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The Spoon

Daily news and analysis about the food tech revolution

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Report: 70 Percent of Delivery Orders in 2022 Will Come From Third-party Services Like DoorDash

Restaurant food delivery from third-party services like DoorDash and Grubhub will account for 70 percent of all delivery orders by 2022, according to a new report from CBRE Group.

It’s a surprising prediction — said no one ever. CBRE’s new report, the third in the firm’s U.S. Food in Demand series, is one of many, many pieces of research confirming the central role third-party food delivery services now play in the restaurant industry. Off-premises ordering is expected to be the major driver of restaurant sales over the next decade. An undeniable part of that growth is delivery, which according to the CBRE report reached $34 billion in sales last year, up 13 percent from 2017.

DoorDash, Grubhub, and other third-party services remain an important — and obvious — element of this growth, and for good reasons. As CBRE points out, there are many elements of the delivery stack restaurants need to meet today’s demand, whether it’s technical logistics to process orders, marketing services to widen a brand’s audience, or couriers and drivers that place the actual food in customers’ hands. “Restaurants often lack the infrastructure for direct delivery and the customer reach that third-party delivery operators like Grubhub, Seamless, Eat24 and DoorDash provide,” the report notes.

However, these services are also expensive for restaurants to use. Controversial commission fees eat into restaurants’ overall profit margins, which are already thin. The third-party delivery model itself is also currently under fire from multiple angles — how it treats workers, what it does to the environment, and the increasingly important question of profitability. 

None of those issues mean third-party delivery services are going away any time soon. Instead, the model will evolve, so that by 2022 it will look substantially different from the one we use today.

Already, we are seeing clues as to what direction that shift will take. A growing number of restaurants are now adopting hybrid strategies, where customers place orders and pay for them through the restaurant’s own mobile app or website, which handles the technical logistics around processing and fulfilling that order. Third-party delivery companies, meanwhile, supply the last-mile logistics, including drivers and couriers. Some restaurants, notably Panera, work off an inverse version of this, with customers placing orders via the third party’s app and the restaurant handling that last mile itself. 

Both approaches have pluses and minuses. The general consensus is that the hybrid concept will continue to gain popularity over the next year, even as it too changes and evolves alongside the way third parties process, fulfill, and deliver our restaurant orders.

DoorDash, Impossible Foods Among the Fastest Growing Brands in the U.S. in 2019

Food tech companies have a major presence among the fastest growing brands in the U.S. in 2019, according to a new report from Morning Consult Brand Intelligence that ranks brands according to purchasing consideration among consumers. 

DoorDash took the number one spot for fastest growing brand in the U.S. this year, while Postmates clocked in at number three and Impossible at four. And those are just the top five. Among the top 20 fastest growing companies in the report, food and beverage companies nabbed 11 of the spots.  

According to the report, Morning Consult determines its rankings by which brands “have seen the biggest rise in purchasing consideration this year, how that is playing out across generations and which brands have seen a lift in brand identification, even if it didn’t translate to an increase in purchasing.”

Part of the reason for DoorDash’s top spot is no doubt its expansion strategy. Unlike Postmates or Grubhub and Uber Eats (the latter two also landed in the top 20), DoorDash has focused heavily on not just major metropolitan areas but also suburban areas across the country. It was the first third-party delivery service to become available in all 50 U.S. states and has over the last few years struck deals with major restaurant chains that cater to those areas. Think Chili’s, Outback Steakhouse, and Chick-fil-A. This is the second year in a row DoorDash — which to date has raised over $2 billion — has been ranked fastest growing brand in the U.S. for Morning Consult’s report.

The company was also, among food delivery companies in the report, the only brand to consistently rank at the top across generations, from Generation Z all the way up to Baby Boomers.

Even with high appeal among consumers, DoorDash faces multiple uphill battles going into 2020. The company is still getting backlash over its much-maligned former tipping policy, including recent charges brought by D.C. Attorney General Karl Racine. DoorDash is also one of a few companies that have pledged to fight California Assembly Bill 5, which reclassifies gig workers and in doing so turns the entire model by which third-party delivery services operate on its head — and further erodes the idea of these companies every becoming profitable. Appealing to consumers is a boost for DoorDash in 2019, but it’s appealing to investors that will make or break delivery companies in 2020.

Spoon Market Map: Ghost Kitchens in 2019

Just half a decade ago, the phrase “ghost kitchen” referred to restaurants that looked legit on Grubhub and Seamless but were actually digital fronts for unregulated kitchens. In other words, chicken tenders from what appeared to be a local restaurant might actually have been cooked in someone’s apartment.

Then the delivery boom went off, thanks largely to the growth of third-party services like Grubhub and DoorDash, and by the many digital channels through which customers could suddenly get food. Order tickets proliferated for restaurants, but so too did the stress around how to fulfill those orders without over-burdening the in-house kitchen staff.

The answer to the problem? Take the restaurant out of the kitchen.

In the last few years, restaurants have been moving many of their operations around delivery and to-go orders to dedicated kitchen spaces outside the main restaurant location. The name “ghost kitchen” has stuck around, but now it’s a health-department-friendly term for these spaces that act as hubs for off-premises orders.

But actually, there are many names nowadays for the concept: ghost kitchen, virtual kitchen, cloud kitchen, the (slightly nauseating) description “kitchen as a service.” All those phrases amount the same thing: a kitchen facility that exists solely for the purpose of helping restaurants cook and fulfill to-go orders and get them into the hands of delivery couriers. There is no dining room or front-of-house staff in a ghost kitchen, the tech-stack is more streamlined than that of a full-service restaurant, and, increasingly, the location is completely separate from a restaurant’s dine-in location(s). Now, too, there are also kitchens on (literal) wheels, which add yet-another piece of mobility to the business model. 

To help you navigate the evolving world of ghost kitchens, we’ve created a market map for your reference. This market map is intended to be a snapshot of the current ghost kitchen landscape in 2019. It’s not comprehensive, and we expect both it and the overall landscape to change drastically over the next 12 months. That means you can expect to see this map updated regularly. As always, we welcome suggestions for additional companies and players in this space.

Have suggestions? Drop us an email.

1. Kitchen Infrastructure Providers

The largest category in ghost kitchens right now, Kitchen Infrastructure Providers can be likened to cloud computing providers: they rent companies the space and tools needed to run a business, either as a flat-fee model for on a pay-as-you-go basis. 

Kitchen United, for example, charges a monthly membership fee that includes rent, equipment, storage, and services like dishwashing. Reef, which originally made a name for itself reinventing the concept of the parking garage, offers these things as well as direct partnerships with major third-party delivery companies like DoorDash and Postmates.   

Normally these facilities are large, warehouse-like buildings that hold multiple “restaurants” under a single roof. For large restaurant operators with multiple chains looking to fulfill extra demand brought on by delivery or test out new concepts without incurring too much risk, these are ideal.

Multi-unit chains can also use these spaces to reach customers in areas where they might not have a brick-and-mortar store. Chick-fil-A is widening its reach in the SF Bay Area by working out of DoorDash’s newly opened facility.

2. Restaurant-operated Kitchens

For some restaurants, running a ghost kitchen operation themselves makes more sense than teaming up with a third-party kitchen provider. This is often the case with smaller, independent restaurants, whose ghost kitchen might consist of nothing more than an area of the restaurant’s existing location(s) dedicated to fulfilling off-premises orders. Or it might apply to multi-unit chains who simply want to expand to new areas and don’t have the capital or inclination to deal with the burden of a full-service restaurant. Colombian chain Muy is one such company, having started as a dine-in restaurant before expanding its ghost kitchens to serve more areas of Latin America.

The most notable of all the companies in this category right now is Starbucks. In addition to building out “to-go” stores that exist solely for the purpose of fulfilling off-premises orders, the company has also partnered with Alibaba to turn parts of the latter’s Hema supermarkets into ghost kitchens in China.

The boundaries around this category are especially fluid. In other words, just because you operate your own ghost kitchen in one part of the country doesn’t mean you can’t team up with a third-party provider in another, as The Halal Guys and Chick-fil-A have done.

3. Virtual Restaurant Providers

This is where the lines really start to blur between restaurant, kitchen provider, and delivery company. Anyone can make a virtual restaurant, and as the category in our map shows, more than just restaurants are trying their hand at food concepts that can only be ordered through digital channels and are prepared in a ghost kitchen. Whole30, for example, is a diet concept better known for its cookbooks than its dealings with the restaurant industry. The folks behind that brand teamed up with Grubhub and restaurant company Lettuce Entertain You to create a virtual restaurant offering meals with Whole30-approved foods. 

On the other hand, a company like Keatz runs a network of virtual restaurants it houses beneath the roof of its own ghost kitchens. Taster, based out of France, creates native restaurant brands for food delivery companies like Uber Eats and Deliveroo. Food is cooked in Taster-run kitchens.

4. Mobile Kitchens

In slightly more its own category, companies like Ono Food Co. and Zume are creating robotic, self-contained kitchens on wheels that offer restaurant experiences that can be tailored to specific neighborhoods in a city and also plug into third-party delivery services.

Restaurants can also partner with these kitchens on wheels to expand their reach into new markets, as &Pizza has done by teaming up with Zume.

What’s Next for Ghost Kitchens

Ghost kitchens will become the norm for multi-unit chains. With off-premises orders expected to drive the majority of restaurant sales growth over the next decade, multi-unit brands (think Panera, Chipotle, etc.) will find ghost kitchens a cost-effective way to meet this demand without overburdening existing restaurants. The majority of them will rent space from kitchen infrastructure providers, as Chick-fil-A is currently doing with DoorDash. 

There will be an explosion of delivery-only brands. Since ghost kitchens provide a cheaper, faster way for food entrepreneurs and small restaurants alike to test-drive new concepts, we will see an influx of delivery- and pickup-only brands come out of these kitchens over the next year. Many will be born inside the walls of facilities like Kitchen United or CloudKitchens. Meanwhile, the number of virtual restaurant networks like that of Keatz will increase. 

Artificial Intelligence will be designed into the kitchen. AI is a really broad term that’s often misused. That fact aside, its presence in the restaurant industry is here to stay, and in ghost kitchens, it will prove itself valuable for everything from tracking ingredients to helping staff curb food waste. On the consumer end, we expect to see the technology more deeply integrated into the apps and websites from which customers order, improving recommendations and upselling opportunities.  

More non-restaurant food brands will launch virtual restaurants. In keeping with a trend recently made popular by Whole30 and Bon Apétit, food brands, diets, celebrity chefs, and other non-restaurant businesses will team up with third parties to launch delivery and pickup concepts. Grubhub and Uber Eats are two such third parties already doing this. Expect many more such partnerships — soon.

Bonus: The tech stack will get pared down. No front of house means no POS, right? Quite possibly. With less (or no) customer-facing technology like digital menu boards, self-order kiosks, and tabletop ordering, much of the restaurant tech on the market today becomes irrelevant in a ghost kitchen setting. As the folks at Reforming Retail noted recently, “under this scenario the POS is just an ordering node in the cloud that outputs your menu to a consumer and sends orders to your kitchen.”

That doesn’t mean restaurant tech is going by the wayside. Some ghost kitchens, like those of Muy, have a walkup option where customers order at kiosks onsite, and there will doubtless be new solutions created that are specifically for the ghost kitchen. But the tools of tomorrow’s ghost kitchen won’t look a thing like today’s bloated restaurant-management tech stack. For everyone involved, that’s a bonus.

Postmates Lays Off ‘Dozens’ of Employees, Shutters Mexico City Office

Food-delivery company Postmates — generally seen as one of the big four alongside DoorDash, Grubhub, and Uber Eats — has laid off dozens of employees and closed down its Mexico City office, according to an article published on CNBC.

Postmates has not said exactly how many layoffs it is doing, noting only in a statement to CNBC that “the number was at least several dozen and included people in the San Francisco headquarters as well as in Los Angeles, Nashville, Tennessee, and other offices.” The layoffs started this week, according to one CNBC source. According to another source from the same article, the company is in talks to find a potential buyer.

The news paints a drastically different version of Postmates from the one we were staring at just a few months ago, when the San Francisco-based service raised another $225 million, bumping its valuation up to $2.4 billion. The company also filed paperwork for an IPO earlier in 2019.

Since then, however, the market for both IPOs and food delivery services has taken a left turn to some darker place than anticipated at this time last year.

On the IPO front, disappointing debuts from Uber and Lyft, not to mention the ongoing WeWork meltdown, have altered investor sentiment. In other words, investors aren’t necessarily rushing to back companies with questionable profitability models.

Food delivery services in particular are getting more and more questions around not just their profitability (which doesn’t exist) but also their sustainability over the long term. Getting a latté delivered to your door might be convenient, but the process is increasingly fraught with tensions over how these companies handle commission fees for restaurants and treat their workers. Suffice to say, those tensions have called into question the current model for restaurant food delivery.

Postmates hasn’t been center stage for much of these debates. Instead, the service has kept busy in 2019 doing high-profile partnerships with Major League Baseball teams and national restaurant chains. In fact, just this morning, Postmates announced a major deal to start delivering TGI Friday’s in the U.S.

Nonetheless, the company is feeling the effects of the War on Food Delivery, as this week’s news makes clear. “We made the difficult decision to end operations in Mexico City as we focus on our continued growth in the U.S.,” Postmates said in a statement to CNBC. “We continually review our business to ensure that staffing is aligned with current business needs and have made small adjustments as a result.”

Chopt Is the Latest Restaurant Chain to Launch a Store Dedicated to Delivery and Pickup Orders

Chopt Creative Salad joins the growing number of restaurant chains building out brick-and-mortar stores completely dedicated to delivery and pickup orders. The fast-casual chain opened its first location for off-premises-only orders last week in Manhattan’s SoHo neighborhood. 

Customers of the Chopt SoHo store can order online or via the chain’s mobile app, bypassing the need to wait in line and interact with a cashier. Delivery orders are handled by the major third-party services (Grubhub, DoorDash, etc.), while the SoHo location will also feature self-order kiosks for those walking in off the street. Those kiosks will be able to accept cash in addition to cards — an important feature in an age where the debate over cashless payments is heated and chains like McDonald’s have come under fire recently for kiosks that won’t take good old-fashioned greenbacks. 

Chopt hasn’t said whether its delivery- and pickup-only store will provide a new model for future locations. CEO Nick Marsh told Forbes that, “It will be a significant part of our growth going forward, though we can’t give a percentage on how many of them will open.”

Chopt isn’t the only salad chain in NYC to be experimenting with off-premises order formats. In October, Just Salad teamed up with Grubhub to deliver a virtual restaurant brand called Health Tribes to NYC customers. Sweetgreen, who raised another $150 million in funding in September, has expanded its Outpost service, which entails placing pickup stations in office buildings. The chain also just opened its Sweetgreen 3.0 store, a so-called high-tech location that emphasizes self service and orders destined for outside the restaurant.

It all makes sense. Salad travels well — better than, say, french fries. But — and this is the understatement of the week — salad chains aren’t alone in embracing this off-premises store model designed to fulfill more delivery and pickup orders. Chick-fil-A has operated off-premises stores since 2018 and just announced it’s also working out of DoorDash’s new ghost kitchen in Northern California. Starbucks has a to-go-only store in China and one planned for NYC. Masses of other chains following this trend is pretty much a foregone conclusion.

In a place like NYC (or San Francisco, for that matter), the model allows restaurants to utilize smaller spaces and cut down on the amount of rent they pay to be in business. And as demand for delivery increases along with the expectation for online ordering and self-service technologies, this to-go concept will become a de facto part of most major chains’ strategies.

As QSRs Double Down on Off-Premises Ordering, What Happens to the POS?

Whatever your food plans for the weekend, I’m betting there’s a good chance they’ll involve some kind of off-premises ordering. Delivery? Drive-thru? Drone? All of the above and more are becoming de rigueur for foodies and restaurants alike. With that in mind, here are a few more pieces of restaurant industry buzz from the week, all of which hint at what the next 12 months could look like when it comes to when, where, and how we get our food.

Grubhub and Shake Shack Expand Delivery Partnership Nationwide
Expanding on a deal struck back in August, Shake Shack is now available for exclusive delivery with Grubhub across the U.S. According to a press release sent to The Spoon, more than 140 Shake Shack restaurants now offer delivery through that third-party service and no other. While that’s great for customers who want Shack Burgers delivered to their couch, the partnership has also hurt Shake Shack’s sales, according to the chain’s third-quarter results. Part of that may have been due to the exclusive nature of the deal, exclusivity being a strategy increasingly discouraged in the restaurant industry when it comes to effective delivery services.

KFC’s Drive-Thru of the Future Is Open for Business
July brought the initial news that KFC had a drive-thru-only concept in the works down under, in Newcastle, New South Wales, Australia. Said location is now open for business. The new store features five drive-thru lanes that let customers order and pay via the KFC mobile app. While there is a designated lane for customers who want the traditional drive-thru experience (ordering on a crackly speaker, paying an actual person), there is no dining room at this location. If this pilot location proves successful, we’ll see more such KFC locations in the future.

Dunkin Donuts

Houston, We Have a Dunkin’
Dunkin’ (née Donuts), an institution here in the Northeast, is continuing its expansion across the U.S., and it’s bringing its next-generation store with it. The chain announced it is developing 18 new locations around Houston, TX that will emphasize to-go orders, self-service kiosks, and dedicated drive-thru lanes for customers who order via the Dunkin’ mobile app. The first of these new stores is slated to open in summer 2020.

Image via Unsplash.

RIP POS?
But is the POS about to become an endangered species? Not this week, and not probably in the next year. But the growth of ghost kitchens, which exist to fulfill off-premises orders and have no dining room, suggests that pieces of the front-of-house restaurant tech stack could be eliminated in the future. That’s the scenario posed by the folks at Reforming Retail this week. An excellent article from a few days ago points out that with no front of house or cashiers, and with customers ordering directly from their mobile devices, 99 percent of the tech in restaurants could disappear: “And instead of a restaurant needing multiple [sales] terminals they need, well, none.”

Agree? Disagree? Drop your thoughts in the comments below.

Uber Eats Using Discounts and Ad Space to Entice More Restaurants

Uber Eats and Ordermark announced a partnership this week that will offer service discounts to Ordermark restaurant customers who also leverage the Eats platform for their delivery needs. According to a press release sent to The Spoon by Ordermark, the partnership will make it “easy for restaurants to participate and manage off-premise orders.” It could also help Uber Eats woo more restaurants into becoming more loyal and longtime partners.

Ordermark’s technology helps restaurants centralize incoming orders from the many different channels in which they originate nowadays — in-house, delivery, takeout, etc. The technology pushes orders placed via Uber Eats directly to the kitchen without restaurant staff having to use an extra device or manually input the orders into the main POS system.

According to the press release, restaurants that sign up with Ordermark and request to use Uber Eats as a delivery partner can get their initial setup fees waived by Ordermark and are also eligible to receive a discounted rate on Ordermark services (actual discount numbers were not disclosed). While not the most earth-shattering news of the week, it’s also not insignificant, given the ongoing battle between delivery services and restaurants over sky-high commission fees and the fact that we’re seeing more companies like Ordermark come to market with solutions that promise to simplify both operations and financials for restaurants when it comes to delivery.

In another bid to entice more restaurant partners, Uber Eats is also reportedly selling ad space inside the Eats platform to restaurants. TechCrunch reported a job listing for an Uber Eats Ad Lead, which was confirmed by Uber. “There’s a bunch of different ways we can work with restaurants over time. If we have all the restaurants on the marketplace and we give them tools to help them grow, then this will be a very efficient marketplace,” Uber told TechCrunch.

Both developments come on the heels of Uber’s most recent earnings stats which, while not quite as abysmal as the previous quarter’s numbers still show the company posting more than $1 billion in losses. Losses for the Eats business grew to $316 million, up from $198 million one year ago.

Like Grubhub, who just saw its sharpest one-day decline in its entire history as a publicly traded company, Uber Eats is struggling to show investors it can be a profitable business. Firmly entrenching more restaurants into its ecosystem with discounts and ads could help Eats. Unfortunately, it’s a wait-and-see scenario as to whether that will be enough.

We’ve Seen the Restaurant of the Future. It Doesn’t Look Like a Restaurant

What will the typical American restaurant look like in 2030? Ask the National Restaurant Association, whose new report, “Restaurant Industry 2030” serves up some answers to that question.

Many answers, actually. The 80-page report gives us an in-depth look at everything from how the restaurant workforce will change to technologies that will become commonplace in daily operations, many of which we already see quite a bit of in 2019: self-order kiosks, dedicated areas for pickup orders, and digital drive-thru signage, for example.

Overall, restaurant sales are expected to reach $863 billion in 2019 and grow to $1.2 trillion in 2030, according to the report. The major driver of that growth will be off-premises ordering — delivery, takeout, drive-thru, and other mobile-centric experiences. That will, as the report states, change the definition of the word “restaurant”:

Some restaurants will morph into a hybrid model, offering counter service, full service, takeout and delivery, and meal kits. The delivery-only restaurant is on the rise through virtual restaurants and ‘ghost kitchens.’ New food halls feature retail and restaurant pairings to make it easy for people both to eat and to shop for food they can take home.

All of these things underscore the influence off-premises orders are having on restaurant business models. As the report states, “the shift affects everything from restaurant design to marketingtech investment, operations, and site selection.”

Take ghost kitchens as a prime example. Not so long ago, the idea of having a restaurant without a dining room for anything other than concession-type food was unheard of. Now, restaurants are not only using them to fulfill the influx of delivery orders, they are also testing out brand-new menus and, in the case of multi-brand companies, using the ghost kitchen concept to cross-promote and sell sister brands.

Third-party delivery companies, in particular, are capitalizing on the craze for ghost kitchens, with DoorDash opening its own facility in Northern California and Uber Eats and Grubhub teaming up with non-restaurant food brands to launch virtual concepts.

New business models aside, though, Grubhub et al. face a far more ominous prospect over the next decade: increased regulation of third-party delivery. The National Restaurant Association’s report notes that the restaurant of 2030 will see many a government mandate over the next decade around employees, the environment, and food service-related taxes. But the big one to stand out is the increased regulations for third-party delivery operators.

The debate over stricter regulations for third-party delivery is already in full swing. Earlier in 2019, Grubhub, Uber Eats, and indeed the entire sector came under fire when an oversight hearing was held in New York City that called into question the high commission fees these services charge restaurants. Since then, it’s been one headline after the next proclaiming antitrust issues, biased fee structures for restaurants, caps on delivery fees, ethically questionable tipping policies, and so much more.

The shift towards more regulations is already in place, most notably with California’s Assembly Bill 5, which reclassifies gig workers as employees and was signed into law in September. Third-party delivery companies are fighting AB 5, but even if they succeed, there will be virtually no end to new bills, laws, and other regulatory matters to fight over the next decade. Between that and the constant struggle for profitability for these companies, it’s safe to say the third-party delivery sector of 2030 will be markedly different from the one we know today. Which is to say, the very elements changing today’s food landscape will undergo there own change on the road to 2030.

Uber’s Latest Earnings Reports Underscore the Fragile State of Third-party Delivery

Uber beat estimates but still posted over $1 billion in losses in the most recent quarter, according to the company’s Q3 earnings call this week. While Uber’s Rides business shows signs of stabilizing, other business units, including Eats, are still losing enormous amounts of money.

Losses for the Uber Eats business grew to $316 million, or 67 percent, from $189 million one year ago. And while Uber CEO Dara Khosrowshahi said the company aims to achieve profitability for 2021, he also in August said, “I don’t expect that business to be profitable in the next year or year after frankly.” Uber Eats team members were part of the layoffs Uber announced in October.

Over the last several months, Uber has unveiled several new features to its business aimed at cross-promoting its Rides and Eats services. Uber Vouchers, for example, is meant to drive more foot traffic to restaurants by subsidizing a user’s ride there. The company also said in September it would merge its Eats app with its main rideshare app.

“We can more quickly and efficiently attract and retain customers, as well as deepen their engagement by linking and cross promoting all of our offerings,” Khosrowshahi said on this week’s call.

But a good cross-promotion strategy won’t necessarily stem the bleeding when it comes to losses for the Eats business. And as Grubhub’s lackluster numbers for the last quarter suggest, the hype around the third-party food delivery services could be cooling down.

One reason for that may be that more restaurants are taking delivery, or at least pieces of it, back under their own control. As restaurant chains move to own more of their branding, credibility, and in some cases the last mile, many are turning to hybrid delivery strategies that only rely on third-party services like Uber Eats for part of the delivery process, which could result in restaurants paying lower fees to these companies.

Then there’s California’s AB 5, which was signed into law in September and classifies contract employees like Uber Eats and DoorDash drivers as employees. Despite Uber, DoorDash, and Lyft committing $90 million to fight the legislation, New York is considering a similar law right now, and others are bound to follow.

On this week’s call, Khosrowshahi reiterated Uber’s plans to defend its stance on AB 5 and similar laws. “So this is going to take dialog,” he said of the issue. “We’re up for that dialogue, and one way or the other we think that our model will thrive and grow.”

The Week in Restaurants: Grubhub vs. NYC (Again), Choco Reinvents Ingredient Sourcing

Between trick-or-treat excursions, earnings calls galore, and the fact that AI is going to take over the restaurant industry, it’s been a busy week. While you battle the comedown from your Halloween sugar high, here are a few more bits of news from the restaurant industry this week.

Grubhub Had a Bummer of a Week
The Grubhub versus NYC restaurants showdown continues. This week, 30 members of the New York City council signed a letter demanding refunds for restaurants who were allegedly charged incorrect phone order fees by Grubhub. The letter is a response to a class-action lawsuit by a restaurant operator claiming they were charged for calls that did not result in actual orders, and it’s the latest event in an ongoing saga between Grubhub and NYC over how the third-party delivery service treats its restaurant partners. It also comes just on the heels of Grubhub’s disappointing third-quarter results, which show the service is slowing down in terms of growth and losing ground to DoorDash.

Choco Raises $33.5M for Ingredient Ordering Platform
Ask just about any restaurant operator, and they’ll tell you that sourcing ingredients is a time-consuming, error-prone process that still heavily relies on leaving voicemails and sending faxes. A company called Choco wants to change that with its mobile ordering platform for restaurants and suppliers that essentially acts like a food delivery app for ingredients. The company announced this week it has closed a $33.5 million Series A round led by Bessemer Venture Partners. The service is currently available in 15 cities across the U.S. and Europe, at chain restaurants and Michelin-star joints alike.

Little Caesars Takes its Pizza Portal to Canada
Little Caesars unveiled its Pizza Portal technology to Canadian customers this week. The heated, self-service pickup station, which has been in the U.S. for a little over one year now, lets users order a pie via the Little Caesars mobile app then skip the in-store line and simply scan a QR code to unlock their “portal” and grab their food. The Pizza Portal is now available in “nearly all” Little Caesars locations in Canada. Whether the chain will ever join the masses and start offering delivery remains unknown, but as Pizza Portal’s expansion suggests, delivery or no, Little Caesars isn’t sitting on its hands when it comes to improving and growing its digital strategy.

Waitr Partners With Checkers & Rally’s for Delivery
Louisiana-based delivery service Waitr announced a partnership this week with burger chain Checkers & Rally’s to deliver from over 200 of the latter’s locations in the U.S. The move looks to be part of an ongoing effort on Waitr’s part to team up with larger, higher-profile restaurant chains.

Uber Eats Makes Pickup Feature Available Nationwide, Launches Food Guides

Today, Uber Eats announced that the Pickup feature on its on-demand restaurant food app is now available to customers nationwide. According to an article this morning in USA Today, the company has been testing the feature in San Diego, Phoenix, and Austin and has now made it available to all customers in the U.S.

Pickup is just as it sounds: Uber Eats customers order their food through the app as usual. Then, instead of paying a delivery fee and waiting for someone to drop the food at their door, they go to the restaurant and collect it themselves.

While hardly a new concept, having a pickup option for food seems a necessary step when it comes to appealing to certain parts of the population, particularly in dense urban areas where the restaurant of choice might be on the next block and the $5 delivery fee is not justifiable on such an order. Other major on-demand food competitors — Grubhub, DoorDash, and Postmates — already offer the pickup option to customers. Why Uber Eats has waited so long to unveil its own version of pickup remains a mystery, but with both off-premises orders and competition among third-party aggregators increasing, the service needs every tool it can possibly utilize to entice more diners.

Speaking of which: Simultaneous to the nationwide rollout of Pickup, Eats also launched its Uber Eats Pickup Guides Powered by JUMP. The guides, run by Uber’s JUMP electric bike and scooter program, trace the most efficient route between different local restaurants that offer Uber Eats. While definitely more of a gimmick than anything else, it’s at least a nicely designed one. If you’re visiting a city, it’s also a convenient way to scoot around exploring the different food options — all, of course, while staying well contained inside the Uber Ecosystem.

The Pickup Guides are available for Austin, Washington, DC, Denver, Los Angeles, Miami, and Sacramento.

These new features come on the heels of news that Uber is laying off 1 percent of its workforce, including some Uber Eats staff. The company continues to struggle with financial losses, and Eats, in particular, isn’t likely to become a profitable business for some time. Alas, a pickup feature and a handy city guide aren’t likely to change those facts.

Wendy’s Ramps Up Its Digital Order and Delivery Strategy

Wendy’s is intensifying its efforts around digital order and delivery, announcing at an Investor Day call last Friday that it is aiming to make digital sales 10 percent of all orders by 2024. Right now, digital sales account for 2 percent of orders.

Earlier this year, the Dublin, OH-based chain said it was investing an incremental $25 million into building “a stronger foundation” across its digital platforms. So far, that move to play catch up to its competitors appears to be paying off. At Investor Day this past Friday, Wendy’s Chief Digital Experience Officer Laura Titas noted in a presentation that check sizes are now 20 percent larger with mobile orders. For delivery specifically, the chain now sees check sizes 50 to 60 percent larger.

Titas’ presentation also suggested delivery will be key towards helping Wendy’s reach its 2024 goal for digital sales. To that end, she outlined multiple initiatives around improving the delivery experience.

For starters, it’s adding more delivery services. Wendy’s has partnered with DoorDash since 2017. Next year, the chain will expand its reach with third-party delivery to include Uber Eats and Grubhub, too.

And as is the case with many chain restaurants, QSR or otherwise, Wendy’s isn’t focusing its delivery strategy solely on those third-party partnerships. Instead, it will also launch what Titas called “in-app delivery,” where, thanks to a POS integration, Wendy’s can also process orders directly through its own app. While she didn’t give too many details, Titas said she expects this direct integration to knock three to five minutes off the delivery process. Meanwhile, the arrangement will also allow Wendy’s to track customer data more precisely.

Geolocation capabilities, to improve delivery and help ensure that customers are ordering from the right (i.e., the closest) Wendy’s, voice-order via Google Assistant, and a long-needed loyalty program were all announced at the Investor Day event as well.

Wendy’s certainly has its work cut out when it comes to evolving into a tech-forward restaurant company. Between Burger King’s many publicity stunts to drive mobile orders and McDonald’s turning itself into a tech company, competition is only growing fiercer when it comes to retaining customer loyalty. But with 60 percent of all restaurant orders now off-premises, there’s also a lot of room for growth and new audiences to grasp for those who can make their reach wide enough.