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The Spoon

Daily news and analysis about the food tech revolution

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ConverseNow Raises $3.25M for Its AI-Driven Restaurant Ordering Platform

Restaurant tech startup ConverseNow announced this week it had raised a $3.25 million seed funding round for its platform that uses AI to automate the process of ordering food. The round was led by Bala Investments with participation from LiveOak Venture Partners, Tensility Venture Partners, Knoll Ventures, 2048 Ventures, Bridge Investments, and Delphi Display Systems’ CEO Ken Neeld. It brings ConverseNow’s total funding to date to $3.3 million. 

ConverseNow’s CEO Vinay Shukla says part of the Austin, TX-based company’s new funds will go towards improving the AI that powers its platform. 

That AI allows restaurants to automate and personalize the ordering process for customers. Restaurants can integrate it across multiple sales channels (drive-thru, mobile app, etc.) to increase things like order accuracy and make better personalized recommendations based on a customer’s order history and other data. The platform integrates with restaurant POS systems as well as back-of-house kitchen displays.

AI is a hot topic when it comes to speeding up service and improving order accuracy in the restaurant. McDonald’s put the conversation squarely in the spotlight last year when it acquired Dynamic Yield and installed the company’s AI tech in its drive-thrus. Starbucks has in the past claimed AI is “a very important part” of its overall strategy. And a survey from the end of 2019 found that 71 percent of customers are “amenable” to having more AI in their restaurant experience.

If the same survey were given now, that figure would probably be higher. The COVID-19 pandemic has forced most restaurants to pivot to off-premises orders, and even as dining rooms slowly reopen, states’ guidelines recommend keeping to-go meals a priority. That in turn will mean more people going to the drive-thru and ordering via off-premises channels such as websites, mobile apps, and even the good old-fashioned telephone.

The other plus of AI right now is its ability to increase contactless ordering and payments. In the restaurant tech stack, it’s the tools that can offer more seamless ways to provide these things that will provide the most value.  

ConverseNow said in the press release that its tech is already being used by “leading QSRs.” In addition to improving its AI platform, the company will also use the new funds to improve customer acquisition. 

Welcome to Burger King. Did You Have a Reservation?

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Things I never thought I’d live to see: a global pandemic shutting down the economy, the McDonald’s snuggie, and fast food restaurants requiring reservations to dine in. But with the restaurant biz on the brink of catastrophic meltdown and businesses slowly reopening under strict social distancing practices, we can expect lots of new versions of the on-premises experience over the next few months — and probably a total redefining of what it means to be a restaurant. 

News landed this week that Burger King is testing an app for dine-in reservations at three stores in Milan, Italy that are expected to fully reopen on June 1. Reuters reports that the app lets customers order food and book a table before ever setting foot in the restaurant, which will operate at less than half its pre-pandemic capacity. During peak hours — 12–2 p.m. and 7–9 p.m. — roughly one-third of those tables will be reserved for customers using the app.

The company says it expects the new booking system to keep its revenue stable in the face of reduced in-house seating. Previously, BK in Italy got about 70 percent of its revenues from dine-in customers. Social distancing won’t allow for that now, and BK said it hopes to make up some of those lost sales with drive-thru.

Reservations are one way to keep crowds at bay in QSRs. Another is to build social distancing features into the actual store layout and operations, as McDonald’s has done in The Netherlands. The mega-chain is trialing a few initiatives at one store in the city of Arnhem, including table service, where burgers are delivered on trolleys, designated waiting spots for the line, and hand sanitizing stations at the store’s entrance. There may also be a host behind a plexiglass-shielded station, directing people where to stand in line.

There’s no word yet on whether this McDonald’s prototype will make its way to the U.S., though I wouldn’t be surprised if some social distancing elements wind up in the chain’s ongoing Experience of the Future store remodels. Burger King, meanwhile, has said if the trial of its app is successful in Italy, it could be used in other countries. 

And while QSRs are busy adopting features we’re most used to seeing at casual dine-in joints, the latter continues to adjust its format to be more to-go friendly. This was already happening B.P. (before pandemic). Now, sit-down restaurants are accelerating the addition of things like drive-thru lanes and self-service kiosks to keep business moving and socially distant at the same time.

All this suggests some seriously blurring lines between the normally siloed types of restaurant experiences. Going to a McDonald’s might suddenly feel like a more formal affair, while family dinner night at The Melting Pot might feel strangely casual without the usual person-to-person formalities. Tech tools that automate the order and pay process, and redistribute the tasks of servers, food runners, and cashiers, will only further change the now-fluid definition of the restaurant. 

We’re only at the start of things when it comes to these new dining out formats. Expect many more iterations of the restaurant to surface in the coming weeks. 

Grubhub Responds to Commission Fee Caps.

Meanwhile, I’d be remiss if I didn’t mention the ongoing smackdown between third-party delivery services and governments mandating caps on the commission fees these tech companies charge restaurants. That was a hot topic this week as more cities joined the list of those either considering caps or already implementing them. 

Grubhub responded this week via its Q1 2020 earnings call. CEO Matt Maloney said these fee caps force the company to increase fees for consumers, lessen marketing spend, and are ultimately resulting in fewer orders for independent restaurants. “Our preliminary data shows that on average, our independent restaurants are seeing over 10% fewer orders since the fee cap and many of these orders have shifted to a large brand or QSR restaurants that were not impacted by the emergency ordinance,” he said.

Note that he said “orders” not “revenues.” There’s no question that being on a platform like Grubhub makes a restaurant more visible to more potential customers. That in turn would hopefully fuel more orders for, say, your local pizzeria instead of Papa John’s.

But with Grubhub et al. taking an up to 30 percent commission of each restaurant transaction, more orders does not translate into significantly more revenues for restaurants. See this gem of a receipt, courtesy of one independent business, as proof of how little restaurants make on third-party platforms. 

On the call, Maloney said one-size-fits-all model “will not work.” And yet one independent restaurant owner who testified at a public hearing last week about NYC fee caps suggested there was virtually no negotiability when it comes to commission fees, suggesting Grubhub runs its own one-size-fits-all model when it comes to food delivery.

The debate around commission fees has been building momentum for some time. The pandemic has effectively stripped any remaining gloss off the facade of third-party food delivery and put its unsavory insides on full display. That the sector will need to make a pivot of its own if it wants to stay relevant seems more and more a question of “when,” not “if.” 

Amazon Returns to Restaurant Delivery. Sort of

But let’s end the week on a less-infuriating note, like Amazon running a makeshift third-party delivery service for restaurants in its corporate buildings. Drivers that used to transport the Seattle tech giant’s corporate employees are now running food from restaurant to customer, according to Eater Seattle.

Deliveries are contactless, meaning the restaurant packages up the order and sets it in the delivery driver’s trunk. Said driver then leaves the food on the customer’s doorstep. 

Once upon a time, Amazon ran a restaurant delivery service, which it shuttered in June of 2019. At the time, Amazon cited competition from the likes of Grubhub, Uber Eats, and other third-party delivery services. The new endeavor doesn’t appear to be a play by the company to get back into that space. Rather, it seems to be a temporary lifeline for local restaurants, not to mention a way to keep drivers who once ran corporate employees around working now that those employees are under stay-at-home orders.

On that note, have a good weekend, and don’t forget to tip your drivers.

Jenn

Most Restaurants Will Mimic Shake Shack’s Digital-Centric Store Format in the Future

Shake Shack is modifying some store formats to be more off-premises friendly as the chain prepares to reopen dining rooms. These “Shack Track” stores, as they’re being dubbed, will include things like walk-up windows and more drive-thru lanes meant to encourage increased digital ordering, according to the company’s Q1 2020 earnings call this week.

Shake Shack CEO Randy Garutti said on the call that the chain will start opening dining rooms regionally, though with reduced capacity to ensure social distancing guidelines are in place. There will also be fewer cashiers and kiosks in stores, and the chain plans to “shift guests to mobile and contactless pre-ordering.”

Hence the new store formats the company will test as it reopens restaurants. On the call Garutti also mentioned interior and exterior pickup windows and, where space permits, curbside pickup and drive-thru lanes, which is new for Shake Shack. The company has been testing these formats over the last several weeks while dining rooms remain shuttered. Garutti said the current pandemic has “reinforced how necessary and beneficial this strategy will be for Shake Shack.” 

It has also reinforced how necessary digital ordering and payments will be to the future restaurant experience in general. On that front, Shake Shack is better prepared than most restaurants. As of April 29, digital channels represent roughly 80 percent of total Shake Shack sales. Garutti said on this week’s call that digital sales are “very literally keeping us in business.”

The new store formats will encourage this digital preordering, and Shake Shack said it will continue to improve its digital properties and eventually integrate delivery into those interfaces, which means less reliance on third-party services Shake Shack currently has partnerships with. 

“Contactless” is definitely the buzzword du jour in the restaurant industry right now as businesses look to reopen while maintaining social distancing requirements. Not every restaurant has the cash or resources to double-down on expensive mobile apps made in-house, and so some are turning to restaurant tech companies for those digital capabilities.

Meanwhile, Shake Shack isn’t the only major chain tweaking its store format to fit our to-go-centric times. Chipotle was testing new store types long before the pandemic and will continue building those out. McDonald’s had to step on the brakes a little in terms of its Experience of the Future stores but will continue building some of those, as well. 

These redesigns matter because they could set standards for the rest of the industry in the future. Smaller chains and independent restaurants have neither the time nor the money to extensively redesign their restaurants. But as states mandate reduced capacity in dining rooms, these smaller businesses may look to the major chains for guidance on how to incorporate off-premises ideas into their business. In time, a new, standardized restaurant format (or several) could emerge that no one would have predicted two years ago — and everyone will expect a decade from now.

Fight Club: Mischief. Mayhem. Third-Party Delivery Fee Caps.

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If you like a good fight, the one around restaurant commission fee caps is worth watching. I spent the better part of three-plus hours the other day tuned into the New York City Council’s Committee on Consumer Affairs and Business Licensing public hearing. One hotly debated topic was around capping commission fees third-party delivery services like Grubhub and Uber Eats charge restaurants.

I’d love to say everything got resolved and NYC will be placing caps on third-party service commission fees for all time. The reality is that this fight was here long before the pandemic and will be around long after it leaves.

I’m sure you’ve heard of the brouhaha brewing around the issue. Restaurant industry advocates and businesses alike had flagged those third-party delivery commission fees — which can go as high as 30 percent per transaction — as prohibitively expensive for restaurants. With dining rooms closed now, most restaurants are left with the options of either shutting down completely or relying on a third-party service like Grubhub to help them execute on delivery orders.

One restauranteur who testified at this week’s hearing explained that for independent restaurants, the fees are more or less non-negotiable. (Side note: he also expressed fear of retaliation from delivery companies for his speaking at the hearing.) Jessica Lappin, a former NYC council member and the President of the Alliance for Downtown New York, said that even if restaurants are doing takeout and delivery right now, they are doing it at a loss. Council member Mark Gjonaj suggested that due to the commission fees, each transaction a restaurant makes is “yielding a net loss.”

Perhaps the most telling moment came when a Grubhub representative took to the mic to “express Grubhub’s strong opposition” to fee caps. You can watch the entire (and rather circular) debate that broke out here, but it more or less boiled down to the idea that if NYC and other cities successfully impose fee caps, Grubhub et al. will have to change their business model.

Therein lies the marrow of the matter in terms of why third-party delivery companies oppose commission fee caps and other changes (e.g., reclassifying workers as employees). Government oversight of those fees cost these companies more money, and further erode their chances of ever becoming profitable. An unprofitable model won’t satisfy investors, and third-party delivery as we know it would then be on the rocks.

Sky-high delivery fees and a faltering economy won’t help the model in terms of its attraction to the average end consumer. And they certainly won’t improve the net-negative returns restaurants are making at the moment.

In some cities, Big Government has already stepped in. San Francisco, Seattle, and Chicago have all introduced fee caps that will last at least as long as dining rooms remain closed. Los Angeles is considering a similar measure. NYC’s proposed 10 percent cap was actually introduced months before the novel coronavirus hit the U.S. in full force. 

As emergency measures, these fee caps feel necessary right now if independent restaurants are to have any kind of shot at keeping the lights on. Longer term, everyone (restaurants, advocates, government, tech companies, and consumers) will have a responsibility to address how much damage the delivery model is actually doing. It seems a global pandemic that’s taking lives and shuttering businesses isn’t enough to make some of these services stop siphoning the livelihood from restaurants. Are those really the businesses we want calling the shots in the restaurant industry in the future?

McDonald’s limited menu is good news for the drive-thru lane.

Among other things, like drive-thru lanes generating more sales, McDonald’s spent quite a bit of its earnings call this week talking about its menu. Since shelter-in-place orders forced the chain to close down dining rooms and rely on off-premises orders, McDonald’s has been offering a limited menu. For example, it doesn’t offer breakfast for the time being.

Cuts like that were made to help the mega-chain manage the operational difficulties restaurants face right now. On this week’s call, CEO Chris Kempczinski suggested customers should not expect every McDonald’s in the nation to immediately revert back to its pre-pandemic menu.

Smaller menus for the long term could work in McDonald’s favor, though. When we looked at the QSR Drive-Thru Study last year, one of the standout points was the steady increase in drive-thru wait times over the last couple decades. Growing right alongside those wait times has been the number of items QSRs offer on their menus.

These complex menus take longer to read, present customers with the tyranny of too many choices, and up the risk of an order being inaccurate when it is ready. None of those things make for speedy service, and with more customers likely going to opt for the drive-thru lane over the dining room now, finding ways to fulfill orders faster is crucial for QSRs.

No one is suggesting we revert back to my favorite picture of all time, this McDonald’s menu from the ’80s. But as restaurants pare down menus and plan to work with reduced capacity and limited staff once they reopen, the bloated mess of choices QSR’s previously offered may become a thing of the past.

Sweetgreen just added dinner options.

One company not paring down its menu is Sweetgreen. On LinkedIn this week, cofounder and Chief Brand Officer Nathaniel Ru unveiled the chain’s new dinner menu, called Plates.

For the last four weeks, the tech-forward fast-casual chain — most widely known for its highly Instagrammable salads — has been testing a Sweetgreen dinner menu. Via a post on Medium, the company said the process has been about “operationalizing an entirely novel concept (normally a year-long process) in just 30 socially distant days.”

That 30-day process looks, from the photos, to have turned up a menu full of plant-centric dishes and lots of legumes, grains, and sauces. If you want more details around how the team put this new concept together, the full Medium post is definitely worth a read.

Sweetgreen had been planning the dinner concept for some time in the hopes of launching it next year. But, as the Medium post notes, “given the current state of uncertainty, the need for warm, familial, and home-cooked food has never felt more important.” 

They’re right on the money. Family-style meals and comfort food are two major trends right now for restaurants as people shelter in place. I’ve never considered couscous and warm leafy greens comfort food, but I’m from rural(ish) Tennessee so what do I know? Plenty of folks are health conscious these days, and with many consumers likely to be wary for some time about going out to eat, a dinner concept is a smart play for Sweetgreen. 

Now if we could just get it delivered without those pesky commission fees. 

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

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

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

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

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

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

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

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

McDonald’s Shuts Down U.K. Restaurants

By the end of the day today, McDonald’s will close all 1,270 of its restaurants in the U.K. in response to COVID-19 concerns. That includes takeout and drive-thru options as well as delivery.

McDonald’s sent the following tweet over the weekend:

McDonald’s franchisees in the UK are expected to follow those moves and close as well. Employees of corporate-owned stores will receive full pay for their hours scheduled through April 5.

Previously, McDonald’s had closed its dining rooms but remained open to fulfill off-premises orders around the world. Today, however, McDonald’s U.K. head Paul Pomroy told the BBC, “Over the last 24 hours, it has become clear that maintaining safe social distancing whilst operating busy takeaway and Drive Thru restaurants is increasingly difficult and therefore we have taken the decision to close every restaurant in the UK and Ireland by 7pm on Monday 23 March.” 

The chain also fully closed 50 locations in the U.S. on Friday, though those stores were part of larger buildings affected by COVID-19, not standalone locations. Still, the sweeping closures in the U.K. could be an indicator of what’s to come Stateside, particularly where takeout is concerned. Over the weekend, Starbucks ended takeout service from its U.S. stores because of the “high traffic” locations were experiencing. The Seattle-based coffee chain was one of the first to close its dining rooms and switch to a to-go model last week, with McDonald’s and others following shortly thereafter. Which could mean McDonald’s is well on its way to axing its own takeaway services in the U.S.

It seems doubtful McDonald’s would get rid of drive-thru or delivery right now in the U.S., given how important those two channels are to overall sales growth. But with news of the coronavirus changing not just every day but every hour and more states taking stricter measures to limit human to human contact, nothing is a given. This is far from the last time McDonald’s, Starbucks, and other QSRs will have to quickly shift strategy in the age of coronavirus.  

Week in Restaurants: How Restaurants Are Responding to Coronavirus

Restaurants large and small face a major sales slump due to declining foot traffic and mandates from city governments to reduce capacity in the dining room. Meanwhile, larger chains are under pressure to provide more paid sick leave to their workers, and based on the number of businesses now focusing on to-go and delivery formats, we’re about to see a massive surge in delivery orders. Here’s what the week in restaurants and restaurant tech looked like in the wake of a pandemic.

Starbucks Considers Switching to Delivery, Takeout Format

Starbucks already temporarily suspended its reusable cup program last week. Then yesterday, in a letter to customers, company CEO Kevin Johnson wrote that the chain is considering an off-premises-only model for some stores for the time being. That would mean customers could only order via the Starbucks mobile app, and all orders would have to be for pickup, delivery, or drive-thru. Johnson said closing entire stores outright would be a last resort, and that any changes made to store formats would be decided on a “community-by-community and store-by-store” basis.

NYC Restaurants Must Reduce Capacity

New York State Governor Andrew Cuomo and NYC Mayor Bill de Blasio said Thursday that New York City bars and restaurants must reduce capacity by 50 percent starting today at 5 p.m. Gatherings for 500 people or more have been completely banned. De Blasio said small businesses affected by this change have the option of no-interest loans to consider, and those who face eviction should check the city’s website for free legal assistance.

 

Restaurants Add Paid Sick Leave for Workers

Darden, the parent company of Olive Garden, Longhorn Steakhouse, and Cheddar’s Scratch Kitchen launched a new sick leave policy this week where employees earn one hour of paid sick leave for every 30 hours worked. The new policy applies to about 180,000 restaurant workers across Darden’s portfolio. A Darden spokesperson mentioned that this is a permanent change that has actually been in the works for some time. “We did accelerate the rollout given the current environment,” he added.

McDonald’s announced paid sick leave for up to two weeks for employees that are asked to quarantine themselves due to coronavirus. The policy applies to corporate-owned stores only. Workers are currently demanding paid sick leave for all employees across both corporate and franchise locations.

Noodles & Company is also now offering emergency pay for quarantined workers at company-owned stores. The plan is similar to McDonald’s, where hourly workers who normally do not get paid sick time will receive paid time off if they are unable to work after being diagnosed with or quarantined because of COVID019. The company is said to be working on a longer-term paid sick leave policy for employees. 

Starbucks, in addition to its moves above, is also now offering catastrophe pay to workers who have been diagnosed with or exposed to COVID-19, as well as anyone who “comes into close prolonged contact with someone in their store or household” who has the virus, according to a letter from company president Rossann Williams. These groups are eligible for up to 14 days of catastrophe pay. Additional pay replacement “may be made up to 26 weeks” if an employee is still unable to return to work.

Week in Restaurants: McDelivery and Dunkin’ Expand, Starbucks Suspends Reusable Cups

We’d all be forgiven for feeling a little nervous going into the weekend, given the ongoing concerns around rising coronavirus cases. As you’ll read below, restaurants, too, are now responding with new measures meant to keep customers safe(er). And while there’s always a little news from the delivery sector each week, I suspect we’ll see a lot more bytes in the coming weeks about restaurant chains adding more services as more customers opt to stay in.

McDonald’s Adds Postmates for Delivery

Mickey D’s further widened its pool of delivery partners this week when it announced a partnership with Postmates for more than 300 restaurants in Dallas and Los Angeles. The move isn’t surprising. McDonald’s has been steadily adding partners ever since it ended its longstanding exclusive contract with Uber Eats in 2019. Since then, it’s added Grubhub, DoorDash, Just Eat (in the UK), and others. The Postmates deal means the chain now has partnerships with all of the major food delivery services in the U.S., which is a strategy some experts recommend for restaurant chains in this off-premises-obsessed era.

Dunkin’ Expands Delivery

Dunkin’ announced this week it is expanding its delivery reach with Grubhub to include more of the Metro New York area. The original Grubhub-Dunkin’ deal launched in June of 2019, and this expansion will make more than 800 Dunkin’ locations delivery friendly across NYC, Westchester, New Jersey, Connecticut, and Long Island. The delivery option also applies to customer of Grubhub-owned delivery service Seamless.  

Starbucks Suspends Reusable Cup Policy 

Amid coronavirus concerns in the U.S., Starbucks has put a hold on its practice of filling reusable cups customers bring in. “We are pausing the use of personal cups and ‘for here’ ware in our stores,” Starbucks executive vice president Rossann Williams said in a letter to stakeholders this week. However, Starbucks will still honor your efforts should you choose to bring your own cup by continuing the 10-cent discount Starbucks customers using refillable cups normally receive.  

Panda Express May Be Testing Pickup Cubbies

Meanwhile, in the world of pickup orders, another restaurant chain has adopted the cubby system. In its own roundup from earlier this week, Nation’s Restaurant News pointed out that Panda Express has “a locker system for kiosk and online orders” at one of its Irvine, California locations. Apparently the company didn’t return NRN’s request for a comment, so it’s not clear if this is a one-off, test, or some other initiative. But pickup lockers and cubbies are becoming all the rage for takeout these days, so it wouldn’t be surprising if, as they can keep food hotter (or colder) for longer and ensure customers actually take the right order when they come to collect their food.

Food Tech Show: Coronavirus Hits Housewares Show, Cargill Launches Plant-Based Burger

It’s another episode of the Food Tech Show!

This week I got together with the Spoon’s Chris Albrecht and Catherine Lamb to talk about some of food tech’s most interesting stories of late, including:

As always, you can listen to the Food Tech Show on Apple podcasts, Spotify or anywhere you get podcasts. You can also download direct to your device or just click play below.

McDonald’s, Starbucks Join Contactless Delivery Efforts in China as Coronavirus Spreads

McDonald’s, Starbucks, and other quick-service restaurants (QSRs) are now implementing contactless delivery across China in the wake of the Coronavirus outbreak, according to Reuters.

Yum China brands Pizza Hut and KFC began using the delivery method earlier this month, along with third-party services Ele.me and Meituan. Now, McDonald’s and Starbucks are using a similar approach in order to keep workers safe and help prevent further spreading of the deadly outbreak.

Customers are encouraged to order remotely via restaurants’ mobile apps and websites. Orders are then sealed into bags and placed in a designated pickup spot, such as at the entrance of a customer’s building. Delivery drivers are required to carry ID cards that show they had their temperature taken and do not have a fever. 

Starbucks recommends customers order via the chain’s mobile app for pickup orders. Customers then wait outside a Starbucks location until they receive a pickup notice for their order, which will be placed on a table just inside the store. Any customer who enters a Starbucks must have their temperature taken at the door. Starbucks is also working with Ele.me for delivery orders. 

Some form of contactless delivery existed prior to the Coronavirus outbreak. However, much of China’s population is currently limited in terms of their own mobility and unable to return to work. Roughly 760 million people in China live in neighborhoods or villages currently under some level of lockdown. At least 150 million of them — about 10 percent of the population — face restrictions around how they can leave their actual homes. That makes contactless delivery one of the only ways in which they can procure food, whether it’s restaurant meals or grocery items.

According to Allison Malmsten, a marketing strategy analyst at Daxue Consulting who spoke to Reuters, the outbreak “redefines contactless food delivery.”

As lockdown continues, we’ll doubtless see more restaurants, grocery stores, and delivery services ramping up contactless delivery in the coming days and weeks.

Uber Eats Loses Exclusive Contract With McDonald’s in the UK

Uber Eats took another competitive hit this week when it lost its exclusive rights to deliver McDonald’s orders in the UK. Rival delivery service Just Eat announced on Tuesday it had struck a deal to become the QSR chain’s second delivery partner in Britain, according to a report from CNN Business.

Joseph Barnet-Lamb, an analyst at Credit Suisse, told CNN that orders from McDonald’s account for about half of the 30 million deliveries Uber Eats does in the UK each year. “This is all part of Just Eat taking back control of the competitive landscape,” he said. 

Just Eat is already a leader in the UK food delivery space, and its planned merger with another European food delivery heavyweight, Takeaway.com, could give the company even more competitive muscle that players like Uber Eats and Deliveroo will have to fight. (British antitrust watchdog the CMA certainly thinks so, as the deal with Takeaway.com is currently under investigation, though it’s still expected to go through.)

This is the second time Uber Eats has lost an exclusivity contract with the Golden Arches. In July 2019, McDonald’s added DoorDash as a second delivery partner in the U.S., then later added Grubhub, too.

Elsewhere, Uber shut down its Eats service in South Korea, laid off staff, and, this year, just sold its India business to rival service Zomato.

None of this is particularly surprising. Uber is under pressure from investors to prove it can be more than just a cash-burning business — in other words, profitable. Part of that process includes shutting services down in markets where they don’t perform well or fall behind the local competition.  

That doesn’t mean Eats is leaving the UK anytime soon. However, Just Eats processed over 123 million orders in the UK in 2018. If its deal with Takeaway.com goes through, it will create one of the largest food delivery services in the world, and a competitive threat that goes far beyond the question of who’s delivering Big Macs.

Week in Restaurants: NYC Bans Cashless Stores, Saladworks Launches Ghost Kitchens

Amid all the constant talk about the promise of restaurant technology and the so-called seamless customer experience, it’s important to remember that the era of the digital restaurant has to be inclusive to everyone — even those who may not have a bank account or smartphone. That conversation was reignited this week when the Big Apple announced plans to ban cashless business models. Read more on the issue below, as well as new ghost kitchen operations and the latest tech initiative from one of the QSR scene’s biggest tech advocates.  

NYC to Ban the Cashless Business Model

The New York City council voted on Thursday to ban cashless businesses — that is, those only accepting card or digital payments. Councilman Ritchie Torres, who surfaced the issue back in 2018, drafted the bill, which takes effect 90 days after it was signed and makes it illegal for stores, restaurants, and other businesses to refuse cash-paying customers. Some businesses have pushed back on the bill, saying the cashless model allows them to keep better track of finances and also present a more seamless experience for customers. Of course the other side of that argument is that cashless stores discriminate against the unbanked and underbanked population, which numbers in the millions in the U.S.

The NYC ban follows similar moves by Philadelphia, New Jersey, and San Francisco.

Saladworks Launches Its First Ghost Kitchen

Fast casual chain Saladworks announced this week it has signed on with Kitchen United to operate a ghost kitchen out of the latter’s facility in order to speed up and streamline off-premises orders. The move follows another announcement by Saladworks from December that the chain plans to have multiple ghost kitchens and potentially even launch new food concepts like “Sandwichworks” and “Pizzaworks.” The ghost kitchens are slated to open in Chicago, IL, Austin, TX, and Scottsdale, AZ.

McDonald’s Launches Career App for Employees

McDonald’s launched a career-focused mobile app this week that helps employees “maximize education benefits and take the next step in their professional journey,” according to a press release. The app was created in partnership with the Council for Adult and Experiential Learning and Inside Track. Through it, restaurant workers can connect with advisors and coaches as well as take an assessment on their career interests and opportunities, both at McDonald’s and elsewhere. The app builds on McDonald’s Archways to Opportunity program, which helps employees earn diplomas, get help with tuition, and improve English-language skills, among other things. It may also help McDonald’s improve retention among its staff by helping them “move up the ladder,” so to speak, through more in-depth career opportunities.