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The Spoon

Daily news and analysis about the food tech revolution

digital ordering

Augmented Reality Bites

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Virtual food hall, meet the augmented-reality restaurant menu. You’ll soon be best friends.

Hear me out.

Over these last few weeks, multiple news bites around virtual food halls have surfaced. These food halls are collections of restaurants that exist online and where meals are only available for delivery and pickup. They are in many ways a natural effect of the pandemic shutting down dining rooms and the restaurant biz going off-premises.

The latest one comes from Lunchbox. This week, the company integrated its online digital order platform into C3’s virtual restaurant brand ecosystem to bring a bunch of different delivery-only eateries under one virtual umbrella.

Being able to order a plant-based burger, chicken, and maybe a rice dish through a single digital interface sounds great until you zero in on that word digital. One of the potential problems with this new wave of virtual food halls is that customers will never have the chance to actually visit these restaurants in person. Your introduction to their food comes in the form of 2D thumbnails you have to scroll through on your phone and squint at to even get an inkling of what you’re about to order. If you’re familiar with the restaurant that’s less of an issue, but most virtual food halls and brands are new, and ordering from them is something of a culinary gamble.

Enter augmented reality (AR), a technology some say is the next great innovation for restaurant menus. Modern Restaurant Management ran a piece this week exploring the possibility of customers using their own smartphones to display 3D models of the food they are about to order. With AR, instead of a small, flat, 2D image, a user could “see” how the dish looks on their table, zoom in on it and view it from multiple angles to get a much better idea of what they’re about to buy.

I should note that the Modern Restaurant Management Post was authored by Mike Cadoux of augmented reality platform QReal. In other words, Cadoux’s has skin in the AR game.

But he makes a good point when it comes to thinking about AR in the context of the new off-premises reality in which restaurants now operate: “Early adoption of AR was hindered by the problem of getting the experience to the customer. People are loath to download apps, and delivery platforms had to service thousands of restaurants, most of which wouldn’t have access to 3D models. Now a restaurant or brand can push their own content to the customer. They would be wise to utilize all the smartphones capabilities and showcase their food with the next-generation of content.”

Spoon Editor Chris Albrecht actually spoke with Cadoux back in August, when QReal released a study with Oxford University’s Saïd Business School that found participants were more likely to order an item if they could view options in AR. “It’s like a test drive for a car,” Cadoux told The Spoon at the time. “Same way when you buy food, you want to think about what it’s like to eat it.”

The tech makes especially good sense for virtual food halls. As I said, these restaurants do not have dining rooms, so customers are relying solely on the digital realm to learn about the food. If, for the sake of argument, Lunchbox and C3 were to integrate AR into their ordering platform, they could better showcase the “fine dining” aspects of their food and in doing so make their meals more appetizing. Everyone else, from Zuul’s virtual-only sandwich chain to Steve Aoki’s pizza brand, could also reap the benefits of AR in the virtual restaurant realm.

AR is not yet mainstream, and its presence in the restaurant industry is still largely forthcoming. But since one pandemic year seems equal to five normal ones, an AR-powered food hall may be closer than we think.

Uber Engineer Says “No” to Uber’s Prop. 22

Californians, take note. One of the things those in the Golden State will vote on come November is Prop. 22, a $180 million ballot measure that would allow third-party delivery services to classify drivers as independent contractors. The measure would effectively override California’s Assembly Bill 5 (AB 5), which was signed into law last year and dictates that Uber, Grubhub, and other gig-economy companies must classify drivers and couriers as employees. 

Classifying them as independent contractors means delivery drivers would lack access to workers comp., paid sick leave, and other benefits W-2 employees receive. It goes without saying that a lot of folks are against Prop. 22. One of them is an employee at Uber.

Kurt Nelson, who’s been a software engineer at Uber since 2018, penned an op-ed at TechCrunch this week that argues drivers should be classified as employees. Nelson, who still makes deliveries for app-based companies in order to understand the gig economy, writes that Uber “refuses to obey” AB5 and instead prefers to “write a new set of rules for themselves” with Prop. 22. 

Among many other notable lines, there was also this gem about the gig economy: “I’ve met drivers who have to sleep in their cars, risk financial ruin over a single doctor’s appointment or go without life-saving medication. There’s no way around it. Uber’s Prop 22 is a multi-million effort to deny these workers their rights.”

You can read the piece in its entirety here. Uber has yet to make any public response to Nelson’s op-ed, so stay tuned.

Restaurant Tech ‘Round the Web

Kitchen United CEO Jim Collins has stepped down to “focus on personal endeavors,” according to Nation’s Restaurant News. Collins played a major role in turning KU into one of the leaders of the ghost kitchen space. Michael Montagano, KU’s former chief financial officer and treasurer, has been named CEO.

Mobile POS platform GoTab launched an integration with hospitality labor management system 7shifts. The combined offering gives restaurant owners/operators the ability to view sales and labor data from the same interface.

Meal prep software company Meallogix announced a partnership with DoorDash this week. A press release sent to The Spoon notes that the deal gives Meallogix’ customers the option of using the third-party delivery service to manage their routes for the last mile of delivery.

Lunchbox Partners With C3 to Launch a Virtual Food Hall for High-End Meals

Online ordering platform Lunchbox announced today it has teamed up with virtual kitchen company C3 (Creating Culinary Communities) to create a virtual food hall, much of it devoted to higher-end eats from top chefs. C3 will use Lunchbox’s restaurant tech platform to power the food hall, which will unite C3’s brands under a single ordering interface.

C3, which is a partnership between SBE Entertainment Group, shopping mall company Simon, and Accor Hospitality Group, operates a network of ghost kitchens and delivery-only restaurant brands. Virtual brands currently include the delivery-only version of the popular Unami Burger, a plant-based concept in collaboration with Impossible Foods called Plant Nation, and a caviar bar called 12 Chairs, among others. The bulk of C3’s restaurant brands are, in the company’s own words, “higher-end meals that can withstand 30-minute delivery routes.” Hence the caviar bar. C3 said it also plans to launch seven additional brands in the coming months and have 200 digital kitchens in operation by the end of the year.

The partnership with Lunchbox will give C3 the technology chops to bring its many restaurant brands under a single virtual roof. Customers will be able to browse and purchase meals from all C3 brands via the Lunchbox interface. That includes group orders from multiple restaurants. 

Lunchbox’s software bundles together digital order processing, loyalty programs, delivery dispatch, marketing, analytics, and more into a single interface which restaurants pay a flat monthly fee to use. The company raised $2 million in February of this year and has multiple partnerships with other restaurant tech companies, including Ordermark and Toast.

Virtual food halls seem an obvious next step, what with the pandemic shuttering restaurants left and right and businesses basically being forced to work in off-premises formats. Last month, NYC-based Zuul launched its own virtual food hall to accompany its ghost kitchen network, and Texas-based grocery chain H-E-B recently unveiled a hybrid grocery store and food hall available for takeout and delivery.

If it proves popular, C3’s virtual network for higher-end foods could provide some blueprint materials for other full-service restaurants, which have been hit the hardest by industry-wide shutdowns. Much of that will depend on the type of food these high-end restaurants are serving, and if they can alter their menus to accommodate some transit. It’s not ideal for these types of restaurants, which were crated around the dine-in experience, but it’s at least some lifeline in these perpetually uncertain times.

Sevenrooms Integrates Its Digital Waitlist With Google Reserve

Restaurant management platform Sevenrooms announced today it has integrated its waitlist feature with Google’s reservation tool, Reserve With Google. Sevenrooms has also integrated its waitlist Google Search, Maps, and Assistant, according to a press release sent to The Spoon.

The Reserve With Google integration means guests can add themselves to a restaurant’s waitlist digitally, while they are still at home, and receive real-time estimates and updates on their wait time. 

Guests are notified via text message when they are close to the top of the waitlist and can then check in virtually when they arrive at the restaurants. Remember the pre-digital process where the restaurant called your name over a loudspeaker then crossed it off a piece of paper when you arrived at the host station? The Sevenrooms-Google integration is basically a digital version of that.

It also comes at a time when most dining rooms are still operating at reduced capacity and restaurants that might not have previously used reservations now require them. This is in part to manage that reduced capacity, but it’s also a way to keep waiting areas less crowded and customers more socially distanced.

For Google, the Sevenrooms partnership is just the latest step in the search giant’s march into the restaurant industry. In August, Google announced a partnership with Panera that lets guests order and pickup meals directly via Search, Maps, and Assistant. Last year, it partnered with delivery integrator Olo to offer more pickup and delivery through Google features and added several new innovations around restaurant menus.

Sevenrooms, meanwhile, has expanded its own arsenal of features in recent months to include contactless ordering and payments and a direct delivery tool that lets restaurants (partly) bypass third-party services like Grubhub and DoorDash. The company raised $50 million in Series B funding in June of this year.

Just Salad Launches a ‘Climatarian’ Menu for Digital Orders

Fast-casual chain Just Salad announced today that it will launch its “Climataraian” menu on September 17. The menu, available exclusively for orders placed via the chain’s app and website, will collect and feature those Just Salad items with the lowest greenhouse gas emissions, according to an email sent to The Spoon. It will also display the carbon footprint and GHGs for each item.

The Climatarian menu will have two categories. The “Carbon Counter” is for customers wishing to have the bare minimum of carbon emissions associated with their meal. The “Conscientious Carnivore” is for “meat-eaters concerned about climate change.” The carbon footprint of each item in these categories will be displayed via the digital menu.

Just Salad hasn’t limited this carbon labeling to just menu items on the Climatarian menu. As the company announced back in June, all menu items on the Just Salad app and website will now come with a corresponding carbon footprint, which reflects total GHGs associated with the production of each item. The official rollout of these labels will happen alongside the launch of the Climatarian menu and apply even to “build your own” offerings. 

These menu additions seem aimed at taking some of the guesswork out of eco-friendly eating for consumers. It remains to be seen if seeing “0.41 kg CO2e” and “0.77 kg CO2e” labels on a menu will actually motivate customers to choose the more climate-friendly option in the same way they might choose the lower-calorie option when faced with the numbers. Carbon labeling on restaurant menus is practically unheard of at this point, so it’s reasonable to expect an adoption curve. 

Both the carbon labeling and the Climatarian menu offer us a glimpse of how versatile the digital menu of the future could be in terms of the information it provides. For example, carbon labels could automatically adjust in real time to include GHGs associated with last-mile delivery. And with more restaurant menus going digital and the sustainable restaurant discussion again becoming a priority, Just Salad likely won’t long be the only chain offering environmental info on its menu items. 

This week’s news folds into Just Salad’s larger sustainability goals, which include ditching single-use plastics and sending zero waste to landfills by 2022.

North American Bancard Acquires Restaurant Management Platform SALIDO

Restaurant tech platform SALIDO announced this week it has been acquired by payment tech company North American Bancard (NAB). According to a press release sent to The Spoon, NAB will “vertically integrate” SALIDO’s restaurant operating system onto its own payments platform, EPX.

SALIDO, which was founded in 2012, began its life as a POS system before evolving into a full restaurant-management platform that includes data analytics, staff management tools, menu management features, and a kitchen display system for back-of-house management. The platform works for both independent operators and large chains/franchises. The company counts EATALY, by CHLOE. and Restoration Hardware among its clients. 

SALIDO said in this week’s press release that since the acquisition, the company has been building out new products, including tableside mobile ordering, contactless payments, and online ordering — all features are fast becoming the norm in the restaurant industry. 

On that note, SALIDO is hardly alone in its efforts to build more digital, contactless tech into its platform. Actually, the majority of recent restaurant tech news has centered on these types of technologies, and SALIDO will compete with the likes of Paytronix, Toast, and many other companies, legacy and startup alike.

“Speed” and “efficiency” are two words you’ll hear frequently around the restaurant industry these days, as businesses fight to stay alive. Controlling operations in the restaurant is one way to get closer to achieving those things. SALIDO bills itself as a “unified” solution with which restaurants can do this. The integration with NAB will also give the platform better capabilities around digital payments, another new norm of the restaurant biz.

NAB acquired the EPX payment-processing platform in 2014. The acquisition of SALIDO will further embed the company in the hospitality industry. 

I, Restaurant

This is the web version of our newsletter. Sign up today to get updates on the rapidly changing nature of the food tech industry.

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.