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Daily news and analysis about the food tech revolution

McDonalds

What the New McDonald’s Flagship Tells Us About the Fast Food Giant’s Future

One of the most famous McDonald’s locations in the world just got a major makeover, inside and out.

The former Rock N Roll McDonald’s reopened last week as a new flagship store, and “redesign” is an understatement. The fast food giant unveiled a 19,000-square-foot structure and a business strategy that are all about two things: staying eco-friendly and improving the guest experience through digital.

So yes, that means there’s a lot of tech involved in this new iteration of an old fast food standard. Dubbed an “Experience of the Future” restaurant, the Chicago location incorporates all McDonald’s latest tech initiatives.

Self-order kiosks — which McDonald’s now plans to install in 1,000 stores each quarter — are front and center. Customers can browse, order, and customize food items, which a McDonald’s employee brings the food directly to the table. It’s a setup company CEO Steve Easterbrook calls “repurposing labor,” and it reportedly is creating more jobs, rather than leaving people unemployed. For those who prefer ordering the old-fashioned way, there are still four cashiers, and yes, they still take cash.

Kiosks are now in about 5,000 McDonald’s restaurants across the U.S. Adding 1,000 per quarter is part of the company’s plan to have kiosks in nearly all freestanding restaurants by 2020.

Better accommodating mobile is another key part of McDonald’s self reinvention. While there are fewer parking spaces in general (it is Chicago, after all), the new flagship has dedicated spaces for those doing curbside pickup via their mobile app. There will also be space to serve more Uber Eats drivers efficiently — another crucial part of McDonald’s rebranding strategy.

But plenty of chains are revamping their business strategies to focus on mobile and kiosks. What sets McDonald’s apart just a little bit more is the actual location. The Chicago flagship building is a massive steel, wood, and glass structure with 27-foot windows, an enclosed arboretum with birds, and over 70 trees on the ground level. It’s basically an Apple store with Big Macs. The location also has a solar pergola with 1,062 panels that can power about 60 percent of the restaurant.

None of these changes are specific to the Chicago location, though; they’re part of a $6 billion effort to “modernize most U.S. restaurants by 2020.”

In some cases, that word “modernize” could be be a BS term drummed up by a marketing department. The reason I believe McDonald’s is that this redesign — the current one as well as future stores — addresses multiple hot-button issues at once: digital ordering may be convenient, but it produces more waste and emissions, even when drivers are third parties or paying customers. That’s where those solar panels come in, as McDonald’s can use them to collect renewable energy and offset some of its non-renewable energy consumption onsite. (The Chicago restaurant is also in the process of becoming LEED certified.) Meanwhile, the addition of table service and Easterbrook’s “repurposing of labor” suggest that our fears of robots taking over might be overly pessimistic. For now, at least, automated services will just become another fixture in the restaurant.

But there’s one thing I can’t shake: at the end of the day, McDonald’s is still serving fast food, which, to name another hotly debated item, conflicts with increasing consumer desire to eat whole, health(ier) foods. Foliage and solar panels are great, but they don’t curb obesity, diabetes, or heart disease. McDonald’s is doing some work in this area. Burgers are now “100% fresh beef” that’s cooked to order. They also unveiled an initiative this year to make the Happy Meal a healthier option.

I’m going to risk oversimplifying the matter here by saying McDonald’s could do more to accelerate its these efforts. Offer more more fruits and veggies as side options. Deter excessive soda drinking by charging for refills. Serve plant-based burgers instead of triple cheeseburgers.

Granted, too many health-conscious options and it wouldn’t really be McDonald’s as we know it. Oddly enough, the mega chain could use that to its advantage. They more or less invented fast food as we know it. Why not modernize the notion of it while they’re reinventing the business?

Shake Shack Gives Self-Service Kiosks a Second Chance

A little over a year ago, Shake Shack opened its first-ever location powered by self-service kiosks in the East Village. At the restaurant, all ordering and payments were made through digital kiosks — no human intervention necessary.

Except human intervention actually was totally necessary. In a matter of months, customers practically declared mutiny and Shake Shack abandoned the concept. “The kiosks are also supposed to make things go quicker, but the wait is even longer,” one commenter noted.

But it seems the Danny Meyer-backed chain is giving the concept another go. This week Shake Shack announced it will expand its kiosk locations; but with some differences from the pilot.

Most notably, the selected stores will feature a more hybrid concept, offering both cashiers and kiosks. This combo is a wise move on Shake Shack’s part, since kiosks still cause a fair share of confusion and there are many who would benefit more from interacting with an actual person. Guests will also be able to use cash if they prefer, as the card-only payments were a point of grief with the original kiosk-concept location. Right now, Shake Shack currently has five locations that offer this hybrid kiosk-human structure, and plans to open more in areas like San Francisco and Seattle, where labor costs run especially high.

And labor costs will continue to be an issue. On its second-quarter earnings call, Shake Shack reported that those increased year over year by 26.3 percent, partially driven by increases to minimum wage.

That’s where the kiosks come in: “We are learning how the kiosk experience changes the flow in the front-house, the extent to which we are back to speed at service, kitchen throughput, how it best enhances the guest experience, its ability to deliver labor leverage in the future and how ordering behavior may be impacted,” said CEO Randy Garutti.

Automation in quick-service restaurants is becoming more and more commonplace, to make an understatement — and it’s not hard to see why. Analysts say that kiosks could help McDonald’s recoup $2.7 billion in sales. The fast food leader said it plans to add kiosks to 1,000 stores every quarter for the next two years.

And kiosks were all the rage at this year’s National Restaurant Association show, which had products from 365 Retail Markets, Adusa Inc., and Apex. And those are just the first three on the alphabetized list.

Shake Shack stands a somewhat better chance of succeeding with kiosks this time around. That’s partly because they’re still accepting cash and party because people’s perception towards automation has shifted since the first iteration. Consumers in general are more comfortable with kiosk interfaces in 2018 than ever before, whether at the airport or eating lunch.

However, it’s best not to paint too rosy a future at the moment. Shake Shack and others may be touting an ideal solution with these kiosk-cashier hybrid locations, but there are no significant numbers yet on how well the locations will perform. And with labor costs continuing to rise, the pressure to automate more and more restaurant operations will increase. Understanding when and where to do that — and when and where not to — will be key to any fast-casual chain’s success.

Interested in the future of restaurant tech? Come to the Smart Kitchen Summit! Use discount code SPOON for 25% off of tickets. 

Wendy’s Just Aggressively Expanded Delivery in North America

This week Wendy’s announced it has expanded third-party delivery options in North America in what’s clearly a move to better compete with McDonald’s and other fast-food restaurants as consumers demand more and more delivery.

Among other announcements during the company’s latest earnings call, Wendy’s CEO Todd A. Penegor noted that roughly 40 percent of the company’s restaurants in the U.S. and Canada now offer delivery, up from 25 percent at the end of the first quarter.

“The consumer has an appetite for convenience and we have seen this through our delivery economics,” he said, adding that check sizes have been “1.5 to 2 times higher on delivery orders.”

On the call, Wendy’s also reiterated its commitment to technology, including its new Digital Experience organization, which works on leadership changes, agile software development, and, of course, further developing the company’s mobile strategy. Current CIO David Trimm will retire in early 2019, which Wendy’s says will provide a chance to “refocus [their] leadership structure” to leverage more tech.

Wendy’s kickstarted delivery services at the end of 2017 by partnering with DoorDash in the U.S. and SkipTheDishes in Canada. On the aforementioned post-quarter earnings call, Wendy’s also reported that delivery is the number one area of business in terms of customer satisfaction. That’s huge, considering fast food isn’t inherently designed (cooked?) for travel, and a lot of fast food chains still struggle to keep food high-quality.

Take McDonald’s. The daddy of all fast food chains expanded its Uber Eats-powered delivery operations to about 5,000 stores in the U.S. in less than two years. They may be the most aggressive in terms of expansion right now (Wendy’s currently operates about 2,500 locations with delivery), but food quality remains an issue, most notably with soggy fries.

Not to be forgotten, Burger King is also ramping up efforts in both digital and delivery. While BK has experimented with delivery in the past, the company has been slower than its competitors to adopt it on a large scale. Even so, there are some who approve of BK’s slower ramp up, noting that a steady speed can “show what some of the potential pitfalls are.” Said pitfalls include losing some control of one’s brand to third-party services, as well as the food quality issue.

Delivery still represents only about 3 percent of all restaurant orders, fast food or otherwise. Most days it seems like more, given all the news we read about the market. But it’s still hard to tell if this trend towards getting fast food delivered to your home is a fad or an actual long-term strategy. For now, the question seems more about who can strike the best balance of timing, quality, and strategy to, erm, deliver what customers want most.

White Castle and DoorDash Partner, Offer Free Delivery

Ever since UberEats and McDonalds teamed up at the end of 2016, fast food chains big and small have made a charge towards delivery services in an attempt to keep up.

White Castle is the latest such chain; today they announced, via an email release, a partnership with DoorDash to offer delivery at almost 300 locations in the U.S. This is in addition to White Castle’s existing delivery services (see below). And in what’s also becoming a typical move for such releases, there will be a limited free delivery deal.

The majority of the White Castle menu is now available on DoorDash, from the iconic slider to those Crave Cases that have fed many a Superbowl party over the years. To celebrate this new partnership, DoorDash is offering free delivery on White Castle orders of $10 or more between today (July 30) and August 5, in selected areas. The company didn’t specify which areas, so check DoorDash’s list of locations for more info.

If said deal isn’t near you, fear not. You can still likely get White Castle delivered to your doorstep via Grubhub (though there’s no deal involved), as White Castle teamed with the service earlier this year.

Many food chains partner with multiple third-party services in order to grab the biggest slice that they can of the $43 billion food delivery market (predicted to hit $76 billion in 2022). That said, we’re seeing a small rise in exclusive partnerships — à la McDonalds-UberEats. DoorDash and Wendy’s also unrolled an exclusive partnership at the end of 2017. And earlier this year, Grubhub became the “official online ordering partner” of Yum Brands (Taco Bell, KFC, etc.) when the latter invested $200,000 million in Grubhub common stock.

No word yet on whether White Castle will partner with anyone else — Uber Eats, for example — in the future. White Castle has already embraced alterna-burgers and attempted to deliver Crave Cases via drones. So it’s safe to say the company is open to new ways in which to reinvent its business (digitized drive-thru strategy, maybe?), and new partners that can help that process.

Food Tech News Roundup: Fungi Burgers, Pineapple Beer, and Chatbot Bartenders

Summer has descended upon us like a thick, laze-inducing haze. If you’re like us, all you want to do is head to the local pool and drink cool beverages out of our stainless steel straws.

Steamy weekends are not the time for more work, so we went ahead and rounded up some news-worthy food tech stories from around the web for your reading pleasure. Bonus: you can peruse while you’re lounging in air conditioning.

Bronx Brewery Beer Fights Produce Waste
On July 30th New York’s Bronx Brewery will release a beer made with repurposed food scraps. Called More To The Core, it’s a Kolsch style ale brewed with pineapple cores and skins, which are normally tossed into the trash and end up in landfills. This tasty, waste-y beer is a collaboration between Baldor Specialty Foods and The Bronx Brewery, and is available in their taproom.

 

Capital sprouts up for fungi-based meat company
This week Terramino Foods, a startup which uses fungi to make meat and seafood alternatives, raised $4.25 million in a seed funding round co-led by Collaborative Fund and True Ventures. In a press release, True Ventures indicated that Terramino Foods has already developed a plant-based salmon burger, and has plans to create alternatives to beef, chicken, and pork with its new capital. 

 

Costco partners with Zest Labs to optimize food supply chain
Wholesale giant Costco announced this week that it would start working with Zest Labs, a company which works in fresh food supply chain traceability. According to a press release, Costco is expecting this partnership to help modernize and optimize their fresh foods, reducing food waste up to 50%.

 

McDonald’s workers are short on soft skills
This week McDonald’s released the results of its Workplace Preparedness Study, which analyzed skill development across multiple age groups. The survey polled 6,200 people and discovered that many were missing soft skills, such as teamwork, customer service, and responsibility. We’ve addressed the restaurant labor shortage before on the Spoon, and have wondered if companies will pad their meager workforce with robots in coming years. But will robots have better soft skills than teenagers looking for a summer job? Or maybe the robots will take over the physically repetitive jobs, like food prep and dish running, freeing up people with soft skills to interact with customers.

 

Allrecipes & Tito’s vodka launch Barkeep, a chatbot ‘bartender’

Ready to get your drink on through Facebook? Allrecipes and Tito’s vodka got you covered. The recipe site is working with the Austin, TX craft vodka maker to launch a chatbot by the name of Barkeep using Facebook Messenger chatbot platform. After checking if the user is of legal drinking age, Barkeep suggests a few cocktails (using Tito’s, natch) and then walks the user through a conversation branch flow that has the user ultimately choose a cocktail recipe. Once a recipe is picked and the user is sent to Allrecipes, they can then order their some Tito’s or other liquor through Drizly. You can try Barkeep out for yourself here.

Did we miss anything? Tweet us @TheSpoonTech!

McDonald’s Joins Starbucks in Recyclable Cup Challenge

Fast food giant McDonald’s announced today that it is joining the efforts of Starbucks and Closed Loop Partners to spur development of a recyclable and/or compostable cup. The golden arches will contribute $5 million to Closed Loop’s NextGen Cup Consortium, which follows the $10 million Starbucks committed to the project back in March.

According to Closed Loop Partners, which invests in sustainable consumer goods and recycling technology and launched the Center for the Circular Economy, 600 billion paper and plastic cups are distributed worldwide each year. To help combat that waste, Closed Loop developed the NextCup Consortium and Challenge, an accelerator program to identify and commercialize “recovery solutions for environmentally friendly single-use hot and cold paper cups.”

The NextCup Challenge launches in September of this year and is “open to suppliers, innovators and solution providers with promising ideas to recover single use cups.” Awardees will get a grant of up to $1 million and will enter a six month accelerator program to scale up their solutions. Those interested can find out more here.

Five million dollars is a rounding error for a company like McDonald’s which had revenue of $5.14 billion in the first quarter of this year. But it’s a positive step for the company, which has 37,000 locations worldwide supersizing drinks on a daily basis, to join the public chorus about the negative impacts of single use cups and straws on the environment.

Reducing drink waste has become a hot topic during this hot summer, and with good reason. Plastic is junking up our oceans and becoming a huge environmental problem. Last week Starbucks announced that it would be phasing out single use plastic straws in all of its 28,000 locations by 2020. Celebrities are rallying against straws and cities at home and abroad are enacting plastic straw bans.

All this focus on waste reduction? I’m lovin’ it, and can’t wait to see more of it.

Robot or Cobot? Companies Taking Varying Paths As Food Robots Reach Viability

Flying in the face of the claim of being “the best first job in America,” burger chains and other fast food eateries are on the brink of replacing young workers with machines. Labor costs (especially the fight for a higher minimum wage) and shrinking profits are driving changes. Specifically, the strategic move is to deploy self-service kiosks and burger-flipping robots at such places as Wendy’s and McDonalds. Both of these fast food outlet have announced some tech-driven strategies aimed at improving the bottom line.

Drawing the most attention in this area is Miso Robotics’ “Flippy,” a kitchen assistant equipped with a camera, sensor and AI software. It can cook a hamburger to a perfect temperature by flipping it at predetermined intervals. The machine is built to place the hamburger on a bun and even work collaboratively with human workers. The human worker can pitch in by adding toppings and wrapping the food for service.

Miso Robotics joins other companies such as Chowbotics. This company, by creating a robot (the size of a dorm refrigerator), can make a salad, eliminating the need for salad bars and often inaccurate hand-made greenery orders. Wanting to own the entire process, San Francisco’s Momentum Machines is in the process of opening its own retail location featuring its robotic technology that can crank out 400 custom burgers an hour.

Flippy is scheduled to be implemented in 2018 by CaliBurger, a chain with locations in California, Washington State, Washington D.C., Canada, Mexico, China, Kuwait, Malaysia and other spots around the world. The first implementation of Flippy with be at a CaliBurger outlet in Los Angeles.

“We take into account all of our customers’ needs for everything from food safety to maximum uptime,” Miso Robotics CEO David Zito told CNBC. “Today our software allows robots to work at a grill, doing some of the nasty and dangerous work that people don’t want to do all day. But these systems can be adapted so that robots can work, say, standing in front of a fryer or chopping onions. These are all areas of high turnover, especially for quick service restaurants.”

If you marry robotic technology, cloud computing, and keen market awareness, the result is Zume Pizza, a San Francisco startup rewriting the rules in food delivery. In a recent Smart Kitchen Show podcast, Zume’s co-founder Julia Collins explained some of the “secret sauce” that separates her company from other tech-enabled food delivery players.

The process, Collins said, is what she calls a “co-bot” culture where tasks are divided between robots and humans where repetitive and dangerous tasks such as making perfectly shaped dough balls and taking a pie in and out of an 800-degree oven are handled by robots. The more artisanal parts of the process are tackled by humans.

Zume’s delivery service stand alone in the market by deploying carefully designed pizza wagons that take partially cooked pizzas and, using predictive analytics, provides a movable storefront where pies can be sent to areas based on demand and data-driven factors such as holidays. The concept is a logistics marvel that breaks the mold of needing to open multiple storefronts to serve a wide geographic area.

Doing an 180 from its campaign touting its role in lives of first-time workers, McDonald’s is using technology to cut down on the number of counter staff it employs. McDonald’s claims its new service-service, touchscreen ordering kiosks—which it will add to 2,500 of its restaurants—won’t eliminate cashier jobs but instead move those workers to more customer-service positions such as concierges.

“MCD is cultivating a digital platform through mobile ordering and Experience of the Future (EOTF), an in-store technological overhaul most conspicuous through kiosk ordering and table delivery,” Andrew Charles of analyst firm Cowen told Wall Street Investors.

The new technology will cost each franchisee between $150,000 and $700,000 with the parent company picking up an undisclosed part of the tab.

McDonalds Trials With UberEATS in Florida as Mobile App Hits 11 Million Users

McDonalds is in the midst of a technology push that includes expanding Internet ordering and in-store kiosks, as well as exploring new consumer options such as curbside check-in and home delivery.

According to Marketing Week, the company just finished a trial in Florida with UberEATS, a partnership it announced in December. UberEATS would be accessed through the company’s mobile app, which already has 11 million registered users.

The company’s CEO, Steve Easterbrook, has previously admitted the company fallen behind its fast food peers, is playing catch up now by focusing on experiential differentiation using technology.

From Marketing Week:

“This is one where it’s better to be right than first to market. We are looking to understand what works best for customers. We are now focusing on the experiential side – curb side check in, order and pay, make it easier and more convenient and then build reward systems over time. We believe tech can do a lot of heavy lifting, so the overall experience will be better.”