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The Spoon

Daily news and analysis about the food tech revolution

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Forget IPOs. DoorDash Is the One to Watch Right Now in Third-Party Delivery

Grubhub still leads the third-party food delivery market in terms of sales, and of late, Postmates and Uber Eats have gotten a lot of attention for their respective pre- and post-IPO news. But DoorDash may well be the most important company to watch in the escalating showdown for third-party delivery dominance, according to new data from tech company Second Measure.

Second Measure analyzes anonymized credit card transactions and uses that data to shed light on customer behaviors. In the world of third-party delivery, those behaviors underscore the rapid growth DoorDash has undergone recently, growth that has the company almost on equal footing with Grubhub in terms of monthly sales. Grubhub leads the market, with 32 percent of total monthly sales. But the company’s growth is now slower than its competitors, as evidenced in the following graph:

Source: Second Measure

DoorDash, meanwhile, holds 30 percent of the market in terms of monthly sales, and unlike Grubhub, it’s still growing rapidly. In February 2019, DoorDash closed a $400,000 million round and had a valuation of $7.1 billion. Besides investors, Second Measure notes in its report that DoorDash saw “a staggering 216-percent year-over-year jump [in sales], compared to 58 percent at Uber Eats and 4 percent at Grubhub.”

Part of those rising sales numbers are no doubt due to DoorDash’s aggressive push across the country. The service is the only third-party delivery service right now to be in all 50 U.S. states, in case you couldn’t tell from the endless numbers of promotions and partnerships the company does with everyone from Canter’s Deli in LA to Taco Bell to the Wyndham Hotels chain. The service is also now in 50 Canadian cities.

Impressive as the numbers are, no one’s place in the third-party delivery market seems certain because the space changes so rapidly — something that will continue for the rest of 2019 and beyond. DoorDash will have to work hard at retaining its customers if it wants to keep up. And as Second Measure and others have noted, loyalty to any one service isn’t something third-party delivery customers prioritize. For example, in the first quarter of 2017, 88 percent of Grubhub’s customers didn’t use another service; two years later, that number has dropped to 62 percent.

Unless, that is, you’re in the south. It seems of all the third-party delivery services out there, Waitr, who’s business is more focused on second-tier U.S. cities, has the highest number of loyal customers on the list. Waitr (who recently acquired Bite Squad) doesn’t (yet) have the reach or growth rate of DoorDash, but focusing on customer loyalty in cities that aren’t New York, LA, or other major metropolises could eventually be hugely advantageous. DoorDash should take note.

Checkers & Rally’s Launch “Franchisee Friendly” Delivery Program

Burger chain Checkers & Rally’s announced via press release a delivery program this week that enables delivery from multiple third parties and is also, according to a company press release, “franchise-friendly.”

To service multiple third-party delivery partners at once, and perhaps also to avoid putting franchises through the kind of franchise McSaga McDonald’s currently finds itself in, Checkers & Rally’s have integrated delivery from five major players into a single point-of-sales system. Customers can order from Uber Eats, DoorDash, Postmates, Grubhub, and Amazon Restaurants, and that order will appear as any other ticket item in the system.

Enabling third-party delivery with multiple partners can and does often create operational issues for restaurants. There’s the pileup of hardware devices that come with using multiple services, often referred to nowadays as “tablet hell.” Plus, multiple new ticket streams from these third-party providers means someone has to key in the different orders from different devices, which would slow even the most well-oiled machine down while simultaneously raising the potential for error.

Checkers & Rally’s sought to avoid these pains by enlisting digital ordering platform Olo, who raised $18 million earlier this year from Tiger Global Investment. For the Checkers & Rally’s partnership, Olo helped implement a system that funnels all orders from third-party services into one channel that goes directly into the main POS system. While this approach isn’t exactly new — Chowly and OrderOut both provide this type of integration — Olo’s platform is specifically designed for larger chains (Checkers & Rally’s has around 900 restaurants currently).

The program also offers a benefit to franchisees in the form of a single point of contact for business. Everything from contract negotiations with the third-party services to tech support to training is addressed through the same contact. I’ve spoken with enough restaurant operators in the last year to know that getting support from third-party delivery services can make a call to the IRS seem fun.

Rick Silva, President and CEO of Checkers Drive-In Restaurants, said in a press release that the company wants “to provide our franchisee community with a fully integrated platform that would make it easy and profitable to fulfill delivery orders.”

That’s an important point: delivery is more or less a mandatory part of business nowadays, but the economics of working with third party services don’t always make sense for franchises. Paul Flanders, CFO of Burger King franchisee Carrols Restaurant Group, recently noted that “The economics [of third-party delivery] are probably marginal for the [franchisee] operator.” Meanwhile, the aforementioned McSaga has McDonald’s franchisees questioning some of corporate’s decisions around the exclusive partnership McDonald’s has with Uber Eats, arguing for a better commission split with third parties, and, in some cases, the ability to work with more services than just Uber Eats. A post by the National Owners Association, a McDonald’s franchisee group started late last year, stated that, when it comes to the many changes franchisees have to face, “simplification needs to be priority one.”

Simplification appears to be what Checkers & Rally’s is after with its newly launched delivery program. Of course, making it easier to take multiple orders from multiple services is only one element of doing cost-effective, operationally efficient delivery. But Checkers & Rally’s appears to be making franchisees an integral part of the process when making decisions about delivery, rather than an afterthought you throw technology at.

The numbers will tell how effective this strategy is, and we’ll have to wait for those until the next round of earnings calls. In the meantime, the new program will serve both delivery and pickup orders.

Postmates’ New Party Feature Is Another Way to Waive Delivery Fees

Yesterday, Postmates launched a new feature called Postmates Party, which lets customers in the same vicinity opt to share drivers and in return get food delivered for free.

As TechCrunch pointed out, the feature is a lot like Uber’s POOL feature. Postmates Party lets you see where others in your neighborhood are ordering from at that exact moment and essentially piggyback off those orders. Postmates waives the delivery fee and any peak time pricing when you order from those restaurants at that time.

There is a five-minute window from the time you select Party to the time you must checkout in order to get the free delivery:

The feature is clearly aimed at price-conscious customers who might not want to pay a delivery fee for every single order they place via Postmates, and it’s one of many new ways third-party delivery services are trying to stand out in the competition and also retain customers. Those moves include ghost kitchens from Uber Eats, DoorDash testing out self-driving cars, and Postmates experimenting with a delivery rover that looks like Minion.

Big moves and technologies like those above are great, and may even be necessary. But what’s interesting about Postmates Party is that it’s a small addition to the service that offers a solution to a big problem: fees. A Technomic forecast that explored off-premises restaurant trends recently honed in on per-delivery fees with third-party services as a barrier to consumer adoption. While the forecast was specifically talking about subscription models (another appealing new feature of most services), pooling orders with nearby strangers is appealing because it requires no additional steps from the customer, so long as they get that order in within the five-minute window Postmates has provided.

For Postmates, the feature could also streamline its operations a bit because it can cluster orders in the same neighborhoods and save on how many drivers it has to pay, how many trips those drivers take, etc.

Interestingly, Postmates unrolled the feature just as Uber Eats came under fire for a confusing new pricing structure that has Reddit users the world over calling bullshit on the service for actually marking prices up.

Also this week, CNBC reported that Grubhub is losing customer retention and, according to analysts, “will have to add three times as many new diners in the third quarter of this year compared to 2018 to make up for expected churn.”

While we don’t have any numbers yet on how Postmates’ new Party feature is performing, the service may be wise to focus its efforts on iterative changes to its app that cost the customer nothing (in terms of both money and time) and might even make the service more efficient in some places.

Postmates Party is currently only available in select U.S. cities: NYC, Las Vegas, Los Angeles, Chicago, Phoenix, San Francisco, Long Beach, CA, Miami, San Diego, Seattle, Orange County, CA, and Philadelphia.

Waitr Takes a Bite Out of the Third-Party Delivery Market, One Small City at a Time

A brief history lesson: When Walmart first became successful enough to expand outside its home state of Arkansas in the 1960s, the company didn’t immediately barrel into heavily populated coastal cities like New York or Los Angeles. Instead, it opened locations Missouri and Oklahoma — neighboring states but not exactly the epicenter of commerce. Walmart didn’t actually make it to California until the ‘80s and New York until the ‘90s.

Chris Meaux, CEO of delivery service Waitr, argues that this focus on smaller markets is how Walmart built the mega-popular status it enjoys today. And if he has his way, Waitr will eventually be able to tell a similar story.

“[They] had such brand equity that they eventually got pulled into [major] cities,” he says of the big-box retailer’s eventual coast-to-coast expansion. “And I think the same thing could happen to Waitr over time. We’re building a very strong brand in the markets we serve. If the demand for that brand requires we get pulled into major markets, we’ll do it.”

To the consumer, Waitr looks much like any third-party delivery service: You download an app, order food, and wait for someone to deliver it. The company operates in many of the same markets as — and many markets where those bigger players aren’t.

To be clear, Waitr isn’t trying to be the next Walmart. It is, however, following the retail giant’s strategy of expanding from its smallish hometown — in this case, Lake Charles, Louisiana — into other smallish cities before heading to the mid-sized markets a la Minneapolis or Amarillo, Texas. Major metropolises aren’t even on the wish list right now.

Even its website emphasizes this localish approach, pushing the image of a hometown food service rather than a faceless entity that’s in every other American city. As Meaux explained over the phone recently, these places are perfect markets for Waitr’s business “because they haven’t gotten attention from some of the larger companies.”

Waitr’s current territory includes much of the Southeast and two dozen cities in Texas. And with its recent acquisition of Bite Squad for $321.3 million, that reach expands to smaller coastal markets like Virginia and Hawaii.

“It was almost exactly the same business model as Waitr,” Meaux says of Bite Squad, adding that larger companies tend to be more focused on demand for consumers, whereas Waitr/Bit Squad puts a lot of emphasis on partnerships with restaurants and drivers, too.

How to employ drivers was a key area on which Waitr and Bite Squad agreed, and it’s the other thing setting Waitr apart from the larger delivery companies. Waitr has, according to Meaux, around 18,000 W2 employees as drivers on its payroll. And he’s aware of how absurdly expensive that sounds to most people.

“It’s really a policy that employees are more expensive,” he says. “Efficient employees are much less expensive.” Because Bite Squad can schedule employees to work when they actually need them, they can more easily accommodate busier periods of the day (dinnertime) and cut back when it’s slow (2 p.m.). Meaux says drivers are reimbursed for personal vehicle and cellphone use. “If you manage the driver flee right and you schedule the drivers when you need them, [you] can do it with a fraction of the drivers that [competitors] require. And as long as employees stay busy, the company profits, because its fees are hourly, rather than a flat rate. Bit Squad, who still maintains its own operations, uses an almost identical approach when it comes to drivers.

It’s impossible to now right now whether this is a sustainable model for the long term. But Meaux, along with Bite Squad CMO Craig Key, are optimistic. “We’re excited about the future about Wiater and Bite Squad, we’re deep into the integration,” says Meaux. “We have a lot of opportunity for growth and expansion. We believe in the next five to seven years or so, we have a chance to be a significant leader in the space.”

He says there will also be room in that future to continue exploring a subscription-based model, something other delivery companies are currently experimenting with, too. Bite Squad’s Unlimited service costs $5.99/month, and users can order from participating restaurants within a four-mile radius. Meaux says there’s “tremendous opportunity” for the unlimited model, though it won’t be as significant as, say Amazon Prime was for e-commerce. “Products or services are oftentimes options. Food is not an option.”

One could argue that delivery is optional, but at this point, it’s so widely and cheaply available it’s become commonplace. In fact, Waitr’s heaviest users, Meaux tells me, are “moms with kids” who “have no time.” Paying a five dollar fee to not throw kids in the car and drive to the restaurant or grocery store seems a small investment when looked at in that light, especially when it comes to smaller cities and longer distances between any two places.

Subscription Models Are the Future of Third-Party Food Delivery

When Postmates started delivering Starbucks back in 2015, the deal came with a glaring drawback: Postmates’ $5.99 delivery fee applied to any order, even if it was a single beverage. While it was fun and novel to try getting a tall latte delivered to the office once, just to say you did, most of us wrote the concept off as impractical and unsustainable.

Times have changed. Coffee delivery with reasonable delivery fees is now a thing, along with smoothies, Big Macs, $1.19 bean burritos, and pretty much anything else you can imagine. That’s thanks to the fact that off-premise sales are now 38 percent of total restaurant sales and growing, and, according to a recent forecast by Technomic, much of the growth comes from the rise of third-party delivery sales.

That makes now the perfect time to rethink delivery fees, and a growing number of companies are now looking to the subscription model.

Think Netflix for food delivery: You sign up for a monthly membership, and in return get unlimited delivery on food in your area. For third-party services, the subscription route offers users competitive pricing options that will (hopefully) keep the diehard delivery fans loyal to the service. In its forecast, Technomic noted that “subscription models that eliminate per-delivery fees in favor of a flat-rate subscription will emerge to present a clearer value proposition to customers.”

As this is a fairly nascent practice, it’s far from perfect at the moment, with restrictions and limitations that could put some people off. But the mere fact that most of the major delivery players now have some presence in the subscription model space suggests it’s an area of delivery we should watch closely over the rest of 2019. Here’s what folks are up to:

DoorDash unveiled its DashPass in August of 2018. For a monthly fee of $9.99 you can order as much delivery from participating restaurants as your heart desires and your pocketbook can manage. In a blog post, DoorDash called out some big-name chains as participants, such as Wendy’s, The Cheesecake Factor, and White Castle, suggesting major restaurants are at least partially on-board with the subscription-style business model.

Right now there are a couple restrictions with DashPass: orders have to be over $15 to qualify for DashPass, and the pass only applies to certain restaurants. For example, I’m writing this post from Nashville, TN, where DoorDash tells me 110 restaurants are available for DashPass, which is hardly the extent of Music City’s culinary landscape.

Postmates offers a similar service, and has done so since 2016. For $10 per month, you can use the Plus Unlimited service for delivery orders over $15. As with DoorDash, the program only applies to those restaurants participating, which limits your options somewhat. Postmates also promises member deals and discounts.

In the UK, Deliveroo rolled out a subscription service last year called Deliveroo Plus. At £7.99/month, it’s a steal for anyone ordering just a few meals per month. (Deliveroo typically charges a £2.50 delivery fee per order.) There’s no order minimum, either, making Deliveroo’s service something like the Amazon Prime of food delivery.

Uber Eats started testing a loyalty program in the UK last year that would potentially do away with delivery fees. Thus far, it hasn’t come Stateside. Grubhub, still the leader in third-party food delivery, hasn’t yet dabbled in subscriptions, either. But I wouldn’t be surprised if either of those two have something in the works.

The key to a successful subscription offering will ultimately lie in how much choice services can offer consumers while still providing a delivery-fee-free package. If that’s pie-in-the-sky thinking at the moment, I doubt it stays that way for long.

The Brooklyn Councilman Who Wants to Ban Plastic Straws Is Now Going After Cutlery

There’s a new (plastic) target on the block for Brooklyn Councilman Rafael Espinal, otherwise known as the guy who introduced a ban on plastic straws in NYC last year. Today, Espinal introduced legislation that would lead to the eventual ban of disposable plastics like restaurant takeout cutlery.

The bill wouldn’t actually ban the cutlery itself. Rather, it would require the city to “review items made with single use plastics at least annually and ban those items for which reasonable alternatives are available.” That task would fall to the NYC department of Consumer Affairs, along with the department of Sanitation and the department of Environmental Protection.

From the legislation text:

The commissioner shall on February 1, 2020, and annually thereafter, report to the mayor and the speaker of the city council on single use plastic items considered, the evaluation including economic feasibility and environmental effectiveness, and the determinations.

Only after these areas are evaluated and a suitable replacement found would the ban on the actual plastic item, cutlery or otherwise, go into effect. Which sounds nice and orderly on paper but would in reality take a long time to go into effect — years, in fact.

Still, the proposed legislation continues the conversation around what to do about the amount of single-use plastic that goes into the trash. Investor Rob Kaplan of Circulate Capital, whose work is heavily involved in the environment, put it well last year when he told National Geographic: “There’s no silver bullet to stop plastic pollution. We’re not going to be able to recycle our way out of the problem, and we’re not going to be able to reduce our way out of the problem,” adding that we have to pursue both tracks while continuing to seek other solutions to make any sort of dent.

In the world of single-use plastics, particularly those at restaurants, Espinal’s legislation is aimed at finding those other solutions. How challenging that would be remains a question mark. Nix a plastic straw and your beverages are still drinkable; nix a plastic spoon, and you’ll have to get creative about how to eat that cup of mashed potatoes from the diner.

There’s also the question of what “reasonable alternative” would actually entail. The legislation discusses “economic feasibility” and “environmental feasibility,” but doesn’t point to specific materials that could replace plastic. There are a number of plastic alternatives when it comes to things like cutlery, from wood to vegetable starch and other plant-based materials. But again, there’s the economic factors to consider, and the proposed legislation text only says economic feasibility includes “direct and avoided costs such as whether the material is capable of being collected by the department in the same truck as source separated metal, glass and plastic recyclable material, and shall include consideration of markets for recycled material.”

We saw a number of private companies rally last year by banning plastic straws, or at least kickstarting the process to ban them. If Espinal’s new legislation were to be effective, it would need to happen in tandem with another massive effort on the part of companies like Starbucks, Alaska Airlines, and others to ban single-use items like cutlery, plastic bags, and other eating items. In this to-go-obsessed culture, that could be a huge ask.

So maybe it’s time for the delivery companies themselves to get involved. Ever the skeptic, I have my doubts this would ever happen. But companies like Grubhub, Uber Eats, and DoorDash are wielding a massive influence over U.S. culture at the moment. It would be nice to think they could use that influence (and money) to show the rest of us how to creatively counter the craze for single-use plastics.

The Dunkin’-Grubhub Delivery Deal Is Great News for Consumers, Bad News for Starbucks

Dunkin’, the chain formerly known as Dunkin’ Donuts, announced today it will begin testing a delivery program with Grubhub in select cities, NRN reports.

The delivery rollout follows a year of moves by the Quincy, Massachusetts-based chain to shed its former image as a donut chain and compete with premium coffee retailers, namely Starbucks. In January 2018, Dunkin’ unveiled its “Next Gen” store, which offers a more modern design as well as a dedicated drive-thru lane for customers placing mobile orders. Dunkin’ made itself available for order via Alexa in 2018, too. And the chain dropped “Donuts” from its name, doubling down on its efforts to focus the brand on beverages and not on its signature treat, frowned upon by nutritionists everywhere nowadays. (Fun fact: Dunkin’ Donuts is largely responsible for changing our spelling of the word from “doughnut” to “donut.”)

The chain also did a massive product relaunch of its espresso, reformulating the recipe and proclaiming their espresso, in the words of CMO Tony Weisman, “is so good, you don’t have to go to Starbucks.”

The Grubhub deal is non-exclusive, as Dunkin’ also partners with DoorDash and will continue to do so.

But as delivery continues to become the norm rather than the exception, there may well be fewer folks who want to go to Starbucks anyway. The Seattle coffee giant expanded its Uber Eats delivery program in January in San Francisco, and will continue rolling it out to major U.S. cities over the next several months. It’s also worth noting that Starbucks has significantly more locations nationwide, though Dunkin’ is slowly but surely expanding out of its New England home turf.

Delivery may well become the ultimate battleground for these two companies. Post espresso relaunch, Dunkin’ is, in my caffeine-riddled opinion, on par with Starbucks in terms of quality (and better sometimes). Starbucks has nicer interiors, but Dunkin’ has better prices. Both offer things like streamlined drive-thrus and easy-to-use mobile apps. So whoever can master the most efficient, cost-effective way to deliver these premium drinks is likely the one who will come out on top, at least in the short term.

Dunkin’ hasn’t yet released information about which cities it will deliver in with Grubhub, or when that’s slated to begin. But one thing’s clear: Quincy and Seattle are in lockstep right now, and their race for dominance will only get more heated as 2019 goes on.

Taco Bell Launches Nationwide Delivery With Grubhub

Today, Taco Bell announced an expanded partnership with Grubhub for nationwide delivery.

The news comes a year after Taco Bell parent company Yum! Brands bought $200 million of common stock in Grubhub and started testing delivery in a limited number of markets. With the nationwide expansion, delivery is now available at roughly 65 percent of Taco Bell locations (via Grubhub, of course).

For the nationwide rollout, the two companies reportedly worked for months to directly integrate Grubhub into Taco Bell’s POS system. An integration like that means (hopefully) fewer inaccuracies on delivery orders, since workers won’t have to take an order then manually rekey it into a Grubhub tablet, as is the usual process for restaurants. The integration is Grubhub’s largest to date.

It won’t hurt Grubhub’s ongoing expansion, which is currently stretching to second- and third-tier U.S. markets (aka smaller cities). Grubhub has reportedly increased its fleet of drivers to accommodate the Taco Bell deal, which will reach many of those smaller cities.

Taco Bell has some serious growth plans in the works. Besides expanding its delivery program, the Irvine, CA-based chain plans to grow to 9,000 stores worldwide by 2022. The company will also install self-service kiosks in every U.S. restaurant by the end of 2019. Two years ago, that might have seemed like a risky business decision. But kiosks are everywhere these days, it seems, from trendy food halls to McDonald’s.

Taco bell also plans to start testing vegan and vegetarian menus in 2019. While the chain already offers some vegetarian combos, this will be the first dedicated menu for meat-free and vegan options.

That will happen a little later in 2019. In the meantime, the chain will celebrate its nationwide delivery launch by dropping the delivery fee on orders of $12 or more for a limited time.

DoorDash Now Delivers Food to All 50 U.S. States

DoorDash just announced services in three new states, and with that it reached a new milestone: becoming the first third-party delivery service officially operating in all 50 states. According to a press release sent out today, that makes DoorDash available to roughly 80 percent of Americans. As is pretty much customary at this point, DoorDash will offer a deal in honor of today’s news: for today, customers will only pay a 50-cent delivery fee for all orders over $10.

The milestone comes with the addition of DoorDash service to Montana (Billings, Bozeman, Missoula), Alaska (Anchorage), and South Dakota (Sioux Falls), and brings the total number of cities where DoorDash delivers to over 3,300. By comparison, Grubhub says it currently serves 1,700 U.S. cities (plus London). Uber Eats, meanwhile, serves only a few hundred in the U.S. but is expanding all over the map, including to the Middle East and Asia. However, number of cities doesn’t necessarily equal the most marketshare, and DoorDash is still third behind Grubhub and Uber Eats in terms of customers.

It should also be noted that expanding into these new cities (as well as a few in North Dakota and West Virginia) doesn’t mean DoorDash gets a break from the competition, be it Uber Eats and Grubhub or the slew of other services who’ve long operated in small- and mid-sized U.S. cities.

Back in December, we wrote that these places are a new battleground for third-party delivery, now that major metropolises like LA and NYC are (mostly) saturated. To that end, Bite Squad, who was acquired by Waitr in December, is already in Sioux Falls, as is a small company called Zip Dish. BringMeThat operates in Alaska, and CafeCourier is in Missoula, MT.

The U.S. is a big place, but it seems our appetites for delivery are even bigger. I wouldn’t be surprised if we see DoorDash or any of the other top three look to acquire some of these smaller companies at some point in the near future. Stay tuned: the winning battleground could wind up being where we least expect.

Bite Squad Brings Food Delivery and a New Economy to America’s Small Cities

Minneapolis is landing on more radars these days as a destination for all things food related. It has a food startup scene, food halls, and accelerator programs backed by major CPGs. And it’s got Bite Squad, a food delivery service that’s changing the economies of smaller U.S. cities at the same time it drops meals off at customers’ front doors.

The service works much like any other third-party food delivery operation. Users order and pay for food either online or via the Bite Squad app, with delivery fees based on the distance between customer and restaurant. Bite Squad functions a bit like Uber Eats in that users can see a detailed breakdown of where their order is in the preparation process: the five-step status checker lets a guess track their meals’ progress after placing an order, notifying them when an order is sent to the kitchen, when it’s being cooked and quality checked, and, finally, when it’s on the way.

Bite Squad may be based in Minneapolis, but it is in over 300 U.S. cities now, thanks to a recent expansion; they aim to be in 400-plus cities by the end of 2018. But unlike a lot of food-delivery services, Bite Squad focuses on Middle America’s big towns and small cities, rather than trying to grab a sliver of major hubs like NYC and LA. “[Delivery] is still a very new part of a Middle America city economy,” Bite Squad’s Chief Marketing Office, Craig Key, who adds that “the most exciting thing we’re doing is that we’re reinventing economies of these towns.”

They do this by tackling new cities neighborhood by neighborhood, sometimes also acquiring local food-delivery businesses that can give Bite Squad access to new audiences. That was the case with the company’s recent 100-city expansion, where they acquired 13 regional restaurant-delivery services across Florida, Minnesota, Texas, Mississippi, and a few other states. “We really build this business one neighborhood at a time,” says Key. “We optimize each zone, and we make sure we have the right number of drivers and restaurants [available]. We’re confident in our position because we’re not haphazardly going into markets.”

Part of that calculated growth includes Bite Squad’s approach to hiring drivers: almost all of them are W2 employees with a guaranteed hourly wage and access to things like workman’s comp and overtime pay. It may sound expensive to keep 5,000 drivers at employee status (not to mention the fleet of Prius cars Bite Squad company owns), but Key points out that other companies who hire drivers based on a gig-economy model have their share of frustrations, too: namely in the form of court cases and lawsuits around worker classification and treatment. Plus, Bite Squad claims the employee model is a profitable business. “We built a business based on employee drivers,” says Key. “As long as we’re keeping those drivers busy we can be profitable because our profits can be hourly, not based on a flat delivery fee.”

Bite Squad is able to do things like prioritize employees over contractors because so far the company has managed to keep its business going from its own profits, rather than having to raise funds and answer to investors. Since Bite Squad is private, Key didn’t disclose any actual figures to me. But he did mention the food-delivery service sector is growing at a rate of roughly 30 to 50 percent per year, and that Bite Squad’s growth rate is faster.

Even so, the company has no plans in the immediate future to expand into the major metropolises. Rather, Bite Squad sees years’ worth of opportunity still waiting to be grabbed up in small cities and big towns around the country. “We’re very bullish on the upside of Middle America’s appetite for restaurant delivery,” says Key. “By our own math, we’ve got hundreds of more markets we’re looking at and evaluating. Just to fulfill our own pipeline of markets will take years.”

Instagram’s Getting Into Restaurant Reservations With a New Partnership

Instagram just announced it will enable in-app restaurant reservations thanks to a new partnership with reservation platform Quandoo. That means you can now search for a restaurant and book it just by hitting a button and without ever leaving the Instagram environment.

Quandoo is currently in 12 different countries across Europe and the Asia-Pacific region. Users can search 17,000-plus restaurants on the Quandoo website or mobile app, and quickly book a table reservation.

But it’s the restaurants themselves that stand to reap a lot of benefit from using a service like Quandoo, which can function as a reservations-management system and marketing services platform rolled into one. Those marketing services include everything from custom websites that integrate with the Quandoo reservations platform to newsletter placement to social media strategies. Restaurants can choose from different pay-per-month plans that range in price and the number of services. Ultimately, Quandoo helps restaurants handle more bookings per table and therefore generate more revenue.

The deal means restaurants have an even larger potential audience and/or customer base, as well as a means to make businesses more searchable and shareable. Facebook may still be the top social network, but Instagram, alongside WhatsApp, is inching closer (Facebook owns both companies). Plus, Instagram’s been dabbling in the restaurant biz a few years now, getting involved with everything from pay-by-picture concepts, where users get a meal in exchange for uploading and tagging a photo, to helping change cocktail culture by demystifying the concept of mixology.

Quandoo is not available in the U.S., but similar strategies are nonetheless at work—Instagram already has partnerships with Grubhub, Resy, and OpenTable.

Given that food has always been a popular topic to document on Instagram, it makes sense the company is playing an increasingly bigger role in the restaurant industry and will keep doing so in the future, for reservations or otherwise.

Food Tech News Roundup: Baby Blockchain, Kombucha, and No More Eat24

Grab yourself another cup of nitro cold brew — it’s time for this week’s food tech news roundup! You know, that time when we assemble all the stories from around the web that we didn’t have time to write about, but are still worth a read. That time!

This week we have news about Nestlé’s foray into blockchain, food delivery closures, and some kombucha innovation. Yes, kombucha innovation. Enjoy!

 

Grubhub announces it’s shuttering Eat24
Bye bye, Eat24. This week news surfaced that Grubbub would be closing down the food delivery company, which it acquired in late 2017, by the end of 2018. This announcement came just a few days after food delivery giant Grubhub acquired online order management company LevelUp. According to Skift Table, Eat24 got the axe because, in a crowded food delivery market, not enough diners were loyal to its brand. Interestingly, Grubhub did not do the same to New York-based Seamless, another food delivery company under its umbrella.

 

Humm Kombucha develops patent-pending kombucha brewing process
Great news, kombucha lovers! This week brand Humm Kombucha announced that they had developed a fermentation process which results in the “first ever verified non-alcoholic raw kombucha” (patent pending). Kombucha, like other fermented beverages, can have small amounts of alcohol — which can be a problem for obvious reasons. Apparently, Humm figured out a way to brew a raw, live (that is, unpasteurized) kombucha that’s below the government standard of 0.5% ABV — and stays that way even when left unopened at room temperature.

 

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Nestlé dips toe into blockchain with baby food
Corporate food giant Nestlé is applying blockchain technology to its Gerber baby food products. The Wall Street Journal reported that Nestlé hopes that blockchain will let them track the fruits and vegetables that go into Gerber goods, and facilitate product recalls in case of contamination. Nestlé is also working with frenemies Unilever, Driscoll’s, and others on the Food Trust, an IBM-supported network working to increase transparency and traceability in the food system.

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