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Daily news and analysis about the food tech revolution

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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. 

A Snapshot of the 6 Biggest Fast Food Companies’ Sustainability Pledges

Environmental issues are no longer an invisible threat. With temperatures warming, oceans are heating up and extreme weather events such as hurricanes and forest fires, as we’re currently seeing in Australia, are happening more frequently.

There’s only so much individuals can do to lessen our impact on the warming planet, including flying and driving less and cutting back on meat. It’s on governments and businesses, especially corporations, to stave off catastrophe.

As we start off a new decade, let’s take a look at the sustainability pledges of the top fast food companies by revenues. As emissions that result from meat and dairy production are on track to contribute 70 percent of the total allowable greenhouse gas emissions by 2050, the BBC reports, fast food chains’ decisions have a lot of impact on the planet, although most pledges have centered around packaging. As some of the largest brands on the planet, these moves will not only cut back on climate change causing emissions and pollution, but provide an example to other businesses.

1. McDonald’s

The world’s biggest restaurant company in 2018 was the first fast food company to commit to sustainability. McDonald’s pledged that by 2025, “100 percent of McDonald’s guest packaging will come from renewable, recycled, or certified sources,” and also “to recycle guest packaging in 100 percent of McDonald’s restaurants.” For this year, it also set a goal that “100 percent of fiber-based packaging will come from recycled or certified sources where no deforestation occurs.” The company has also invested in a wind farm and a solar farm that it said will produce “more than 2,500 McDonald’s restaurants-worth of electricity.” As far as plant-based options, the Golden Arches is expanding its Beyond Meat test in Canada.

2. Starbucks

According to the coffee giant, “an estimated 600 billion paper and plastic cups are distributed globally,” and Starbucks accounts for an estimated 1 percent of that total. It has set a goal to “double the recycled content, recyclability and compostability, and reusability of our cups and packaging by 2022.” It plans to phase out straws this year. (A small competitor of Starbucks, Blue Bottle, plans to eliminate disposable cups entirely.) Starbucks, which said it has invested in renewable energy, has also set a goal to design, build and operate 10,000 “Greener Stores” globally by 2025. Starbucks offers several plant-based milks, and is expanding its lineup of non-dairy drinks.

3. Subway

The sandwich company hasn’t made any specific pledges, and pins a lot of the responsibility of energy conservation on its franchise operators. Subway offers a meatless Beyond Meat meatball sub. The company says its paper products, including towels, tissues and napkins, are made from 100 percent recycled material. As for the rest of its materials, including cups, wraps, bowls and lids, Subway makes no further commitments to make them more sustainable.

4. Chick-fil-a

The popular chicken restaurant that closes on Sundays also hasn’t issued any major sustainability pledges. The company said last year it is “thoughtfully searching for sustainable design solutions that are recyclable, compostable or contain recycled content — starting with new bowls” made of recyclable PET plastic. Chick-fil-a has committed to reducing construction waste for its new locations. The chain offers no plant-based options.

5. Taco Bell

The Mexican-inspired food chain is the latest to issue a big sustainability pledge. It has committed to “making all consumer-facing packaging recyclable, compostable or reusable by 2025 worldwide,” as well as adding recycling and/or composting bins to all restaurants, “where infrastructure permits.” Last year, it committed to more sustainable beef. Taco Bell has long featured vegetarian and vegan options, and recently made them more prominent on its menu.

6. Burger King

The other burger chain also hasn’t set any firm sustainability commitments for the decade. Rather, it said it will “continuously review our policies on animal welfare, sourcing and environmental impact to ensure that we remain good corporate citizens in the communities we serve.” The company, responding to a Change.org petition, said it will stop giving out plastic toys, but only in the U.K. At least you can get the Impossible Whopper at every U.S. store.

Of course, the companies who did make pledges are not beholden to them. It’s up to investors and consumers to hold each company responsible to do their part to reducing their contributions to climate change.

If any company updates their pledges, we will revisit and update this article.

Week In Restaurants: Grubhub Says It Is Not for Sale, McDonald’s Creates a New Tech Department

Taco Bell bucked industry trends this week by announcing it will test paying select managers at some company-owned locations $100,000, which is roughly double the average salary for restaurant managers. Between that, new vegan drinks from Starbucks, and a slew of other announcements, much happened in the world of restaurants this week. Here’s a wrap of a few other stories from ‘round the web:

Grubhub Says It Is Not for Sale

Reports surfaced earlier this week that Grubhub had hired financial advisors to explore a sale or acquisition — news that sent the troubled delivery company’s stock surging. However, a spokesperson for the company told the folks at Restaurant Dive today that “there is unequivocally no process in place to sell the company.” The spokesperson added that Grubhub believes there will be acquisition opportunities this year and that the company’s profitability “remains secure.”

McDonald’s Is Creating a New Tech Department

Meanwhile, if there were any doubts former CEO Steve Easterbrook’s sudden departure would stall the mega-chain’s tech ambitions, those should be sufficiently quelled by this week’s news. On Wednesday, McDonald’s announced it is creating a digital customer engagement team and the role of Chief Digital Engagement Officer. Lucy Brady, who has spent the last three years as SVP of corporate strategy and business development at McDonald’s, will step into the new role. Brady’s group formerly led the development of McDonald’s delivery program as well as the $300 million Dynamic Yield acquisition that happened last year. The new team will oversee digital ordering, personalization, payments, loyalty programs, and delivery, and report directly to newly appointed CEO Chris Kempczinski.

Olo Supposedly Planning a 2020 IPO

Olo is said to be planning a U.S. initial public offering for this year, according to a Bloomberg article that cited “people with knowledge of the matter.” The company’s software streamlines the process of adding delivery partners for restaurants, among other things, and has been steadily gaining popularity in the restaurant tech world over the past few years. Sources say Olo had interviewed potential advisors at the end of 2019 and could seek a valuation of $1 billion for an IPO. Olo itself declined to comment on the story.

Wow Bao Expands to the East Coast

Fast-casual Asian-food chain Wow Bao will expand to the East Coast, with three new locations set to open in the first quarter of 2020, according to an email sent to The Spoon. Wow Bao is known for its tech-centric approach to fast-casual that leverages Brightloom’s end-to-end tech stack for restaurants. Given that focus, which includes self-order kiosks, pickup cubbies, and digital ordering, it makes sense the chain’s new planned locations will be in airports, where super-speedy service for high volumes of people is the norm — or at least the norm restaurants aim for. Planned locations are for Dulles International Airport, Boston Logan International Airport, and Raleigh-Durham International Airport, according to the press release. 


It’s Official: Impossible Will Not be On McDonald’s Menus (but Beyond Will)

After months of wondering which fake meat McDonald’s would finally put on its menus, we’re one step closer to an answer. Today Impossible Foods told Reuters that it was no longer trying to win a deal to supply the largest fast-food chain in the world, stating that it could not produce enough “bleeding” plant-based meat to keep them supplied.

Production is a looming concern for Impossible. At the unveil of its new plant-based pork at CES 2020 in Las Vegas, CEO Pat Brown told the audience that production capacity was the company’s “biggest challenge right now.” Nonetheless, Impossible is expanding its partnership with Burger King, which will begin serving the Impossible Croissan’wich, featuring Impossible’s new faux sausage, this month. It also told CNBC that it’s doubling its R&D team over the next year to speed up new product releases.

But that’s not all. The day after this news broke, McDonald’s and Beyond Meat announced that they were expanding their partnership in Canada. McDonald’s began testing the PLT (Plant, Lettuce, Tomato) sandwich, which is made with a Beyond Meat patty, at 28 restaurants in Southern Ontario last September. Starting this week they’re almost doubling that test to fifty-two restaurants in the Ontario area. The test will last for the next three months.

Put all of these clues together, and it doesn’t take a genius to guess that McDonalds’ in the U.S. could soon be rolling out a Beyond Meat burger. If they do, it would be a smart move for Mickey D’s. Burger King has benefitted enormously from its partnership with Impossible Foods. As more and more fast-food chains embrace plant-based meat — on all parts of their menu, including breakfast — the more notable it is that McDonald’s doesn’t have a meatless meat offering

The big question on my mind — besides when this new menu item will launch — is what a McDonald’s Beyond burger might be called. As I’ve written previously, I have some issues with the name P.L.T. because a) the sandwich doesn’t have any bacon, faux or otherwise, and b) it doesn’t leverage the Beyond brand. If they launch a Beyond offering in the U.S., McDonald’s would be smart to follow Burger King’s lead and put the Beyond name in it.

Whatever they call it, Beyond better wait to make that leap until it’s sure that it can do what Impossible could not: keep up with the massive demand of the number one fast-food chain in the world. At this stage, when alternative meat is starting to gain new audiences from QSR partnerships, a supply hiccup could put off consumers — and it might be hard to get them back. Especially with a fast-food chain that’s pretty much ubiquitous with burgers.

Beyond’s CEO Ethan Brown has previously stated that they were prepared to supply even very large restaurant partners. But will that include the largest restaurant chain in the world? With McDonald’s slowly (but surely) expanding its test of the PLT — and Impossible out of the picture — I’m betting we’ll soon find out.