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Daily news and analysis about the food tech revolution

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OneRare and Honeybee Burger Partner to Bring Plant-Based Food to the Metaverse

OneRare, the first dedicated food metaverse platform just announced a collaboration with LA-based Honeybee Burger to make plant-based food “more desirable, accessible and available everywhere.”

The vegan burger, founded by former Wall Street execs, is considered a mini-chain in Southern California but has grown in popularity alongside the plant-based movement and is planning to open locations in NYC and Chicago. Honeybee plans to leverage OneRare to enter the metaverse and create a virtual location accessible to anyone around the world.

It’s a good move and one that smaller restaurant groups should watch carefully; as giants like McDonald’s, Wendy’s and Chipotle unveil their proprietary “metaverse” environments that will act like virtual storefronts and communities (Wendyverse, anyone?), taking advantage of already established platforms like OneRare will be important to compete in the fast-casual dining space in the future.

Adam Weiss, CEO of Honeybee commented, “we like to think of Honeybee as an innovator, redefining the potential of vegan food in order to increase the appeal of plant-based dining globally. On the food side, that means bringing new and exciting plant-based products to our customers, including things like Nowadays chick’n nuggets…and also Akua kelp patties, which we were the first QSR to serve. This innovation extends to our business and marketing, where we were one of the first to use Regulation CF to raise funds, and now we want to be one of the first to market in the metaverse.”

For now, Honeybee will use the OneRare “foodverse” to promote plant-based food and sustainable dining and feature an NFT menu created by the vegan chain. OneRare has been busy since raising its first funding round in November 2021, announcing dozens of partnerships with food and restaurant brands along with partnerships with NFT and cryptocurrency platforms.

McDonald’s Drive-Thru Plans Need to Factor In Franchisees

The big to-do in the drive-thru lane of late is news that McDonald’s is testing automated ordering at 10 locations in Chicago, Illinois. 

The tech is based on an acquisition McDonald’s made in 2019 of voice-tech company Apprente. Through it, intelligent systems, rather than human beings, take the drive-thru customer’s order and send it to the kitchen for fulfillment. At an investor conference last week, McDonald’s CEO Chris Kempczinski said the company is seeing 85 percent accuracy on orders, with only about 20 percent of orders across the 10 stores requiring human intervention.

While Kempczinski is confident we’ll see voice-ordering at all McDonald’s drive-thrus in the next five years, he added that consumers shouldn’t expect to see it widespread as soon as next year. “There is a big leap between going from 10 restaurants in Chicago to 14,000 restaurants across the U.S. with an infinite number of promo permutations, menu permutations, dialect permutations, weather — I mean, on and on and on and on,” he said at the conference.

Separate from the technical feats the system must accomplish, there is also a huge number of franchisees to consider in the process of a wide-scale implementation. There are currently 38,000 McDonald’s operating across roughly 115 countries. The majority — 93 percent — are franchisees. Getting them onboard may be no small feat, either.

Disputes over technology have created tension between McDonald’s and its franchisees for years now — going all the way back to when some franchisees argued against having to offer Uber Eats to customers. The latest disagreement between the two groups concerns a $423-per-month fee corporate has been charging franchisees to cover a $70 million lag in outstanding technology fees. The National Owners Association (NOA), a group of McDonald’s franchises that formed a few years back, has gone as far as suggesting it create a technology cooperative to give owners more control over technology-related decisions. Ernst & Young is currently conducting a third-party audit of the fees in question.

All of which is to say, now may not be a great time to attempt a major rollout of what will probably be a costly system. How costly voice ordering will be for franchisees is unclear just yet, but it would presumably require setup and maintenance costs at the very least. And as we saw with McDonald’s Dynamic Yield acquisition, implementation, and eventual downgrade, not all new tech brings a justifiable amount of return on investment for franchisees. 

Labor also presents some urgent items to consider. 

While automating drive-thru ordering via a system like Apprente’s could aid in the current struggle against the current labor shortage, franchisees will still have to spend time and money training their employees to use the tech and work alongside it. In many cases, that means training them to learn when to not get involved.

At the investor conference, Kempczinski said one learning from the existing 10 implementations of the new tech was training crew to “not want to jump in” as soon as there is a question or pause from the system. “We’ve had to do a little bit of training of ‘just keep your hands off the steering wheel, let the computer do its work,’” he told investors, adding that it took time for crew members to learn to “trust” the technology. 

While McDonald’s hasn’t officially confirmed this, it’s likely franchisees would be in charge of training for the above. That in turn would mean operators and manages must first get comfortable with the tech themselves. And, given the high rate of turnover in QSRs, this could potentially eat up a lot of time if a manager were continually having to train new hires.

Many see the digitization of the drive-thru as essential. The drive-thru lane has become progressively slower over the years. The pandemic didn’t help that latter point, since lockdowns turned the drive-thru into one of the main order channels for restaurants, making overall wait times even longer. Other QSRs, including Chipotle, KFC, and Burger King, have all announced plans to make their drive-thrus more high tech to speed up wait times and improve order accuracy. Clearly McDonald’s needs to compete. This time around, though, it also needs to make sure it thoroughly considers its franchisees’ needs in the process.

More Headlines

Presto Launches a Bundle of Tech Tools to Help Restaurants Reopen With Fewer Staff – Restaurant tech platform Presto today launched a new product bundle it says is meant to help restaurants keep their operations up-to-par in the midst of the ongoing labor shortage.

Tesla May Soon Open Its Own Restaurant – Tesla has filed a trademark under restaurant services, which suggests the automaker may be finally working to realize its dream of combining its charging stations with an old-school drive-in restaurant.

Yum China’s New Program Will Teach Digital Skills to Children in Rural Areas – Yum! Brands spinoff Yum China is investing in more digital education for underserved areas. 

Starbucks Trialing a ‘Borrow a Cup’ Program in Seattle

Starbucks announced this week that it is currently trialing a reusable cup program at five Seattle, Washington stores for a period of two months. Dubbed the “Borrow a Cup” program, the trial is a continuation of an earlier single-store pilot that took place this past fall and winter in Seattle.

To participate, customers can order a beverage in a reusable cup for both in-person and mobile orders at participating stores. There is a $1 deposit. Once a customer is done with their drink, they can return the cup to participating stores, all of which will have return kiosks where customers can drop the empty cup. Upon returning the cup, customers also scan their Starbucks app to receive 10 bonus points on their Rewards account. (They get their deposit back, too.)

To clean the cups, Starbucks has partnered with a company called GO Box, which collects cups daily for cleaning and sanitizing, then returns them to circulation within 48 hours. 

Starbucks has also partnered with Ridwell, which offers a home pickup service for hard-to-recycle items, in case a customer can’t actually get to a store to return their cup. Users will get a Ridwell bin in which they can place their reusable cups for pickup at the front door. Users must purchase a Ridwell membership to join the pilot. Pricing varies from $10 to $14 depending on the type of subscription.

Starbucks noted today that a major hurdle on the path towards more widespread use of reusables is convenience. “The challenge is how to make choosing reusables as convenient as you expect from Starbucks – no extra steps – especially with 80% of Starbucks beverages being enjoyed on the go,” the company said in a statement today.

It’s all too possible that the extra steps of having to return a cup to the store or set up service with Ridwell may prove too involved for some consumers. Given that, we can assume the “Borrow a Cup” program is just one small step on Starbucks’ journey towards a more earth-friendly coffee business, particularly where cups are concerned. 

Worldwide, we throw out about 264 billion paper cups per year. Because of their plastic lining, these cups are difficult to recycle and therefore wind up in the landfill more often than not. In the U.S., reusable programs aren’t yet widespread, though that is slowly changing. Fellow QSRs Burger King and McDonald’s have both partnered with LOOP, the circular packaging service from TerraCycle, to trial reusable containers, including cups.

Both Starbucks and McDonald’s worked with Closed Loop Partners’ NextGen Consortium, which aims to reduce packaging waste, prior to the pandemic. Starbucks also had a “bring your own” reusables program in which customers could bring their own cups to Starbucks cafes and receive a small discount in return. That program was suspended because of COVID-19, and has not yet been reinstated at any Starbucks cafe.

The Case for More Conveyor Belts in Restaurants

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Spoon Editor in Chief Chris Albrecht posed an interesting question this week for restaurants to consider: Will we see more conveyor belt-style food delivery systems as consumers head back to dining rooms?

The short answer is yes. For now, the concept is most associated with sushi. But new developments in restaurant tech and operations over the last year suggest the conveyor belt will have many uses for many different food types moving forward — sushi or otherwise.

Conveyor belt sushi, better known as kaiten sushi, emerged in the 1950s when an Osaka, Japan restauranteur named Yoshiaki Shiraishi developed the concept to keep labor costs down at his restaurant and ensure quick service for customers.

Labor costs and shortages as well as improving speed of service are two major priorities in the restaurant industry right now, especially as restaurants continue to struggle financially from the pandemic and at the same time have to juggle multiple meal formats, from in-dining room to curbside pickup to drive-thru. And seeing as we’re still in a pandemic, many see limiting the human-to-human contact as another necessary priority. 

Managed properly, conveyor belt systems could easily address all three of the above elements: labor, speed, and safety. In a growing number of cases, they already do.

UK-based chain YO! (née Yo! Sushi) helped to popularize the conveyor belt concept in Britain long before the pandemic. And it seems the chain has made some some pandemic-related changes to its system over the last few months, including integrating it with QR code-based digital ordering. Rather than customers choosing what they want from a rotating display, they scan a QR code at the restaurant and choose and pay for items digitally. The conveyor belt then brings chosen items to customers. Speaking to BBC in 2020, Yo Sushi CEO Richard Hodgson said the belt system takes the place of a waiter, and “rather than using it to showcase the food, we’re using it to deliver the food straight to you.” 

Kaiten sushi never really went out of vogue, so it’s unsurprising we’re seeing more of these systems pop up in the age of social distancing. But the concept is rapidly spreading outside of sushi restaurants, too. As Chris noted a few in his post:

At the Country Garden robot restaurant complex in China, food is carried from the kitchen to the table via an overhead rail system and then dropped down by tether to the customer. At Alibaba’s Robot.he restaurant, also in China, automated robots on tracks deliver food directly to a table. The Robo Cafe in Dubai has a similar system of Roomba-like robot waiters for customers sitting at the counter.

Down the street from me, in Nashville, Tennessee, a mother-daughter duo opened a cheese-and-charcuterie conveyor belt restaurant called Culture + Co.

And with more restaurant orders going off-premises, the conveyor belt is becoming a back-of-house staple, too. Crave Collective, a combination ghost kitchen/virtual restaurant, runs a conveyor belt system through the middle of its facility that shuttles delivery orders to drivers waiting to deliver the food. Both Burger King and McDonald’s have introduced the conveyor belt as a delivery mechanism for getting food from the kitchen to drive-thru and/or pickup customers, though both examples are still just design concepts right now.

It goes hand-in-hand with the move towards less interaction between staff and customers, or at least less handing back and forth of physical things. As some of the above examples show, the format seems especially well suited to getting off-premises meals to drive-thru and curbside customers. I’m not the only one to think so, either. A growing number of restaurants, ghost kitchen operators, and other individuals in restaurant tech have all suggested we’ll see the conveyor belt in more of these scenarios in the future in addition to having them in the dining room.

If you’re interested in the future of restaurant automation, you should attend our upcoming ArticulATE food robotics virtual conference on May 18! Get your ticket today!

Restaurant Tech ‘Round the Web

Drive-in burger icon Sonic is currently testing in-app tipping features through which customers can tip the folks that bring out their food. The company said being able to tip Sonic’s so-called “bellhops” via the chain’s app has been one of the top two requests from customers.

P.F. Chang’s announced this week a partnership with guest engagement and CRM platform Wisely. The latter provides marketing automation tools as well as table and waitlist management features to restaurants, with the underlying goal of creating “more personalized” restaurant experiences for guests.  

Major U.S. restaurant chains reported sales declines in February according to the latest update from NPD’s CREST Performance Alerts. The decline was in no small part due to snowstorms, rainfall, and ice in many parts of the country during the month of February. 

McDonald’s May Sell Part of Tech Company Dynamic Yield

McDonald’s is considering selling part of AI startup Dynamic Yield, which it acquired in 2019, according to a report from the Wall Street Journal. 

The original intention behind the $300 million Dynamic Yield acquisition was to install the company’s AI tech into self-service kiosks and drive-thru menu boards at McDonald’s locations. With the implementation, menus would become more technologically sophisticated, able to offer things like more personalized recommendations for customers. McDonald’s currently has Dynamic Yield implementations in the U.S., Canada, and Australia.

But as WSJ reports, after analyzing the Dynamic Yield platform, McDonald’s has found that the tech “hasn’t delivered the promised sales boost” originally hoped for at the time of the deal. The QSR mega-chain aimed for Dynamic Yield order suggestions to boost drive-thru sales by 1 percent in the U.S. Sources told WSJ that sales have fallen short of that target, and one franchisee said that “the return on investment is just not there.”

The Dynamic Yield platform is just one piece of technology McDonald’s franchisees have called into question recently. Despite the chain’s aggressive push towards digital ordering and all the accompanying technological changes, franchisees have pushed back on how much they must pay for all this tech. Ernst & Young is currently conducting an audit of these technology fees, while franchisees have paused all non-essential communication with McDonald’s corporate.

Still, missed sales targets and franchisee tensions don’t spell the end of Dynamic Yield’s platform as part of Mickey D’s operations. McDonald’s said it would keep parts of the company, including those that service the chain’s drive-thrus and kiosks. While details are few and far between, McDonald’s shift towards stores with more drive-thru lanes and less dining room space suggest Dynamic Yield’s tech will continue to provide at least some value going forward. 

McDonald’s is currently “exploring” the sale of a portion of Dynamic Yield. There is no set timeframe for a deal, and it is entirely possible that no deal at all will happen.

The Restaurant Trash Problem Is Actually a Major Opportunity

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

Here’s a small silver lining alert. The restaurant industry’s urgent shift to off-premises meal formats has created an urgent need to combat packaging waste. And people are finally starting to do something about it.

Let’s not sugar-coat the issue too much. Packaging waste is a major problem, one to which restaurants contribute greatly. Prior to the pandemic, some cities were taking steps to reduce or ban single-use plastics, and materials like polystyrene (aka Styrofoam) were out of vogue. All that changed when the pandemic forced the entire restaurant industry to rely on to-go orders for sales and regulations and company policies began banning the use of reusable containers for health and safety reasons.

In fairness to many restaurants, alternative forms of packaging (compostable, reusable, etc.) are expensive, and can even require operational changes for the staff. It should not be expected that these businesses suddenly come up with strategies for more eco-friendly packaging, particularly not at a time when many still struggle to keep the lights on and many more have shut down forever.

But those that can explore alternative packing options should, and of late we have seen some encouraging developments in this direction:

  • Last week, Just Salad announced its famed reusable bowl program would be available for digital orders. The company also highlighted, in its latest sustainability report, its Zero Waste delivery program, which integrates reusable packaging into the delivery order process.
  • Sweetgreen last week announced its plans to go carbon neutral by 2027. Details were pretty high-level, but the company already uses compostable packaging for its to-go orders, so it would not be surprising to see some additional developments in this area in the future. 
  • Just Salad was also in the news last month for the launch of its new meal kit service that’s free of both extraneous portion sizes and plastic packaging.
  • At the end of 2020, Burger King announced a partnership with circular packaging service Loop to pilot reusable food and beverage containers this year.
  • Ditto for McDonald’s, which struck a similar deal with Loop in the second half of 2020. The mega-chain has other circular solutions in place, too, like its Recup system in Germany.
  • There are plenty of other notable efforts being made here, from individual restaurants, like Zuni in California, to companies like NYC-based DeliverZero, which partners with restaurants to fulfill delivery meals with reusable containers. Additionally, Dishcraft Robotics lends some automation to the process of collecting and cleaning reusables at restaurants.

The bigger point here is that while we have a massive packaging problem on our hands right now, we also have a massive opportunity to change that and introduce new innovations in the process. Those innovations could simultaneously curb our single-use plastics problem while also addressing things like food quality, tamper-resistant packaging, and other elements that have surfaced over the last year. The public’s appetite for to-go orders is not going away. That means the opportunity to change our relationship to packaging is around for the long-haul, too.

Innovation won’t come as a one-takeout-box-to-rule-them-all format. Instead, what we’re more likely to see is collaboration among restaurants, material scientists, package designers, and many others. Nor will the issue be solved next week. Weaning an entire industry off single-use plastics will be a complex, costly undertaking that will probably meet a lot of resistance and a lot of failures.

None of that is a reason to ignore the packaging problem and opportunity. Based on developments from the above companies, many are already willing to start changing the system for everyone.

Restaurant Tech ‘Round the Web

White Castle’s recent ghost kitchen effort in Orlando generated so much demand the location had to close will not reopen until spring, when the chain finds a location better suited to meet that demand.

Food delivery search engine MealMe has closed a $900,000 pre-seed round led by Palm Drive Capital. Slow Ventures and CP Ventures also participated in the round.

For the second year in a row, the National Restaurant Association’s annual conference is cancelled due to COVID-19. Instead, the Association will host a series of virtual events throughout the rest of 2021.

McDonald’s Agrees to Third-Party Audit of Disputed Technology Fees

Ernst & Young will conduct an independent audit of the new technology fees McDonald’s assigned to franchisees at the end of 2020, according to a report from Business Insider.

The review, requested by a group of McDonald’s operators called the National Franchisee Leadership Alliance, will look into the $423-per-month technology fee McDonald’s announced in December of last year. Franchisees contest they owe this fee and have paused non-essential communications with corporate in response.

The monthly technology fee, which corporate would begin charging franchisees next month, is part of a $70 million debt McDonald’s claims its operators owe for a “lag” from an old payment structure. McDonald’s controls most of the technology in its stores and charges franchisees a fee for use of that tech. Tech has been an ongoing point of friction between McDonald’s and its franchisees for years now, with operators with operators increasingly frustrated over how much they must pay. 

This is further aggravated by the sheer amount of tech getting implemented at McDonald’s restaurants nowadays, from Dynamic Yield’s artificial intelligence system in the drive-thru to the increasingly popular McDonald’s mobile app. And McDonald’s is just getting started when it comes to digital ordering, drive-thru tech, and other digitization efforts of its business.  

According to Restaurant Business, franchisees argue they do not owe back pay for tech such as the mobile app. McDonald’s corporate, on the other hand, says it has “absolute confidence” that these fees are owed to the company. 

Franchisees will start talking with McDonald’s field officers over the issue, but non-essential communication with corporate remains paused. Restaurnat Business noted that the end of these talks between corporate and franchisees could well mean that the dispute eventually goes to court. 

While McDonald’s seems to have more disputes with its franchisees than most major QSR chains out there, the ongoing battle highlights some of the complications of digitizing a QSR brand. The pandemic’s impact on the restaurant industry has shifted the bulk of business for QSRs to off-premises meal formats, which increasingly rely on digital ordering. Whether other QSRs that rely on a franchise-based model encounter some of these issues as they digitize their businesses remains to be seen.

Meanwhile, the Ernst & Young review is expected to take a few weeks at the very least. 

Top 3 Tech Trends for QSR Redesigns

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The “next-generation” restaurant format isn’t new, as QSR brands like Dunkin’ and McDonald’s can attest. But the restaurant industry’s sudden and in many ways irrevocable shift to off-premises formats in 2020 certainly increased both the number of restaurants revamping their store formats and the speed at which they are doing so.

Those revamps come in many forms and features: BK’s floating kitchens, Applebee’s adding drive-thru lanes, everyone’s near lack of dining room space, to name a few.

And since everyone from Sonic to Del Taco seems to be announcing some kind of format revamp — physical, virtual, or both — these days, I thought it’d be worthwhile to round the top common denominators up to get a hint at which tactics will likely become widespread across the restaurant biz in the near future.

Herewith, are my top three QSR redesign trends:

More Curbside Pickup Spots

Digital order/payment capabilities are a must-have for restaurants now, and this technology coupled with curbside pickup is something we will see a lot more of in the near future. 

For many restaurants, offering curbside pickup options is cheaper than building out a drive-thru lane and window. Outside of the technology, all a restaurant needs is to dedicate a few parking spots close to the building, some signage, and a staff person to run the orders out. Bigger brands may have the money to retrofit their existing stores with drive-thru, but for many mid-size and smaller restaurants, curbside is a more realistic option when it comes to fulfilling more off-premises orders.

For customers, digitally enhanced curbside pickup is increasingly seen as a cheap, fast alternative to delivery, which is getting more expensive for customers. (More on that in the next section.) 

Curbside tech itself is getting some improvements to make the method faster and more efficient, Panera’s geofenced curbside initiative from 2020 being the obvious example. While efforts like these are the anomaly right now, more chains will adopt them and other curbside tech in the coming months.

Drive-thrus, Cruise-thrus, Chipotlanes

On the other hand, those that can swing the cost of adding a drive-thru should do so. 

Some chains, like Applebee’s, are testing out the drive-thru concept for the first time. Chipotle is another good example of a restaurant chain that never offered the format before and has now shifted its entire strategy to accommodate more “Chipotlanes.” Ditto for Sonic, a restaurant better known for drive-ins than drive-thrus, and Pokeworks forthcoming “cruise-thru.”

Others, like QSRs that have always offered drive-thru, are expanding the format. Literally. Double, and triple drive-thru lanes, with some dedicated solely to mobile orders. are becoming the norm at the KFCs, Dunkin’s, and BKs of the world.

The common denominator of this common denominator is that tech is integrated into most of these drive-thru concepts, whether that’s through accommodating more mobile app orders or uses of artificial intelligence to improve order accuracy and upselling.

Mobile-Only Zones and Dedicated Delivery Areas

As anyone who’s been in a drive-thru line lately knows, restaurants are struggling to fulfill the influx of off-premises orders quickly. Many restaurants are addressing this by dedicating certain drive-thru lanes to mobile orders and for delivery drivers picking up orders. Some, like Dunkin’, have done this for years. Others, like Shake Shack, are new to the concept. Still others, namely Pokeworks, have taken the concept one step further and do not accommodate onsite ordering in the drive-thru lane at all.

Meanwhile, to keep third-party delivery drivers waiting on orders from taking up all the curbside spots, many restaurants are also building dedicated areas for delivery pickups. Del Taco, for example has both dedicated drive-thru lanes and pickup shelves for delivery orders.

None of the redesigns discussed above have been widely deployed yet; we can expect more of that in 2021. At that point, new standards for store designs will start to trickle down from the major brands listed here to mid-sized and smaller ones, further cementing the role of off-premises across the restaurant industry.

Postmates: the Latest Delivery Service to Raise Its Prices Post-Prop 22

After saying prices would remain the same for customers following the successful passing of Proposition 22, Postmates has now raised those same prices as high as $2.50 per order.

Postmates’ about-face follows similar price increases from Uber and DoorDash, according to a report from Eater San Francisco. It’s also a contradictory to the tagline these companies were pitching in the ramp-up to the Nov. 3 election—that Prop. 22 passing would allow them to continue operating in California and that prices for customers would not increase.  

Prop. 22 passed in a 58 to 42 percent vote, which allows gig-economy the aforementioned companies to continue classifying their workers as independent contractors. Translation: Uber et al. do not have to pay worker benefits like healthcare, workers comp, and sick leave.

The delivery companies said that they would offer their own benefits package to workers that include a stipend for healthcare. The recent price hikes appear to be geared towards paying for those benefits. For example, the Postmates website calls it “the California Driver Benefits fee” and says that it “helps us fund the new benefits offered to drivers thanks to the passing of Prop 22.” 

All of this feels pretty inevitable, to be honest. After all, one could hardly expect companies that are now infamous for predatory and dishonest business practices to subsidize workers’ benefits out of their own pockets. It’s just a shame more voters didn’t reach that conclusion before clicking “Yes” on the Prop. 22 measure.

Restaurant Tech ‘Round the Web

Part of the plan President Joe Biden has issued to combat coronavirus includes providing clear, national guidelines for restaurants on how and when they can operate. Clear national guidelines would be developed around the safety of workers as well as things like restaurant capacity restrictions.

Olo partnered with customer feedback tech platform Tattle in order to improve the process of collecting restaurant guest feedback for off-premises orders. Tattle will integrate with the Olo platform to provide restaurant guests with a digital survey they can take after ordering from a restaurant.

Pathogen control tech company UV Angel has partnered with McDonald’s franchisees in Texas and Illinois to equip locations with proprietary ultraviolet light surface and air technology. UV Angel says its tech targets pathogens at the room level (as opposed to at the building level), which the company say is more effective in fighting airborne and surface-borne bacteria, viruses, and fungi.

McSaga 2020: McDonald’s Franchisees Push Back on Tech

Like other major QSRs, McDonald’s has made clear in recent months that technology and digital developments are top of the priority list for the mega-chain moving forward. But not everyone agrees with Corporate’s approach to this plan, and McDonald’s franchisee owners are fighting back. As Restaurant Business notes, the National Owners Association (NOA) has “pushed back” against a temporary tech fee and is now considering forming a technology cooperative that would give them more power when it comes to decisions about digital strategy.

The fee in question, which is part of a series of changes McDonald’s announced at the beginning of December, would charge operators $423/month for technology investments to cover a $70 million “lag” from an old payment structure. Those tech fees would begin in March 2021 and remain until the $70 million is paid back to McDonald’s.

This isn’t the first time McDonald’s and its franchisees have gone toe-to-toe over tech, and news of these new fees reignited some old tensions. It has also prompted the NOA, an independent group of McDonald’s franchisee owners and operators, to explore the idea of forming a technology cooperative that would give them more voice when it comes to decision-making moves about tech.

McDonald’s controls most of the technology in its stores, charging franchisee owners a fee for using that tech. That arrangement might have worked well in an era when “technology” was a cash register and a credit card machine. But thanks to the pandemic, franchisees have, suddenly and irrevocably, found itself in a restaurant industry whose terms are increasingly dictated by tech in order to accommodate the shift to takeout and delivery formats. The moves follow similar ones from a host of other brands, including Sweetgreen, Chipotle, Shake Shack, and many others.

Of all the QSRs out there, McDonald’s has been one of the more aggressive brands to push this technology. In recent months, the chain has expanded new drive-thru technology from its 2019 Dynamic Yield acquisition, introduced more self-order kiosks, and announced a new app, loyalty program, and store formats for 2021. As Restaurant Business notes, “These efforts have resulted in considerably higher costs for franchisees, whose monthly payment to McDonald’s for technology is 10 times what it was a decade ago. “

A technology cooperative would give franchisee operators more direct say in what technology gets developed and how money is spent, according to the NOA. “You should have a vote in how that pot of money gets invested,” the board said. 

As part of a statement provided to Restaurant Business, McDonald’s noted that its process “includes collaboration with a franchisee-led technology team” and that the company is “confident” it has the tools in place to “drive future growth through technology.”

The battle between McDonald’s and its franchisees is, as I mentioned above, an old one. But given the rapid deployment of tech to the QSR industry, it’s also a fight that will get more intense, not less, in the coming months.

It’s worth noting, too, that while the franchisee model is hugely popular — it allows a brand to quickly grow with less capital — it may not be the most beneficial one moving forward. McDonald’s is the largest franchise in the world, with other notable names being KFC and Burger King. But Starbucks, another chain that has grown rapidly in recent years, rarely franchises, and in fact argues that franchising can hurt brand continuity, quality control, and even company culture.

As technology continues its rapid invasion of the restaurant industry, its costs and expectations could strain more chains’ relationships with franchisees, and indeed call the viability of whole model into question at some point in the future.

Chipotle Finally Launches Its Own Take on the Ghost Kitchen Concept

QSR brand Chipotle is a known leader in the restaurant industry’s current transition from dining room to off-premises formats, but the company has for the most part been quiet in the conversation around ghost kitchens. Up to now, that is. The company today revealed its Chipotle Digital Kitchen a pickup- and delivery-only restaurant that is essentially its own homegrown take on the ghost kitchen concept.

The new restaurant, located in Highland Falls, New York, will open this coming Saturday (Nov. 14). Chipotle said in today’s press release that the Digital Kitchen is meant to drive business in “non-traditional locations” such as dense urban centers that can’t hold a full-service restaurant.

While the restaurant does feature a small lobby with a few seats, there is no assembly line from which to order food and no cashier to ring orders up. Instead, customers must place orders digitally via the Chipotle app or website, or through a third-party delivery platform. Guests retrieve their orders from the aforementioned lobby that is “designed to include all of the sounds, smells and kitchen views of a traditional Chipotle restaurant.” The location can also fulfill larger catering orders.  

Chipotle’s news comes the same week McDonald’s unveiled plans for its own to-go-centric store format that will consist of a kitchen surrounded by drive-thru lanes and parking spaces for curbside pickup. Since Chipotle’s Digital Kitchen is, initially, at least, focused on urban settings with space limitations, it does not accommodate a drive-thru lane. That said, the company has been very public about its intentions to incorporate that format into its stores, and today’s release notes that the new store format “allows for flexibility with future locations.” Drive-thru may not be part of this first location, but it’s undoubtedly on the way as the company opens more of these new store concepts.

With the future of the dining room still very much unknown, there’s something of a mass exodus from that format happening among well-known quick-service brands. Burger King, Wendy’s, Dunkin’, Popeye’s, and Tim Horton’s are just a few names on the growing list of restaurants changing up their store formats.

Chipotle has been trekking towards this shift for some time. In December of 2019, the company announced a few different store format designs for to-go, drive-thru, and delivery orders. 

Make sure to join The Spoon’s Ghost Kitchen Deep Dive event on December 9th. Register here!

Beyond Q3 Earnings: The Company ‘Co-Created’ the McPlant, Will Launch Version 3.0 of Its Burger

Despite disappointing Q3 earnings that saw stocks slide yesterday, plant-based protein heavyweight Beyond made a number of noteworthy announcements on its investor call, including a new iteration of the Beyond Burger, expanded distribution, and involvement with McDonald’s recently announced McPlant product line. 

Beyond posted earnings below analysts’ expectations, reporting $94.4 million in revenues versus the expected $132.8 million. The company attributed slower sales in retail and foodservice brought on at least in part by the pandemic. However, Beyond CEO Ethan Brown said on the call that it was important “not to interpret this near-term pandemic induced drop in activity as a weakening in our long-term value proposition in this critically important space.” 

To that end Beyond made a few announcements on the call around forthcoming products and distribution channels. The biggest of these — or at least the one that grabbed the most headlines — is the company’s involvement with McDonald’s new line of plant-based meat products. Mickey D’s did not mention Beyond in its announcement yesterday. However, when asked about McPlant on its earnings call, Beyond’s Brown said, “Our relationship with McDonald’s is good.” After further confusion, Beyond made the following statement today: 

“Beyond Meat and McDonald’s co-created the plant-based patty which will be available as part of their McPlant platform.”

Why McDonald’s left Beyond out of its initial announcement is unclear. Also unclear is whether Beyond will be McDonald’s supplier for plant-based products going forward.

Less mysterious are Beyond’s plans for retail distribution. On this week’s call, the company announced the Beyond Burger will be available at 7,000 CVS locations in the U.S. in 2021. Beyond Meatballs, a newer entrant to the product portfolio, will be available at 5,000 CVS stores next year. The company also just announced a nationwide partnership with Pizza Hut and, overseas, has successfully trialed products at KFC locations in China. Q3 also saw the launch of Beyond’s direct-to-consumer e-commerce site, following a similar move by the company’s chief rival, Impossible.

Finally, Brown said his company will launch “Beyond Burger 3.0” (he did not provide a time frame) and that Beyond wants to make the current version of its burger “obsolete.” 

None of this was enough to keep Beyond’s stocks from dropping 8 percent after market close yesterday, though Brown again emphasized the long-term value of his company and mentioned the global opportunity for plant-based meats.

That opportunity is certainly huge. Recent numbers put alternative protein investment so far for 2020 well above $1 billion, with plant-based proteins grabbing the bulk of that sum. Part of this can be attributed to the pandemic. But as FAIRR pointed out when it reported the $1-billion-plus investment figure, the pandemic was just “the straw on the camel’s back.” Our reliance on traditional animal proteins was under scrutiny well before COVID-19, which suggests long-term demand for plant-based proteins even after the pandemic is under control.

Record case numbers suggest that day won’t arrive for a while. In the meantime, Beyond will need to boost its performance across both retail and food service in the coming months to keep a competitive edge in a very crowded plant-based meat market.

McDonald’s Is the Latest QSR to Embrace the Drive-Thru-Centric Restaurant Format

At its McDonald’s 2020 Virtual Investor Update today, McDonald’s unveiled a long-term growth strategy that includes a new loyalty program, more AI and machine learning in the drive-thru lane, and revamped formats for future locations. 

At the Update, which directly followed the company’s Q3 2020 earnings call, CEO Chris Chris Kempczinski and several other presenters outlined the pieces of this new strategy, dubbed “Accelerating the Arches.” 

Technology will play a huge role in future growth, particularly where the drive-thru is concerned. In 2019, the company acquired Dynamic Yield, whose tech can show menu options based on external data, such as the weather or traffic patterns in the area, and is currently installed at about 12,000 McDonald’s locations. At the time of the acquisition, McDonald’s suggested this system would eventually be able to make recommendations based on more personalized preferences and order history for each individual customer. Deploying that capability to the drive-thru lane is now part of the Accelerating the Arches plan (though there’s no definite timeframe).

Also in 2019, McDonald’s acquired voice-tech company Apprente. Some McDonald’s franchisees already have an Apprente-powered voice assistant taking orders, rather than a human being. Experts say Apprente could be ready to scale across the McDonald’s system as early as next year.

Other updates to McDonald’s drive-thrus will include express lanes for digital orders and a conveyor belt that delivers your food without the need for human-to-human interaction. 

Wait times at the drive-thru have progressively increased over the last several years, and the latest data shows that total wait time in 2020 was about 30 seconds longer than 2019 across the QSR sector. Add that to the pandemic-related need for more contactless ordering and more efficient ways of fulfilling off-premises orders (i.e., those outside of the dining room), and it’s no wonder reinventing the drive thru is at the top of the priority list for many QSRs. Burger King also envisions a conveyer belt in the drive-thru, and in terms of more AI-enabled tech and dedicated drive-thru lanes for digital orders, everyone from Dunkin’ to KFC is exploring options.

Like some of those other chains, McDonald’s is also rethinking the physical layout of future stores. Even before the pandemic started its latest streak of record-breaking case numbers, QSRs were doubling-down on off-premises formats and calling into question the future of the dining room. Many, including Burger King and Wendy’s, have announced drive-thru-only restaurants for the future. McDonald’s said at today’s investor Update that it is considering a store format that is just a kitchen serving drive-thru and pickup orders.

Finally, the company will launch a new loyalty app called MyMcDonald’s by the end of next year. McDonald’s today also announced McPlant, its own line of plant-based meats, which will be testing in markets in 2021. 

While all of these efforts are features and initiatives many brands are exploring, McDonald’s sheer size (nearly 40,000 restaurants worldwide) and inevitable influence over others could greatly accelerate the rollout of these technologies into the mainstream.