Close Ad

The Spoon

Daily news and analysis about the food tech revolution

Ordermark

2020: The Year the Ghost Kitchen Got Complicated

As an old saying goes, “Anything can happen, and most usually does.”

And it sure did happen in 2020 for the restaurant industry. Pandemic. Dining room shutdowns. Permanent closures at alarming rates. A seismic shift to takeout and delivery formats. More shutdowns. Complete uncertainty over the state of indoor dining coupled with growing panic over the state of the independent restaurant. 

Personally, I think it’s foolhardy to try and meaningfully condense what happened to restaurants in 2020 into a few hundred words. So as we close out this dumpster-fire of a year and head to 2021, I’ll pinpoint one part of the biz that’s been talked of constantly these last several months: ghost kitchens.

Right around the end of 2019, we were already fixated on the ghost kitchen. In a predictions piece I wrote at the time, I said, “This is part of the restaurant industry that will change rapidly over the next year as it becomes more commonplace among both restaurants and consumers.”

All that wound up being true in 2020, not because I’m some predictions wizard but because a global health crisis forced the restaurant industry into off-premises formats like takeout, delivery, and drive-thru. Because these formats don’t require a dining room to function, they are inherently suited to the ghost kitchen setting. Ghost kitchens, after all, were designed to serve to-go customers, typically those ordering through mobile apps and other digital properties. 

But one thing that was made clear in 2020: ghost kitchens are not the end-all, be-all savior of the restaurant industry. In fact, throughout the year, multiple restaurant industry figures raised questions about the commissary model in particular.  

Back in March, when COVID numbers were initially rising, former Kitchen United CEO Jim Collins cautioned restaurants to think hard about whether their business generated enough demand to justify the cost of a ghost kitchen operation. Similarly, Andy Wiederhorn CEO of Fat Brands, said in July that ghost kitchens “simply work better for brands that have existing fanbases” (a point he repeated at our ghost kitchen event earlier this month).

I bring up these reservations not to further cast a cynical shadow but to illustrate another important takeaway from 2020: that because there are still so many uncertainties for restaurants over the traditional commissary model, other forms of the ghost kitchen concept have emerged that make running an off-premises business more feasible for more types of restaurants. 

Over the last year, we saw the growing popularity of the so-called “dark kitchens.” These are underutilized kitchen spaces restaurants are using to fulfill their delivery and off-premises orders. Fat Brands is one notable example of a company using its own restaurants as dark kitchens for sister brands. Ordermark/NextBite, meanwhile, built out its business this year of pairing restaurants with unused kitchen space in order to deliver (literally and metaphorically) more meals from virtual restaurant concepts. Another great example is Hi Neighbor, a San Francisco restaurant group that had to close because of the pandemic. Its response was to use one of its shuttered kitchens to accept and fulfill delivery orders for its own virtual concepts. Hi Neighbor is just one local example of a trend happening nationwide.

In the second half of 2020 (right after Euromonitor predicted the ghost kitchen market would be worth $1 trillion by 2030), we saw massive amounts of investment dollars flow into the space, from Zuul’s $9 million fundraise to a $120 million investment in the aforementioned Ordermark to the $700 million raised by Reef. There were plenty of other financial milestones in between those figures.

Alongside those investments, even more formats emerged of what a ghost kitchen might look like and how it could become more efficient. ClusterTruck, which has operated a vertically integrated delivery business for years, teamed up with Kroger to turn the latter’s deli counters into a kind of ghost kitchen. More recently, Crave Collective opened in Boise, Idaho to show us what a fine-dining take on a ghost kitchen looks like. And the QSRs, finally got onboard, with everyone from Chipotle to McDonald’s unveiling new store formats that minimize or eradicate the dining room and are in effect their own version of a ghost kitchen.

The most unanimous takeaway of the year was this: the ghost kitchen, in its various forms, is here to stay. We may be inching closer to a widespread vaccine for COVID, but the restaurant industry has already completed the shift to off-premises-centric businesses. There’s no going back at this point.

Even so, we leave 2020 and enter 2021 with plenty more questions when it comes to how one best runs a ghost kitchen. What is the role of the chef — an artist, by rights — in this off-premise-centric new world? How long will ghost kitchen operations be tied to third-party delivery services increasingly bent on calling the shots for restaurants? What about the mounds and mounds of packaging waste being generated by all this innovation?

If 2020 was a year about making the ghost kitchen more efficient, 2021 should be about the role the ghost kitchen plays when it comes to the restaurants, chefs, drivers, and other people whose livelihoods are now tied to it.

Event Wrap: Restaurants Still Need Brand Equity, Brick and Mortar in a Ghost Kitchen Strategy

This week, The Spoon gathered a wide variety of restaurant industry players together to discuss the most pressing questions the restaurant biz faces right now around ghost kitchen adoption. Throughout the day-long virtual event, restaurant operators, tech companies, virtual restaurant owners, and ghost kitchen providers themselves weighed in on a range of topics, from the economics of going the ghost kitchen route to building a delivery-friendly menu to the tech powering the concept.

One of the most recurring questions to surface during the event was this: Do you still need a physical restaurant in order to make the economics of a ghost kitchen operation work?

Panelists almost unanimously agreed that, at least right now, you do.

“If you go on a delivery app only and you don’t have a brick-and-mortar presence, you better have brand equity,” Andy Wiederhorn, CEO of Fat Brands, emphatically stated during the event. And that brand equity is not easy to build. (More on that in a minute.)

Others pointed to the industry’s reliance on third-party delivery apps (DoorDash, Uber Eats, etc.) as a huge hurdle to running a 100 percent delivery-only restaurant that actually makes money. “When you move 100 percent delivery only, the economics you have with third-party platforms is going to matter more,” said Kristin Barnett, Head of Strategy for NYC-based Zuul Kitchens. On the same panel, Kitopi cofounder and chief revenue officer Bader Atul agreed there is a “strain on profitability” when you attempt to limit a restaurant’s entire existence to third-party delivery apps. This is because it’s difficult to offset the sky-high and highly controversial commission fees delivery services charge restaurants (up to 30 percent per transaction, in some cases).

For now, at least, restaurants should consider what multiple panelists called the “omnichannel” approach. Some ghost kitchens, like those of Kitchen United and Boise’s recently opened Crave Collective facility, offer pickup options in addition to delivery. Big brands, meanwhile, have the obvious advantage here, since they have deep pockets and a long history of brick-and-mortar business to go alongside delivery. If they’re not already in a certain market, as Chick-fil-a wasn’t when it started serving the California Peninsula area via its DoorDash Kitchens operation, existing brick-and-mortar presence elsewhere can offset the cost.  However, Zuul’s Barnett pointed out that smaller restaurant chains, such as those that operate out of Zuul, can also take advantage of the omnichannel approach. 

Other ghost kitchen providers, including Kitopi and Reef, operate off an entirely different model from the normal commissary kitchen by handling all of the operations of fulfilling an order and the restaurant gets a royalty fee. This method provides restaurants the opportunity of trying a ghost kitchen operation out without having to commit their own labor to the process.

Still others, including Alex Canter of Ordermark and Nextbite, suggested we are fast-headed towards a day when running a 100-percent delivery-only restaurant will be not just feasible but the norm. Nextbite, one of his companies, operates a portfolio of delivery-only brands and helps restaurants add these brands to their own operations. During this week’s event, Canter referenced one Nextbite client that had incorporated five of those virtual concepts into their restaurant and were doing “10 to 15 times more revenue through those brands” than via their own. He said more and more, his company hears clients ask whether they even need their brick-and-mortar stores anymore.

But part of the success of a virtual brand will depend on how well it can build the aforementioned brand equity—another major takeaway from this week’s event.

Multiple panelists agreed that running a restaurant out of a ghost kitchen is more than simply sticking a menu online and waiting for the customers to come. They won’t, if an online menu is the long and short of your branding efforts. Just as with brick-and-mortar restaurants, virtual eateries in ghost kitchens and/or dark kitchens need their own “brand identity,” to use a marketing cliche, something that sets it apart from the dozens of other similar options out there.

We returned to a chicken wings example again and again throughout the day. Your virtual chicken wings joint needs a compelling story around its origins, ingredients, and even basic marketing components like name and visual representation. Without those brand identity elements, your virtual chicken wings restaurant has little chance of standing out amid the dozens of other chicken wing offerings on delivery marketplaces. See ClusterTruck, who was at our event, as an example of a company that has mastered the art and science of branding a virtual restaurant.

Our event covered dozens of other topics outside of these two big takeaways. To watch videos of the panels and access more content, head over to our Spoon Plus channel and become a subscriber.

The Food Tech Show: Lab-Grown Meat vs. The Internet

Happy Friday!

Heading out early for the final weekend before election day? Listen to The Food Tech Show podcast on your way!

In this week’s editor roundtable episode of The Food Tech Show, we talk about whether lab-grown meat can scale like the Internet, Ordermark’s massive new funding round earmarked to help them build out their ghost kitchen and virtual restaurant strategy, Coca Cola’s acquisition of a coffee robot startup, and whether or not the term “veggie burger” has a future in Europe.

As always, you can find The Food Tech Show on Apple Podcasts or Spotify, or just play directly below.

Ordermark Raises $120M to Build More Virtual Restaurants

Restaurant tech company Ordermark announced today it has raised a $120 million Series C round led by the Softbank Vision Fund with participation from existing investor Act One Ventures. According to a press release sent to The Spoon, Ordermark will use the new funds to “help more restaurants transition to online ordering during the COVID-19 pandemic and beyond.”

Ordermark has been helping restaurants incorporate off-premises orders into their operations since long before the pandemic. The company’s hardware-software combo consolidates all order tickets (delivery, takeout, in-house, etc.) into a single channel to make the management of these tickets easier for restaurant staff.

The company has also been something of a trailblazer in the world of virtual restaurants through its Nextbite platform, which is Ordermark’s portfolio of delivery-only brands. Most recently, Nextbite launched rapper Wiz Khalifa’s Hotbox restaurant concept, much to the delight of munchies fans everywhere.

Ordermark/Nextbite relies on underutilized kitchen space in restaurants to fulfill orders for these virtual brands, which gives the restaurants themselves a chance to build up some incremental revenue. While today’s press release did not specifically name new brands or restaurant partners, the company is clearly looking to build out this virtual restaurant portfolio. Jeff Housenbold, Managing Partner at SoftBank Investment Advisers, said in the release that Softbank will “support [Ordermark’s] mission to help independent restaurants optimize online ordering and generate incremental revenue from under-utilized kitchens.”

Alex Canter, Ordermark’s cofounder and CEO, added that restaurants “must get creative by embracing technology and new sources of revenue generation to reach customers outside of their four walls.”

Ordermark said that since the start of the COVID-19 pandemic, Nextbite has launched 15 brands and has added over 1,000 delivery-only restaurants nationwide.

From Wiz Khalifa to Tyga, Are Celebrity Ghost Kitchens the Next Big Thing?

Throughout the latter half of 2019, a prediction that came up repeatedly here at The Spoon was celebrity chefs launching their own virtual restaurant concepts. What we didn’t anticipate was just plain ol’ celebrities getting onboard the trend, but that’s exactly what’s happening now.

An announcement this week from delivery integrator Ordermark added more momentum to the celebrity-as-virtual restauranteur trend: rapper Wiz Khalifa forthcoming Hotbox concept.

Wiz Khalifa’s Hotbox restaurant, which is slated to open October 1, will feature a “top-shelf munchie menu” curated by the rapper and powered by Ordermark. The full menu is not available yet, though a couple featured items — the “Taylor Gang Turkey Burger” and “Blazed Ends” dishes — give a pretty good idea of what to expect once the restaurant launches.

Restaurant owners wanting to cook and deliver the forthcoming Hotbox menu from their own kitchens can do so by becoming a fulfillment partner via Nextbite, the delivery-only restaurant company owned by Ordermark. In other words, your local mom-and-pop can now become a ghost kitchen for the Wiz Khalifa brand. That in turn could provide restaurants with some much-needed incremental revenue that might keep some from completely going under during this strange and challenging time for restaurants. 

Cooking someone else’s menu from your own restaurant kitchen isn’t a brand-new concept. As I said, it’s a form of a ghost kitchen that’s employed by the likes of well-known chains like Fatburger and Wow Bao. Tacking a celebrity name to the concept is an intriguing twist on this. A virtual Wiz Khalifa restaurant will generate a certain amount of interest inherently because of the rapper’s status. And if the food winds up being tasty and affordable, there’s potential for restaurants to tap into a Khalifa’s huge fanbase. 

The celebrity-turned-restauranteur thing isn’t brand-new, either, though it’s only been in the last several months we’ve seen this concept go virtual. Rapper Tyga operates a delivery-only restaurant featuring chicken bites. Steve Aoki has a virtual pizza joint called Pizzaoki. Rachel Ray, launched a limited-time virtual restaurant with Uber Eats last year.

And with off-premises orders still the main sales channel for restaurants, delivery companies looking to diversify, and ghost kitchens becoming the norm, the above examples are just the tip of the proverbial iceberg. 

Here’s a Rundown of Restaurant Tech Deals Available to Struggling Businesses

As more restaurants are forced to pivot to off-premises models in the fight to stay alive, it seems more tech companies are coming to market with hardware and/or software meant to speed up, simplify, automate, and more efficiently manage delivery. And in the spirit of simplifying things, I’ve rounded up a number of those solutions here that address different parts of the off-premises model. 

Just remember: there are tech solutions that solve problems and, as a friend of mine once said, tech solutions in search of problems. Reduced fees or no, not every product or service is going to be useful, and what improves one restaurant’s business could be a total distraction for another.

Order-ahead app Allset has a contactless pickup option at participating restaurants. For all existing restaurant partners that provide the contactless pickup option at their stores, the company is waiving commission fees.

Delivery orchestration platform Bringg launched its BringgNow feature months ahead of schedule. The new feature helps larger chain restaurants, among other businesses, manage delivery orders, track drivers, make last-minute adjustments, and integrate with third-party platforms. BringgNow is free to new users at this time.

Chowly, whose tech helps manage delivery orders, is offering a “no cost” starter package to businesses needing to quickly pivot to delivery models as more cities and states shut down dining rooms.

DailyPay, an app that lets restaurant workers access their earnings immediately, has waived all access fees so that individuals using the service can get their earned income immediately. 

POS and guest management software platform Epicuri is waiving set up fees and offering a 60-day free trial with no commitment for restaurants right now.

Paytronix just launched a new cloud-based solution that lets restaurants add online ordering and delivery to their existing POS systems and, for those who want to conduct delivery in-house, integrate with DoorDash.

Presto is giving away free self-service kiosks that at this point can be used for pickup orders. In an email to The Spoon, the company also said it is also “offering Presto Quick Serve drive-thru kiosks, staff handhelds, and smartwatches completely free.”

Ordermark, a software-hardware platform that streamlines the process of accepting, managing, and fulfilling delivery orders, is waiving all setup fees right now, according to an email sent to The Spoon.

Restaurant order management platform Revention is offering an Online Ordering and Delivery Starter Bundle for a reduced price. It includes a POS terminal, optional DoorDash on-demand delivery service, and remote installation.

Guest management platform Sevenrooms now offers a feature called Direct Delivery that gives restaurants more ownership over their customer data on delivery and takeout orders. For the next 90 days, existing and prospective Sevenrooms customers can add the feature on at no extra cost. 

End-to-end platform Toast has eliminated software fees for restaurant customers for the next month and will provide those customers with free access to its digital ordering, marketing, and gift card programs for three months. 

Operations platform Zenput says it is “offering operators that are new to Zenput – at no charge or obligation through the end of June 2020 – the ability to use our platform to build-out, communicate, and ensure compliance with their COVID-19 processes.”

Online food ordering platform Zuppler is offering free setup and reduced pricing for restaurants and caterers who want to add online or Google ordering to their websites.

Over the coming weeks, we’ll know more about which products and services are most beneficial to restaurants trying to survive the current situation in which the industry finds itself. In the meantime, drop us a line if you know a company or product you think should be on this list.

‘Pare Down Your Menu’ and Other Advice for Restaurants Forced Into Delivery

States continue to mandate that restaurants shut down their dining rooms, and across the U.S. major chains are voluntarily switching to off-premises-only models. Those measures are necessary right now as we try to slow the spread of COVID-19. But where does that leave smaller businesses with less robust delivery programs or no off-premises strategies at all?

Plenty of restaurant tech solutions exist that can speed up and/or simplify a delivery strategy. However, I talked with several individuals this week who own and/or manage such solutions, and they made it clear that right now, there’s a whole lot restaurants can do to improve their delivery operations without forking over thousands of dollars on technology.

“Before you even get to the technology, what you really have to figure out is if you’re equipped to do off premises,” says Sterling Douglass, cofounder and CEO of Chowly. “What kind of food? What’s the menu going to look like? How are you going to staff it? Can you afford to staff it?”

Douglass, along with Alex Canter and Charlie Jeffers of Ordermark, and Jim Collins of Kitchen United, took time this week to chat with me and offer some simple steps restaurants can take today to kickstart their off-premises strategy right now.

1. Pare down your menu.

Pivoting to delivery doesn’t mean necessarily mean throwing your existing menu online and dishing up the same meals in to-go boxes. There’s a reason pizza was a delivery item long before any other kind of food went mobile: it travels well and it’s relatively simple to make. 

Thinking along those lines, restaurants should assess their existing menus and decide which items best translate to a to-go scenario. “What they need to do is trim down their menu, look at the items that are easy to procure and produce, so they can make a menu and put it up online and make easy items they can get out that are going to travel well,” says Jeffers. Fried chicken, for example, tends to hold up in transit. Scrambled eggs: not so much.

Jim Collins, who in addition to being CEO of Kitchen United also runs his own restaurant, suggests restaurants create things like family-style options and, if possible, include beer and wine options. “These things will help you stay relevant to the consumer as we move forward.”  

And if there’s leftover inventory from items you can’t make right now? Canter suggests getting creative about how you can repurpose and sell it:  “[Restaurants are] selling frozen items on Postmates. You can sell frozen soup or frozen take-home pizzas and cookie dough.”

2. Consider using multiple delivery platforms.

Unless you have the funds to power your own delivery operation (marketing, drivers, technical logistics), the reality for most restaurants right now is that they need to partner with third-party platforms like DoorDash and Postmates. If possible, they should partner with all of them.

“More and more, restaurants are realizing that to sustain a business solely based on delivery, they need to increase their volume and that typically means being on as many platforms as possible. Instead of picking one or two it’s really critical for restaurants to be thinking about an omni-channel strategy,” Canter says.

An eMarketer forecast said much the same thing a while back, noting that “more options for customers” would be a key growth driver for delivery in the future.

Companies like Ordermark and Chowly, and others legitimately do come in handy here: they will set a restaurant up on multiple different delivery platforms as part of a single package deal. Otherwise, the restaurant owner or operator would have to go through the same lengthy process for each service. “Opt in to all of the marketplaces but work with someone like ChowNow to get direct ordering working as well,” suggests Collins.

3. Adjust your staffing.

This one is honestly hard to write about, especially since earlier this week, the National Restaurant Association estimated the loss of 5–7 million restaurant industry jobs. “At my family’s restaurant, we’ve had to tell the bulk of our staff to not come in,” says Canter. “That means for us, we’re a sit-down restaurant [with] waiters, bus boys that are no longer needed to support a delivery-only situation.”

He adds that running a delivery-only business requires “a very minimal skeleton crew,” which sadly means owners and operators are going to have to make some hard decisions around staffing in the near future. “This is unfortunately the situation at hand. It really comes down to repurposing your best employees to shift them to focus on the takeout and delivery side of the business.”

4. Accept that delivery is “a must” right now.

We can’t have a discussion about restaurant food delivery without at least acknowledging how controversial and frustrating third-party platforms are for restaurants. I’ll spare you yet-another rant, though, because right now, the unfortunate reality is that the majority of restaurants need to partner with these platforms right now.

“At this point, when restaurants are no longer able to provide a dine-in experience, the only way to stay open is by having a delivery program,” says Jeffers. “Most restaurants don’t have the marketing spend or the following to survive on their own.”

“If you’re a restaurant and you’re not doing delivery, you need to immediately implement a program. Just being on DoorDash and Postmates, you now exist to the people who use these apps. It’s not just worth it, it’s a must,” Canter adds.

Right now, the restaurant industry is banding together to help restaurants accept and implement this new reality of off-premises business, whether its by offering tech solutions, support for workers, and help hotlines to answer questions.

“You’re not alone,” Canter says to businesses. “Every restaurant is trying to figure out the best way to get through this.”

 

Uber Eats Using Discounts and Ad Space to Entice More Restaurants

Uber Eats and Ordermark announced a partnership this week that will offer service discounts to Ordermark restaurant customers who also leverage the Eats platform for their delivery needs. According to a press release sent to The Spoon by Ordermark, the partnership will make it “easy for restaurants to participate and manage off-premise orders.” It could also help Uber Eats woo more restaurants into becoming more loyal and longtime partners.

Ordermark’s technology helps restaurants centralize incoming orders from the many different channels in which they originate nowadays — in-house, delivery, takeout, etc. The technology pushes orders placed via Uber Eats directly to the kitchen without restaurant staff having to use an extra device or manually input the orders into the main POS system.

According to the press release, restaurants that sign up with Ordermark and request to use Uber Eats as a delivery partner can get their initial setup fees waived by Ordermark and are also eligible to receive a discounted rate on Ordermark services (actual discount numbers were not disclosed). While not the most earth-shattering news of the week, it’s also not insignificant, given the ongoing battle between delivery services and restaurants over sky-high commission fees and the fact that we’re seeing more companies like Ordermark come to market with solutions that promise to simplify both operations and financials for restaurants when it comes to delivery.

In another bid to entice more restaurant partners, Uber Eats is also reportedly selling ad space inside the Eats platform to restaurants. TechCrunch reported a job listing for an Uber Eats Ad Lead, which was confirmed by Uber. “There’s a bunch of different ways we can work with restaurants over time. If we have all the restaurants on the marketplace and we give them tools to help them grow, then this will be a very efficient marketplace,” Uber told TechCrunch.

Both developments come on the heels of Uber’s most recent earnings stats which, while not quite as abysmal as the previous quarter’s numbers still show the company posting more than $1 billion in losses. Losses for the Eats business grew to $316 million, up from $198 million one year ago.

Like Grubhub, who just saw its sharpest one-day decline in its entire history as a publicly traded company, Uber Eats is struggling to show investors it can be a profitable business. Firmly entrenching more restaurants into its ecosystem with discounts and ads could help Eats. Unfortunately, it’s a wait-and-see scenario as to whether that will be enough.

The Week in Restaurant Tech: Ordermark and Omnivore Team Up, Employees Get On-Demand Pay

The restaurant biz may have once been seen as slow to adopt technology, but that’s less and less the case these days. In fact, between all the apps, kiosks, back-of-house systems, front-of-house software, automated pickup cubbies and enough other developments to fill a 600-word post, restaurant tech is a bit of a juggling act to keep up with lately.

A bird’s eye view of the scene every once in a while helps, so with that in mind, here’s a quick look at some highlights from this week in restaurant tech:

Ordermark and Omnivore team up for POS integration.
Los Angeles-based Ordermark, whose hardware-software package streamlines third-party delivery orders into a single dashboard, announced this week it has partnered with POS integration company Omnivore. The deal will allow any restaurant using certain POS systems, including Oracle Micros, Brink, and Dinerware, to integrate with Ordermark and aggregate orders from popular third-party delivery services like DoorDash and Grubhub.

Ordermark, who recently raised $18 million in Series B funding, serves major chains across the U.S., including TGI Friday’s and Subway, while Omnivore works with some of the biggest POS systems (see above). According to the press release, the combined integration “addresses over 85% of [restaurant] venues in North America.”

Waitbusters integrates with Postmates.
Waitbusters is one of those restaurant-tech companies that started with a narrow focus (getting rid of wait times at restaurants) and has since expanded to offer more features, including table-management features and some marketing. This week, the company also delved into the delivery world by adding a Postmates integration that’s aimed at restaurants that don’t have their own delivery fleet and may not be able to afford commission fees for third-party delivery services.

Restaurants are offering on-demand pay for employees.
With so much of the restaurant biz going “on demand” these days, it was only a matter of time before employee paychecks did likewise. QSRs are now offering ways for workers to instantly access their earnings. Third-party payment company DailyPay offers this feature via patent-pending technology that tracks employee earnings and lets them transfer funds, for a small service fee, instantly to their bank accounts. This week, NRN reported that Burger King franchisee TOMS King and LA-based chain Sprinkles Cupcakes both use the service in the hopes of curbing employee turnover and appealing to Gen Z workers accustomed to on-demand, uh, everything.

Backyard Burgers modernizes its chain with Qu’s POS.
The popular burger chain Back Yard Burgers announced this week it has teamed with POS company Qu to replace the legacy tech still hanging around its 28 locations. Back Yard Burgers, who is headquartered in Nashville, TN and has stores around the Southeast U.S., is on a quest to modernize its operations, particularly when it comes to standardizing and centralizing orders from disparate sales channels. Qu’s platform specializes in just that, integrating orders from web, mobile, and kiosks as well as those made in house.

Paytronix buys Open Dining.
Customer engagement company Paytronix this week completed its acquisition of food-ordering platform Open Dining. According to a press release, the new solution will let customers “use online ordering with integrations to point of sale (POS) and third-party delivery partners such as DoorDash and Grubhub.” Ohio-based Open Dining focuses mainly on small- to mid-sized businesses. With the acquisition, it will rebrand as Paytronix Order & Delivery.

Ordermark Raises $18M in Series B Funding

Los Angeles, CA-based restaurant tech startup Ordermark announced today it has raised $18 million in Series B funding, according to Venture Beat. The round was led by Foundry Group, with participation from TenOneTen Ventures, Vertical Venture Partners, Mucker Capital, Act One Ventures, and Nosara Capital. The Series B round brings Ordermark’s total funding to $30.6 million.

Funds from the new round will go towards further integrating Ordermark’s service with other restaurant technologies, such as POS systems, kitchen display systems, and, of course, last-mile delivery companies.

Ordermark makes a hardware-software package that integrates and standardizes orders from disparate third-party systems like Uber Eats and Grubhub into a single dashboard. In the age of food delivery, it’s a noteworthy offering because it rids restaurants of the burden of having to juggle incoming orders off multiple tablet devices from third-party delivery services then input those orders into the main system.

The above scenario is often referred to as “tablet hell,” and it’s one restaurants have less and less patience for as demand for delivery increases and more restaurant-tech companies come to market promising solutions. Chowly is another such company that uses a tech platform to streamline orders from third-party delivery services. In a slightly different approach, Olo actually partners with third-party delivery services to help streamline the order process for restaurants. And with delivery apps predicted to hit 44 million U.S. users by 2020, the space is only going to get more competitive.

Ordermark closed a $9.5 million Series A round in September of 2018. The company counts TGI Friday’s, Buffalo Wild Wings, and Subway among its restaurant brand clients.

Three CEOs on How Tech is Transforming the Restaurant Experience

When the famed L.A. institution Canter’s Deli opened an outpost in the first Kitchen United (KU) location, the first visitors were two elderly ladies. They had read about the new Canter’s location in the paper and stopped in for some piping-hot matzo ball soup. “That’s when I thought ‘Uh Oh,’” said Jim Collins, CEO of KU.

What these ladies didn’t understand is that restaurants operating out of KU commercial kitchen spaces are delivery-only, meant to give kitchens a low-cost way to serve the growing demand for food delivery without having to open up a new location.

The advent of cloud kitchens is just one of the trends is just one of the topics tackled during the Future of Restaurants panel at our L.A. food tech meetup yesterday. Also onstage was Alex Canter (yes, that Canter), CEO of Ordermark (and heir to the aforementioned deli), which helps restaurants streamline delivery order fulfillment, and Christine Schindler, CEO of Pathspot, which makes a device that uses visible fluorescent spectroscopy to scan restaurant employee’s hands to check for foodborne illness. Here are a few of the most salient points (and questions) the speakers raised about the evolving restaurant world — where we are, where we’re headed, and what has to change to get us there.

Restaurants need to adapt fast, or prepare to fail
Not all restaurant owners are tech-savvy — they’re incredibly busy, and some think that technology is just one more thing to add to their overly-full plate. But in a world where more and more people expect their favorite joints to offer services like delivery and online reservations, resistance can prove fatal.

“Brick and mortar businesses are learning to become digital businesses,” said Canter. Which isn’t always an easy transition — or one that restaurants one to take. He said that while there are 800,000 restaurants in the U.S., only 12 percent of them offer delivery. Part of the reason for this is because they don’t want to have to take on the tricky task of managing multiple delivery ordering services.

For Schindler, it’s critical to get adoption from both restaurant owners and workers. And she has a lot of out-of-the-box ways to get people to use PathSpot. “We put a lot of games in our device,” she said. Employees can win prizes for getting clean hand scans, and they also encourage friendly competitions between stores to see whose hands are cleaner.

Collins, however, isn’t willing to spend as much time encouraging restaurants to adopt. “My job isn’t to convince someone that the future is coming, my job is to help someone face the future they already recognize is upon them.” Deep, yes; dramatic, yes — but in a world where the majority of restaurants fail and the remainders survive off of razor-thin margins, survival will most likely mean embracing technology.

Where is there room for innovation?
For Collins, the answer is simple: personalization. He compared restaurants today to the search engine marketplace of 30 years ago. Search engines used to display results based on who paid them the most, then “The Big G” (as Collins called them) came in and started showing results based on what was most relevant to the user. (Full disclosure: Google is an investor in Kitchen United.) “These days, we serve a consumer that’s interested in their own dietary preferences,” he said. “If you’re gluten-free, why do you see menu where 80 percent of the items have gluten? Why don’t you see one that only shows the 20 percent that’s not? That’s what I’m looking for.”

Canter pointed to the gig economy, but not in food delivery. “I’d like to see more [on-demand economy] for labor,” he said. While companies like Pared are leveraging the sharing economy to provide short-term BOH workers, like dishwashers and line cooks, “it’s pretty nascent,” said Canter.

Schindler, unsurprisingly, had her eye on food safety. “We need a holistic sanitation solution,” she said. “It’s crazy that the best solution now is an Employees Must Wash Hands sign.”

Do you have to be from restaurants to help transform them?
“If you don’t understand restaurants, you can’t be in the business of serving restaurants,” said Collins. His point was that restaurant management is just too complex: if you don’t have a deep understanding of what it means to work in a restaurant — from busboy to bartender — it’ll be very difficult to successfully run a restaurant.

But sometimes an outsider’s perspective is valuable. Schindler had never worked in the restaurant industry before founded Pathspot. But while working in rural Tanzania, she saw a problem (food-borne illness) that could be solved by the pathogen-spotting technology she was working on in her healthcare job. By applying tech previously silo-ed in the healthcare world, she could help prevent an issue that has been plaguing food companies — especially as of late. Maybe more technologies developed for other markets (blockchain, anyone?) could have a lasting impact on the restaurant world, too.

Thanks to all who came out to ToolBox LA for our food tech meetup yesterday! Keep an eye out for future meetups on our events page.

We’re Taking Our Food Tech Meetups on the Road to Los Angeles!

On November 27th we’re taking our food tech meetups on the road to the sunny Los Angeles area! We’re teaming up with hardware VC firm Make in L.A. for this a half-day event highlighting innovative makers, startups, and investors that are leveraging technology to shape our relationship with food. Here’s what we have in store:

  • Short talks and Q&A’s from the founders of Ordermark, Pathspot, and Kitchen United, plus a panel with all three companies on how they’re shaping the future of the restaurant.
  • The founder of Somabar will talk about how robots can help us live, eat, and drink better.
  • DishDivvy’s CEO will discuss how her company is democratizing home food businesses and bringing the sharing economy to dinner.
  • We’ll wrap things up with a VC panel on strategies for investing in companies disrupting food industries with leaders from Make in L.A., Upfront Ventures and Valley Oak Investments.

Oh, and there will be plenty of time for networking and lunch from a taco food truck, of course.

If you’re in the L.A. area and are interested in the food tech space we’d love to have you join us. The event will be from 10am-2pm  at MiLA’s innovation hub Toolbox LA in Chatsworth, CA. Registration is free thanks to our sponsors Fenwick & West and the Silicon Valley Bank. See you there!