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Daily news and analysis about the food tech revolution

off premises ordering

Chopt Is the Latest Restaurant Chain to Launch a Store Dedicated to Delivery and Pickup Orders

Chopt Creative Salad joins the growing number of restaurant chains building out brick-and-mortar stores completely dedicated to delivery and pickup orders. The fast-casual chain opened its first location for off-premises-only orders last week in Manhattan’s SoHo neighborhood. 

Customers of the Chopt SoHo store can order online or via the chain’s mobile app, bypassing the need to wait in line and interact with a cashier. Delivery orders are handled by the major third-party services (Grubhub, DoorDash, etc.), while the SoHo location will also feature self-order kiosks for those walking in off the street. Those kiosks will be able to accept cash in addition to cards — an important feature in an age where the debate over cashless payments is heated and chains like McDonald’s have come under fire recently for kiosks that won’t take good old-fashioned greenbacks. 

Chopt hasn’t said whether its delivery- and pickup-only store will provide a new model for future locations. CEO Nick Marsh told Forbes that, “It will be a significant part of our growth going forward, though we can’t give a percentage on how many of them will open.”

Chopt isn’t the only salad chain in NYC to be experimenting with off-premises order formats. In October, Just Salad teamed up with Grubhub to deliver a virtual restaurant brand called Health Tribes to NYC customers. Sweetgreen, who raised another $150 million in funding in September, has expanded its Outpost service, which entails placing pickup stations in office buildings. The chain also just opened its Sweetgreen 3.0 store, a so-called high-tech location that emphasizes self service and orders destined for outside the restaurant.

It all makes sense. Salad travels well — better than, say, french fries. But — and this is the understatement of the week — salad chains aren’t alone in embracing this off-premises store model designed to fulfill more delivery and pickup orders. Chick-fil-A has operated off-premises stores since 2018 and just announced it’s also working out of DoorDash’s new ghost kitchen in Northern California. Starbucks has a to-go-only store in China and one planned for NYC. Masses of other chains following this trend is pretty much a foregone conclusion.

In a place like NYC (or San Francisco, for that matter), the model allows restaurants to utilize smaller spaces and cut down on the amount of rent they pay to be in business. And as demand for delivery increases along with the expectation for online ordering and self-service technologies, this to-go concept will become a de facto part of most major chains’ strategies.

As QSRs Double Down on Off-Premises Ordering, What Happens to the POS?

Whatever your food plans for the weekend, I’m betting there’s a good chance they’ll involve some kind of off-premises ordering. Delivery? Drive-thru? Drone? All of the above and more are becoming de rigueur for foodies and restaurants alike. With that in mind, here are a few more pieces of restaurant industry buzz from the week, all of which hint at what the next 12 months could look like when it comes to when, where, and how we get our food.

Grubhub and Shake Shack Expand Delivery Partnership Nationwide
Expanding on a deal struck back in August, Shake Shack is now available for exclusive delivery with Grubhub across the U.S. According to a press release sent to The Spoon, more than 140 Shake Shack restaurants now offer delivery through that third-party service and no other. While that’s great for customers who want Shack Burgers delivered to their couch, the partnership has also hurt Shake Shack’s sales, according to the chain’s third-quarter results. Part of that may have been due to the exclusive nature of the deal, exclusivity being a strategy increasingly discouraged in the restaurant industry when it comes to effective delivery services.

KFC’s Drive-Thru of the Future Is Open for Business
July brought the initial news that KFC had a drive-thru-only concept in the works down under, in Newcastle, New South Wales, Australia. Said location is now open for business. The new store features five drive-thru lanes that let customers order and pay via the KFC mobile app. While there is a designated lane for customers who want the traditional drive-thru experience (ordering on a crackly speaker, paying an actual person), there is no dining room at this location. If this pilot location proves successful, we’ll see more such KFC locations in the future.

Dunkin Donuts

Houston, We Have a Dunkin’
Dunkin’ (née Donuts), an institution here in the Northeast, is continuing its expansion across the U.S., and it’s bringing its next-generation store with it. The chain announced it is developing 18 new locations around Houston, TX that will emphasize to-go orders, self-service kiosks, and dedicated drive-thru lanes for customers who order via the Dunkin’ mobile app. The first of these new stores is slated to open in summer 2020.

Image via Unsplash.

RIP POS?
But is the POS about to become an endangered species? Not this week, and not probably in the next year. But the growth of ghost kitchens, which exist to fulfill off-premises orders and have no dining room, suggests that pieces of the front-of-house restaurant tech stack could be eliminated in the future. That’s the scenario posed by the folks at Reforming Retail this week. An excellent article from a few days ago points out that with no front of house or cashiers, and with customers ordering directly from their mobile devices, 99 percent of the tech in restaurants could disappear: “And instead of a restaurant needing multiple [sales] terminals they need, well, none.”

Agree? Disagree? Drop your thoughts in the comments below.

We’ve Seen the Restaurant of the Future. It Doesn’t Look Like a Restaurant

What will the typical American restaurant look like in 2030? Ask the National Restaurant Association, whose new report, “Restaurant Industry 2030” serves up some answers to that question.

Many answers, actually. The 80-page report gives us an in-depth look at everything from how the restaurant workforce will change to technologies that will become commonplace in daily operations, many of which we already see quite a bit of in 2019: self-order kiosks, dedicated areas for pickup orders, and digital drive-thru signage, for example.

Overall, restaurant sales are expected to reach $863 billion in 2019 and grow to $1.2 trillion in 2030, according to the report. The major driver of that growth will be off-premises ordering — delivery, takeout, drive-thru, and other mobile-centric experiences. That will, as the report states, change the definition of the word “restaurant”:

Some restaurants will morph into a hybrid model, offering counter service, full service, takeout and delivery, and meal kits. The delivery-only restaurant is on the rise through virtual restaurants and ‘ghost kitchens.’ New food halls feature retail and restaurant pairings to make it easy for people both to eat and to shop for food they can take home.

All of these things underscore the influence off-premises orders are having on restaurant business models. As the report states, “the shift affects everything from restaurant design to marketingtech investment, operations, and site selection.”

Take ghost kitchens as a prime example. Not so long ago, the idea of having a restaurant without a dining room for anything other than concession-type food was unheard of. Now, restaurants are not only using them to fulfill the influx of delivery orders, they are also testing out brand-new menus and, in the case of multi-brand companies, using the ghost kitchen concept to cross-promote and sell sister brands.

Third-party delivery companies, in particular, are capitalizing on the craze for ghost kitchens, with DoorDash opening its own facility in Northern California and Uber Eats and Grubhub teaming up with non-restaurant food brands to launch virtual concepts.

New business models aside, though, Grubhub et al. face a far more ominous prospect over the next decade: increased regulation of third-party delivery. The National Restaurant Association’s report notes that the restaurant of 2030 will see many a government mandate over the next decade around employees, the environment, and food service-related taxes. But the big one to stand out is the increased regulations for third-party delivery operators.

The debate over stricter regulations for third-party delivery is already in full swing. Earlier in 2019, Grubhub, Uber Eats, and indeed the entire sector came under fire when an oversight hearing was held in New York City that called into question the high commission fees these services charge restaurants. Since then, it’s been one headline after the next proclaiming antitrust issues, biased fee structures for restaurants, caps on delivery fees, ethically questionable tipping policies, and so much more.

The shift towards more regulations is already in place, most notably with California’s Assembly Bill 5, which reclassifies gig workers as employees and was signed into law in September. Third-party delivery companies are fighting AB 5, but even if they succeed, there will be virtually no end to new bills, laws, and other regulatory matters to fight over the next decade. Between that and the constant struggle for profitability for these companies, it’s safe to say the third-party delivery sector of 2030 will be markedly different from the one we know today. Which is to say, the very elements changing today’s food landscape will undergo there own change on the road to 2030.

DoorDash Launches Its First Ghost Kitchen Facility for To-Go Restaurant Concepts

With more and more restaurants, food entrepreneurs, and delivery services using ghost kitchens, it seemed only a matter of time before DoorDash built one of its own. So it’s not too surprising that today, the San Francisco-based company announced the launch of its first ever shared commissary kitchen, dubbed DoorDash Kitchens, which will house multiple to-go restaurant concepts under a single roof, according to an email sent to The Spoon.

DoorDash customers can now order from a handful of chain restaurants and either pick up food right at the commissary or have it delivered. This first location of DoorDash Kitchens, located in Redwood City, CA, will serve several cities in the California Peninsula area, including Menlo Park, Palo Alto, and Woodside, among others.

DoorDash has partnered with four restaurant chains for this first run of DoorDash Kitchens: Nation’s Giant Hamburgers, Rooster & Rice, Humphry Slocombe, and The Halal Guys.

The biggest benefit for those merchants, as well as any others that might come onboard in the future is geographic reach. “Over time we’ve heard that our partners have been looking for new ways to grow their business,” Fuad Hannon, Head of New Business Verticals for DoorDash, said to me over the phone. “Launching new geographies is one of the most clear ways that we can help.”

It’s also a cheaper option for a restaurant than building a new location from the ground up, or even retrofitting an existing building. “For merchants, it means reaching new audiences without bearing the high costs of building out more brick-and-mortar locations,” Hannon said of the Kitchens concept.

So, for example, Nation’s Giant Hamburgers has no brick-and-mortar locations currently in Palo Alto. However, operating out of a commissary kitchen nearby allows the chain to reach customers in that area without incurring costs around building infrastructure, permits and licenses, or maintaining a dining room setup. Hannon said DoorDash provides the restaurants with kitchen space and proper equipment, and also handles things like permitting and last-mile logistics for the businesses. “It’s really quite turnkey for our partners,” he said.

A little less clear is how many of these kitchens DoorDash plans to build around the U.S. in future. Hannon wouldn’t say if more locations are already planned. But according to recent numbers, 60 percent of all restaurant orders are now off-premises, and ghost kitchens help restaurants fulfill much of this demand. Just look at Kitchen United’s growing empire, the amount of work Starbucks is putting into the concept, and even efforts from DoorDash competitors like Uber Eats and Grubhub.

All of which is to say that ghost kitchens are starting to become table stakes for restaurants, and it would be more surprising if we didn’t see additional locations from DoorDash in future.