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The Spoon

Daily news and analysis about the food tech revolution

off-premises

Report: ‘The Future Is Off-Premises’ for Most Restaurant Operators

Restaurant sales are expected to reach $899 billion in 2020, according to The National Restaurant Association’s recently released “2020 State of the Restaurant Industry” report. By 2030, that number will jump to $1.2 trillion. Unsurprisingly, off-premises restaurant experiences will drive a lot of that momentum in the coming years. As The Association’s report plainly states, “the future is off-premises.” 

The off-premises category includes delivery, takeout, catering, curbside pickup, drive-thru, and food trucks. In the report, three in four operators say this category is “their best growth opportunity,” and the vast majority of those respondents said they expect to add more resources and technology to improve their operations around off-premises orders.

Consumer demand is clearly driving that optimism: 52 percent of adults said purchasing takeout or delivery is “essential” to their lifestyle. At the same time, certain restaurant types rely on off-premises orders for the bulk of their sales. For QSRs (73 percent), fast casuals (51 percent) and coffee and snack outlets (77 percent), off-premises is the main sales driver. In all likelihood these numbers will rise as AI technologies come to drive-thru lanes and most major QSRs offer delivery, ghost kitchens, or a combo of the two.

But before you go rushing off to mobile-order drive-thru lanes and special systems for pickup orders consider something else the report highlights: “Off-premises is an opportunity — not a requirement.”

Off-premises orders still make up a fairly small part of business in many parts of the restaurant industry. While 70 percent of customer traffic in QSRs is off-premises, eight in 10 customers still prefer to dine in when it comes to more traditional table service restaurants.

Part of that may be that there is no “one size fits all” strategy for boosting off-premises sales. A delivery strategy that works for Wendy’s may not be as effective with Chili’s, who offers different meals at completely different price points to its own unique customer base. This is why we’ve seen the rise of things like hybrid delivery and customizable ghost kitchens.

For some restaurants, such as fine dining establishments, off-premises will probably never make much sense. The vast majority, though, will adopt at least some technologies and strategies for off-premises ordering as that sales channel’s popularity increases over the next few years.

Shake Shack’s Newest NYC Location Will Focus on Takeout, Delivery Orders

Shake Shack is set to open a new location in Midtown Manhattan, one that will focus specifically on delivery and takeout orders, according to Restaurant Dive.

The new location will have two separate entrances, one for delivery and takeout orders, including those made via the Shake Shack mobile app, and one that traditional dine-in customers can use. The latter will have very limited seating options, though there will be an outdoor patio. The store will also feature self-service kiosks, which Shake Shack has been testing for some time, with varying degrees of success.

The news makes the NYC-based burger chain the latest QSR to jump onboard the trend of opening stores either dedicated to or heavily focused on to go orders. Trend might be an understatement, though. The National Restaurant Association predicts that off-premises orders will drive the bulk of restaurant sales over the next 10 years. QSRs in particular — are responding to the demand by increasing delivery services (either their own or with a third party), building out digital order strategies, and in some cases, Shake Shack included, literally redesigning store layouts.

Locations dedicated to off-premises orders is another tactic becoming commonplace. In 2019, Starbucks opened its first express location in Beijing, China, and followed up that move with plans to launch a similar shop in NYC next year. Last week, IHOP announced a new standalone restaurant chain called Flip’d that will cater to delivery and takeout orders. The list goes on: Krispy Kreme, Sweetgreen, KFC, Chopt . . .

Spoiler alert: the rise in popularity of ghost kitchens is only going to increase the number of to-go-focused locations restaurant chains open. Some of these locations will become ghost kitchens themselves, fulfilling delivery and takeout orders for not just that location but all of a brand’s surrounding stores. This is how Starbucks’s express store in Beijing currently functions, with to-go orders from surrounding Starbucks cafes funneled to the express store, speeding up fulfillment times and allowing traditional locations to focus on in-store customers.  

Shake Shack plans to open a few of these to-go focused locations in the future.

Starbucks Plans Pickup Only Store for NYC

Starbucks will soon bring its streamlined, pickup-only store model to Manhattan this fall, according to an article published on Bloomberg.

The NYC store, which is still under development and slated to open at some point this fall, is based on the coffee chain’s “Starbucks Now” model it debuted in Beijing in July.

Starbucks Now stores have limited seating, which wouldn’t be too drastic of a change in Manhattan, where tables and chairs at Starbucks locations are already pretty minimal. More importantly, the concept features an in-wall pickup system where customers order and pay via the Starbucks app and retrieve their orders from pickup portals in the wall, without having to wait in line. The system also works for delivery drivers, who can simply walk into the store and grab their order from the wall and go. One or two baristas will be on hand to make drinks and assist customers if they need it.

Starbucks CEO Kevin Johnson told Bloomberg that these stores aren’t meant to replace existing Starbucks cafes and are instead geared towards on-the-go customers (which is basically everyone in Manhattan). The express stores can also double as locations where nearby Starbucks cafes can have their delivery orders fulfilled, freeing up time for employees to focus on non-mobile customers.

They’ll need that extra location for delivery orders. Starbucks recently announced that its delivery partnership with Uber Eats will be available throughout the U.S. by early 2020.

While there’s no official timeline yet, Starbucks will likely plan similar Starbucks Now stores in other cities, including San Francisco, Boston, Chicago, Seattle, and Los Angeles.

Kitchen United Announces Another Expansion for Its Ghost Kitchens

Kitchen United (KU) is making good on its promise to open multiple new locations over the course of 2019. The company announced another expansion today, this time for new locations in San Francisco and Los Angeles as well as a second spot in Chicago.

KU launched in 2017 with the aim to provide extra kitchen space for restaurants needing to fulfill off-premises (delivery) orders. The first KU location, in Pasadena, California, holds enough space for 15 restaurants to use. Other locations are similar in size.

Whereas some ghost kitchens exist to let restaurants or entrepreneurs try out new concepts and brands they might not have otherwise brought to market, Kitchen United is specifically aimed at helping existing restaurants manage the extra volume in orders created by delivery.

And the demand for delivery grows, we can expect to see more of these so-called ghost kitchens, from Kitchen United and others. The market for online food delivery is projected to be $30 billion by 2022 — and that’s just for the U.S.

Various iterations of the ghost kitchen have been popping up in response, and raising some hefty funds. Berlin-based company Keatz recently raised €12 million (~$13.6 million USD) for its virtual-kitchen network that operates around Europe. Uber is dabbling with its own ghost kitchens in Paris. Uber’s former CEO, Travis Kalanick, now runs a cloud kitchen company in Los Angeles.

Kitchen United, meanwhile, has expanded from the original Pasadena, CA location to Chicago’s River North neighborhood, and has already announced plans to open new centers in Atlanta, Scottsdale, AZ, Austin, TX, and Columbus, OH in 2019. (These are currently under construction.) A quick look at the expansion map on the KU site reveals that Houston, Dallas, NYC, and Washington, D.C. are also in the works for 2019.

According to the press release, the new LA, SF, and Chicago locations are in the process of accepting restaurant partners. Each will house between 10 and 15 restaurant brands.

Forget Catering. Shake Shack Ups Its Off-Premises Game With a Food Truck for Rent

Yesterday Shake Shack introduced the world to its new food trucks, available for rental for private events.

To be clear: the Shack Truck doesn’t drive around your city and land at the nearby food truck park come lunchtime. According to the Shack Truck FAQs, it’s instead a vehicle you can rent out for private parties like weddings, anniversaries, birthday bashes, and whatever else you could think to throw a party for.

The menu is determined based on each individual event, but in general you can expect the usual Shake Shack items — burgers, fries, and, of course, shakes. Pricing also varies by event and can be determined once you fill out a form and submit it to the company.

Right now, Shake Shack has two of these trucks: one operating in the tri-state area (NY, NJ, CT, and PA) and one in Atlanta. There’s no word yet on whether the company will have more trucks or more cities available in future, though given Shake Shack’s rapid expansion pace, it’s likely. For now, if you’re in the area, the company suggests booking the truck at least two weeks in advance of your event.

What’s most intriguing about this is not that you can serve Shake Shack at your wedding (although that is pretty amazing news), but that the company has found yet another way to reach audiences outside the traditional standalone restaurant setting. Nearly all of its 200 units currently deliver, and Shake Shack outlets have long been in places like Madison Square Park, Citi Field, and, more recently, casinos like the New York New York hotel in Las Vegas.

A food truck for rent is really just another form of catering, but it’s cleverly branded catering that screams “millennial,” a generation that’s borderline obsessed with off-premises food options. Plus, around 70 percent of customers (millennials or otherwise) are predicted to be ordering offsite by 2020. That means restaurant chains will have to continue to find unique ways of providing those experiences, and a rentable food truck is certainly a good start.