaurant industry stay afloat, not just mainstream chains.

As Squire said, “It’s been helpful to know [we’re] doing something to push this in the right direction.”

Report: Digital Orders and Delivery Driving Restaurant Sales, Full-Service Still Struggling

Digital restaurant orders and delivery orders were up for the month of March, according to new numbers from The NPD Group. Despite — or more likely because of — state-mandated dining room closures, NPD reported digital orders for restaurant meals increased by 63 percent and delivery orders by 67 percent.

Quick-service restaurants (QSRs) represented the majority of the increase in digital and delivery orders. That’s no big surprise, as many of these types of restaurants were already primed for off-premises ordering before the pandemic ever hit. In fact, as far back as November of 2019, the National Restaurant Association predicted that off-premises orders would drive the bulk of QSR restaurant sales over the next decade. Chains like McDonald’s and Chipotle were already running $1 billion-plus digital businesses, and Starbucks said recently that 80 percent of its U.S. orders were to-go orders before the pandemic.

The bigger hit was taken by full-service restaurants. According to NPD, full-service restaurants “realized traffic declines of 35 percent in the month of March compared to year ago March.” The firm also noted that “On-premise traffic share prior to the pandemic represented 80% of the FSR business and off-premise 20%.” 

Shelter-in-place orders obviously changed those numbers. Many full-service restaurants have tried to pivot to off-premises strategies. NPD notes that “FSRs able to offer carry-out and delivery were able to lift the segment’s off-premise traffic share by 31%.” But as we’ve covered before, switching from a model that’s built primarily around dine-in traffic to one that relies on things like delivery and curbside pickup can be a complicated process that restaurants aren’t operationally equipped to handle. Meanwhile, some restaurants, unable to weather the current storm, have closed permanently. Others have ceased operations citing health concerns for their staff. 

Even as states slowly begin to reopen, businesses won’t be pivoting back to their former dine-in models. Most restaurants will have to operate at reduced capacity — down to 25 percent in some cases — and consider implementing things like reservations systems and store redesigns to accommodate social distancing guidelines. 

That said, transactions at full-service restaurants have improved slightly, declining only 67 percent for the week ending on May 3 compared to 71 percent the previous week. This is the third consecutive week these declines have improved, according to NPD. Dine-in restrictions have lifted for roughly 192,000 restaurant units in the U.S., though many more challenges remain for the coming weeks. Those include adopting technologies to enable more digital orders, setting up contactless payments, and preparing for another possible wave of pandemic at some point in the future. 

NPD’s numbers echo what the firm’s Executive Director Susan Schwallie mentioned last week at The Spoon’s virtual fireside chat. “COVID has been an accelerator for everything online and digital,” she said at the online event. In addition to online ordering, ghost kitchens are another tech-driven initiative that will stick around in the restaurant world over the long term. 

Starbucks Leans on Digital Orders and Modified Formats to Reopen 90% of Stores by June

Starbucks plans to reopen 90 percent of its U.S. stores by early June, the company said this week on its Q1 2020 earnings call. As expected, stores won’t immediately reopen nationwide and with the same sit-down cafe format in which they operated before the pandemic. Instead, the Seattle-based coffee giant will open gradually, with modified service that emphasizes pickup, delivery, and drive-thru. 

The company hinted at these plans a little less than two weeks ago, when company CEO Kevin Johnson sent a letter to employees explaining the chain’s recovery plan. As I wrote at the time, Starubucks is an international chain that is already navigating this recovery process in China, so it has some experience other U.S.-based chains may not. It is also ahead of the curve — a major leader, actually — in both off-premises formats and digital business. 

On this week’s call, Johnson spotlighted both of those things. He noted that “continued recovery in China strengthens our belief that these impacts [from COVID-19] are temporary” and that Starbucks expects to emerge with an even stronger business. “We are well positioned to leverage our digital assets and new operating formats like contactless pickup and curbside to expand service to customers,” he said.   

Only 30 stores will reopen their cafes, Starbucks COO Rosalind Brewer said during the call, and there will be no seating in those locations. “We will amplify delivery, we will have the Mobile Order & Pay channels open and then the addition of a new concept, the Entryway Handoff,” she said. Starbucks will monitor what happens in these stores before making the move to reopen other locations. 

For Starubucks, this slow reopening is less detrimental than it might be for a chain with a less robust off-premises strategy. Johnson noted on the call that 80 percent of customer occasions in U.S. stores were to-go before the pandemic even hit. “And so by augmenting the in-store experience with mobile ordering and contactless pickup, we can service significant volume of customers without having the cafe seating area actually opened,” he said. 

As states slowly begin to reopen their economies, bigger chains with similar store formats to Starbucks and existing digital strategies in place will likely operate with their own versions of this modified, to-go-centric format. Chipotle, which was already testing off-premises store formats pre-pandemic, has reported strong digital sales for the quarter. With more earnings calls set to happen over the next few days, we’ll get more intel into what other chains, such as McDonald’s, have in the works.

Smaller restaurants that can’t afford expensive mobile-order systems or accommodate drive-thru lanes can still look to some tech to help with the transition towards this new normal. While most independent businesses are more concerned with keeping the lights on right now, contactless customer service and digital payments will be two areas more restaurants will look to expand to in the coming months. 

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

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

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

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

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

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

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

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

Taco Bell to Give Its Stores a ‘Tech-Forward’ Facelift, Launches Veggie Mode for Kiosks

Like many quick-service and fast-casual chains these days, Taco Bell is responding to the demand for digital and off-premises orders in part by revamping its physical locations. Case in point: Today, the chain unveiled plans to build out new stores under its Cantina concept as well as convert some traditional Taco Bell locations into Cantinas. 

The Cantina is Taco Bell’s somewhat more upscale concept the chain has opened around urban areas over the last few years. To be clear: the Cantina format is still quick-service, just a higher-end version that often features alcohol and includes new technologies like self-order kiosks and digital menu boards.

The company said today it will open its “most technology-forward Taco Bell”  in fall of 2020 in NYC’s Times Square. The press release is vague on details, however, stating only that “the upcoming New York Cantina will utilize new digital features that not only allows for a smooth ordering experience but showcases digital moments throughout the restaurant like never before.”

I’m intrigued as to whether “technology-forward” means the new Times Square store will simply have more of the brand’s existing restaurant tech or if Taco Bell has something up its sleeve it hasn’t yet revealed to the general public. After all, in-store kiosks, mobile order capabilities, pickup shelves, and digital boards are fast becoming the standard not just in Taco Bell locations but across most major QSRs.

Whatever it means, Taco Bell is clearly trying to go after a new audience with the store format that in some ways feels like the Sweetgreen of traditional fast food.

Taco Bell will also convert three of its traditional restaurants into Cantinas to test the concept in more suburban areas. After a period of evaluation, Taco Bell will expand the Cantina concept to other traditional locations.  

Taco Bell has in the meantime also announced a new feature for its self-order kiosks called Veggie Mode. According to an email sent to The Spoon, the function is essentially a way for users to filter menu options so they don’t see any meat-based meals among their selections. Users simply slide a button on the kiosk’s touchscreen to activate Veggie Mode. 

The new features is part of Taco Bell’s ongoing push to appeal to vegetarians or those simply wanting to cut down on the amount of meat they consume. The Veggie Mode feature will be available starting March 12 at Taco Bell kiosks across the U.S., and presumably included in the ones that launch with the new and revamped stores the chain has planned for 2020.

Chipotle Unveils a New Restaurant Design to Support Delivery, Digital Ordering

Chipotle today announced it is testing a design prototype for its stores aimed at further growing the chain’s billion-dollar digital business.

According to a Chipotle press release, the new digital-centric store design will be trialed in the following different Chipotle store formats: an urban storefront, a standalone restaurant with a Chipotlane, and an endcap restaurant with a Chipotlane. So far, the chain has stores in Chicago, IL, Cincinnati, OH, and Phoenix, AZ set to test the new design. It will also retrofit two existing stores in California.

“By better suiting our restaurants to accommodate the digital business, we’re able to finalize orders more effectively and provide a better overall experience for our guests,” Curt Garner, Chief Technology Officer, said in a statement.

The new store model will integrate longtime pieces of existing layouts, such as an open views of make-lines in the kitchen, with more recent changes the chain has made to accommodate the uptick in digital and delivery orders. That includes dedicated pickup shelves for digital orders, second make-lines meant to fulfill meals for delivery, and more Chipotlanes. 

In case you hadn’t guessed, Chipotlanes are a big part of that strategy. Unlike traditional drive-thru operations, those of Chipotle are designed specifically for digital orders. You cannot simply drive up to a menu board and order on the spot from a Chipotlane. Instead, customers order ahead via mobile and only use the window to pick up their food. Third-party delivery drivers can use this feature as well, saving themselves the trouble of having to walk into the store and locate their order. 

On Chipotle’s Q3 earnings call this past October, CEO Brian Niccol said the chain expects a total of 60 Chipotlanes by the end of 2019, though some of these new openings may shift into Q1 of 2020. Additionally, of the 150 to 165 new restaurants Chipotle plans to open in 2020, about half will include a Chipotlane. 

Whether by drive-thru, pickup shelves, or some other method, restaurant chains giving their stores makeovers for the digital-ordering era is a major strategy right now. Just yesterday, we wrote that Shake Shack is opening a new NYC location that will emphasize digital ordering and delivery. Starbucks, Krispy Kreme, and a boatload of others have already made similar moves.

As to how widespread Chipotle’s new design prototype will expand, the chain said in the press release it will asses the performance of each of the four new locations before deciding when and where to roll the concepts out nationally.