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Daily news and analysis about the food tech revolution

Postmates

Postmates Lays Off ‘Dozens’ of Employees, Shutters Mexico City Office

Food-delivery company Postmates — generally seen as one of the big four alongside DoorDash, Grubhub, and Uber Eats — has laid off dozens of employees and closed down its Mexico City office, according to an article published on CNBC.

Postmates has not said exactly how many layoffs it is doing, noting only in a statement to CNBC that “the number was at least several dozen and included people in the San Francisco headquarters as well as in Los Angeles, Nashville, Tennessee, and other offices.” The layoffs started this week, according to one CNBC source. According to another source from the same article, the company is in talks to find a potential buyer.

The news paints a drastically different version of Postmates from the one we were staring at just a few months ago, when the San Francisco-based service raised another $225 million, bumping its valuation up to $2.4 billion. The company also filed paperwork for an IPO earlier in 2019.

Since then, however, the market for both IPOs and food delivery services has taken a left turn to some darker place than anticipated at this time last year.

On the IPO front, disappointing debuts from Uber and Lyft, not to mention the ongoing WeWork meltdown, have altered investor sentiment. In other words, investors aren’t necessarily rushing to back companies with questionable profitability models.

Food delivery services in particular are getting more and more questions around not just their profitability (which doesn’t exist) but also their sustainability over the long term. Getting a latté delivered to your door might be convenient, but the process is increasingly fraught with tensions over how these companies handle commission fees for restaurants and treat their workers. Suffice to say, those tensions have called into question the current model for restaurant food delivery.

Postmates hasn’t been center stage for much of these debates. Instead, the service has kept busy in 2019 doing high-profile partnerships with Major League Baseball teams and national restaurant chains. In fact, just this morning, Postmates announced a major deal to start delivering TGI Friday’s in the U.S.

Nonetheless, the company is feeling the effects of the War on Food Delivery, as this week’s news makes clear. “We made the difficult decision to end operations in Mexico City as we focus on our continued growth in the U.S.,” Postmates said in a statement to CNBC. “We continually review our business to ensure that staffing is aligned with current business needs and have made small adjustments as a result.”

Uber Eats Makes Pickup Feature Available Nationwide, Launches Food Guides

Today, Uber Eats announced that the Pickup feature on its on-demand restaurant food app is now available to customers nationwide. According to an article this morning in USA Today, the company has been testing the feature in San Diego, Phoenix, and Austin and has now made it available to all customers in the U.S.

Pickup is just as it sounds: Uber Eats customers order their food through the app as usual. Then, instead of paying a delivery fee and waiting for someone to drop the food at their door, they go to the restaurant and collect it themselves.

While hardly a new concept, having a pickup option for food seems a necessary step when it comes to appealing to certain parts of the population, particularly in dense urban areas where the restaurant of choice might be on the next block and the $5 delivery fee is not justifiable on such an order. Other major on-demand food competitors — Grubhub, DoorDash, and Postmates — already offer the pickup option to customers. Why Uber Eats has waited so long to unveil its own version of pickup remains a mystery, but with both off-premises orders and competition among third-party aggregators increasing, the service needs every tool it can possibly utilize to entice more diners.

Speaking of which: Simultaneous to the nationwide rollout of Pickup, Eats also launched its Uber Eats Pickup Guides Powered by JUMP. The guides, run by Uber’s JUMP electric bike and scooter program, trace the most efficient route between different local restaurants that offer Uber Eats. While definitely more of a gimmick than anything else, it’s at least a nicely designed one. If you’re visiting a city, it’s also a convenient way to scoot around exploring the different food options — all, of course, while staying well contained inside the Uber Ecosystem.

The Pickup Guides are available for Austin, Washington, DC, Denver, Los Angeles, Miami, and Sacramento.

These new features come on the heels of news that Uber is laying off 1 percent of its workforce, including some Uber Eats staff. The company continues to struggle with financial losses, and Eats, in particular, isn’t likely to become a profitable business for some time. Alas, a pickup feature and a handy city guide aren’t likely to change those facts.

Royal Caribbean Wants to be King of the World for Cruise Ship Food Delivery

By now, food delivery has made its way into college campuses, baseball stadiums, and traffic jams. It’s been only ever a matter of time before cruise ships followed, and this week, Royal Caribbean announced it is testing a food delivery service onboard its Symphony of the Seas ship.

According to a post on the Royal Caribbean blog, guests can now order food from specialty restaurants onboard via the main Royal Caribbean app.

Once signed into the app, guests will see an option to get food delivered from select restaurants on the ship. Right now that includes Johnny Rockets, Sorrentos pizza, and Izumi sushi. Like any other food-ordering app, guests select the items they want and designate where they would like the food delivered, be it their stateroom or some other place on the ship. If the latter, a user can select which deck of the ship they are on then drag a pinpoint to their exact location. There are a few “no delivery zones” onboard, which include pools, theaters, and other restaurants.

Image via Royal Caribbean.

Since the closest I’ve ever gotten to being onboard a cruise is reading a David Foster Wallace essay, I can’t personally speak to how exciting this news is. But groundbreaking or no, it’s to be expected. With food delivery being a “must have” for restaurants nowadays, it’s moved on to larger entertainment venues. And cruise ships are basically just massive entertainment space that float.

Nor is Royal Caribbean the first to try food delivery. This past summer, Carnival Cruise started testing delivery functionality in its own app for pizza and beverages, using a similar pin-drop functionality for users to designate their location.

A natural question is whether we’ll see third-party aggregators like DoorDash and Uber Eats try to hop onboard and scoop up some of the competition. On the one hand, cruise tend to be closed ecosystems, so to speak, of carefully curated experiences, so ceding some of that power to third parties doesn’t necessarily make sense. However, Postmates has already struck deals with baseball stadiums (see above) and essentially become part of the in-house branding, so it’s a stretch but not out of the question to think we might see them or another service on the sea at some point in future.

DoorDash Now Holds 35 Percent of Consumer Spend in Third-Party Delivery

DoorDash’s growth continues outpacing its competitors in the third-party delivery space, according to a new report. This week Edison Trends released data on the third-party delivery market that shows DoorDash leads the competition with 35 percent market share of consumer spend, followed by Uber Eats (25 percent) and Grubhub (23 percent).

The lead DoorDash currently enjoys is not surprise, as it’s been a big year for the San Francisco-based service. The company now offers delivery in all 50 U.S. states and was the first to do so. Its $410 million acquisition of Caviar in August gave the service an even wider reach, and over the last 12 months DoorDash has been scoring deals a plenty with major restaurant chains as well as expanding service to other continents.

Right now, DoorDash’s lead is a small one, though. As Edison points out, the company shared “approximately the same market share of consumer spend” with Grubhub and Uber Eats at the beginning of 2019, so a small lead now doesn’t necessarily mean total dominance for the foreseeable future. All of these companies are still looking for ways to boost user loyalty to their specific platforms, not to mention reach some level of profitability.

What’s interesting about DoorDash is that, as a service, it doesn’t tend to dabble in many initiatives outside of partnering with restaurants and acquiring companies that will help deliver food faster. By contrast, Uber Eats seems forever unrolling new features on and off its app, and Grubhub is of late fixed on launching digital-only concept restaurants. Postmates, meanwhile, appears to be turning its attention to large-scale venues like baseball stadiums.

It’s possible part of DoorDash’s lead is due to its simpler-is-better approach, which focuses primarily (though not exclusively) on expanding service and increasing restaurant choice. Whether this is the winning strategy remains anything but certain.

Fatburger Is Turning Los Angeles Stores Into Ghost Kitchens for Its Sister Brand

Southern California QSR chain Fatburger is turning 15 of its Los Angeles locations into ghost kitchens for Hurricane Grill & Wings, one of its sister brands, according to a post this week from Nation’s Restaurant News. Both chains are owned by Los Angeles-based restaurant company FAT Brands.

Hurricane Grill & Wings has restaurant locations across Florida as well as in New York, New Jersey, and a handful of other states. A store for Chula Vista, CA is in the works, but at present, the chain has no locations in operation in the state of California. However, thanks to Fatburger’s newly launched ghost kitchens, customers in Los Angeles will be able to access the Hurricane menu when ordering for delivery.

The limited version of Hurricane’s menu will feature the chain’s wings as well as a few other items like onion rings, fries, and soft drinks. The menu will only be available for delivery customers who order via the usual suspects of third-party delivery: Grubhub, Uber Eats, Postmates, and DoorDash.

To be clear: The virtual Hurricane restaurants aren’t displacing those Fatburger locations. Rather, Fatburger’s kitchens will do double duty, with cooks trained to make food from both menus.

Like any other ghost kitchen, Hurricane’s will be a completely unseen operation. There’s no dining room involved — customers who eat in at Fatburger locations doubling as ghost kitchens will not be able to order off the Hurricane menu, which, as mentioned above, will be available solely through third-party delivery channels.

For a restaurant company trying to grow multiple brands at once, a move like FAT Brands’ is a smart play towards enticing new customers who might be fans of one restaurant chain but wouldn’t otherwise be exposed to another. Turning existing real estate into a ghost kitchen for another brand is a way to expose customers to more of those choices without incurring the high costs and thin margins of a full restaurant location that includes a dining room.

And in a restaurant business where delivery is becoming increasingly mandatory, enticing customers to try a new brand through delivery also potentially increases a business’s off-premise sales — something that would not only make investors happy during earnings calls, but could also give a brand more power negotiating commission fees with third-party delivery services.

According to NRN, FAT Brands wants to expand ghost kitchens for the Hurricane chain to 12 more Fatburger locations in the fourth quarter, and eventually apply the concept across its entire brand portfolio.

Between Faster Checkout and Robot Tater Tots, the Food Tech Game is Strong at Stadiums

If you want to see some of the coolest innovation in food technology, you need to get in the game. Well, at least get a ticket to the game because stadiums and arenas are fast becoming hotbeds for new ways to sell and get you your food quickly.

Speed is the name of the game and the impetus for most of this disruption happening at large sporting and entertainment venues. The faster attendees can order and get their food, the less time they spend away from the game or concert, and, ideally, the more stuff they buy.

The most recent example is the partnership Postmates announced last week with Yankee Stadium. The partnership, which is similar to one the delivery service has with Dodgers Stadium in LA, and allows attendees to order their food from their seats and pick it up at a designated Postmates Pickup point.

Over at Mile High Stadium in Denver, computer vision-powered checkout scanners have been installed throughout the stadium. Shoppers place their items on a scanner created by Mashgin, which automatically identifies what is being purchased, so individual items don’t need to be rung up one at a time.

But innovation isn’t just happening on the checkout side of the food stand; the way stadium food is being made is undergoing an upheaval as well. Robots in particular will play an increasingly important role in making food at large venues. The Dodgers have used Flippy the robot to fry up chicken tenders and tater tots. And back at Mile High Stadium, the Broncos installed a robo-bartender to pour and serve beer.

The point is that stadiums are perfect venues for a lot of the food technology and automation that we write about. They are large, high-traffic areas that provide a good test case for new, automated workflows and systems. The food being served isn’t highly customized, but rather made in bulk, and meant to be more consistent than artisanal. And really, while it’s fun to eat a hot dog at the ballpark, people are there for the game, so as long as they get their grub in a timely manner, they don’t really care how they get it. Seems like a win for everyone involved.

Postmates Raises $225M, Now Valued at $2.4B Ahead of IPO

Third-party delivery service Postmates has raised another $225 million in funding, TechCrunch reports. The round was led by GPI Capital and brings the service’s total amount of funding to roughly $1 billion. Postmates is now valued at $2.4 billion.

The San Francisco-based company confidentially filed for an IPO in February of this year. At last check, the company will make its IPO paperwork public this month and is expected to debut on the stock exchange at some point during the fiscal third quarter of 2019.

As TC writes:

. . . last-minute financings are critical for companies poised to run out of cash and in need of an infusion prior to hitting the public markets. The motives for Postmates last-minute financing are unclear, however, the company will certainly begin trading on the stock market at an interesting time.

Postmates would follow third-party delivery rivals Grubhub and Uber Eats into the public markets. Rival and current market leader DoorDash is also rumored to be going public.

But as we’ve written before, the long-term viability of third-party delivery is still in question. Postmates and DoorDash might be valued at massive sums right now, but as a model, third-party delivery has yet to become profitable.

It’s also an almost-constant source of controversy these days. From shady tipping policies to proposed caps on commission fees, these services have received endless headlines calling into question the ethics of the model. Meanwhile, California’s Assembly Bill 5, which was just signed into law, is a major blow to companies like Uber and DoorDash and will most likely have a ripple effect across other Democrat-led states.

Recent numbers put third-party delivery app users at 44 million users in the U.S. by 2020. When Postmates lines up next to its rivals in the public market, it will also be joining the struggle to somehow turn a profit from those millions of users.

Postmates Scores Exclusive Deal With Yankee Stadium

Postmates announced today it has struck an exclusive deal with the New York Yankees to bring pickup service to Yankee Stadium.

The news follows August’s announcement that the third-party delivery company had signed a multi-year partnership with the Los Angeles Dodgers to be the stadium’s “on-demand delivery and pickup partner.”

At both stadiums, game-goers will be able to place orders for concessions at the park from their Postmates app, then pick them up at designated Postmates Pickup points. The service is designed to save Yankees fans (or traveling rivals) time they would otherwise spend waiting in line while the game goes on. There are no extra fees involved, and, obviously, no delivery charges, since the service is pickup-only.

It’s also another move by Postmates to build its presence in areas not currently swarmed with competition from other third-party delivery/pickup services. In addition to its stadium deals, Postmates earlier this year partnered with AEG, one of the world’s largest music companies, to bring Postmates Live to the Coachella festival. These exclusive partnerships with major venues and entertainment events essentially make Postmates part of the official billing, and give the service access to an audience it wouldn’t normally be able to reach, since concerts and sporting events don’t allow outside food or drink.

If Postmates Live proves popular, there’s little reason to doubt we’ll see more third-party delivery services duking it out for dominance at stadiums across the country. From there, it’s not hard to imagine similar competition for other entertainment settings, like amusement parks.

According to a blog post from Postmates, its service is active at Yankee Stadium right now from sections 113 and 116, and will expand to the rest of the stadium once the 2020 season begins.

Week in Restaurant Tech: Ordermark Expands Kiwi Deal, Blaze Takes on Big Pizza

McDonald’s grabbed the main spotlight this week for its acquisition of voice-order tech company Apprente, which it says could make your future drive-thru experience faster and simpler. But while Mickey D’s continued its evolution from burger chain to tech company, plenty of other new developments unfolded in the restaurant space this week past week.

If you want to learn more about the latest in restaurant technology, be sure to head to Seattle this October 7–8 for The Spoon’s Smart Kitchen Summit. Grab your tickets here and come on down.

Panasonic Unveils Kiosk-as-a-Service Solution
Panasonic, which has over 11,000 kiosks deployed at QSRs around the country, introduced a new hardware-software offering this week that promises a one-stop-shop solution for restaurants when it comes to integrating kiosks into daily operations. Dubbed ClearConnect, the platform rolls hardware, the company’s iQtouch software, installation, integration with existing restaurant systems, and after-sales service into a single system restaurants pay a monthly fee for. The new solution also includes a suite of drive-thru technologies. No voice-order capabilities yet, but it’s only a matter of time before we see such a feature make its way to the kiosk.

Ordermark Expands Kiwi Partnership
Ordermark, who helps restaurants organize and streamline restaurant orders, said this week it has expanded its partnership with Kiwi, whose six-wheeled bots enable autonomous delivery service on a few different college campuses right now. According to the press release, the deal gives Kiwi access to Ordermark’s portfolio of restaurant customers, which will expand as the former rolls its bots out to other locations, including Sacramento and Palo Alto.

Image via Blaze Pizza.

Blaze Wants to Take on Big Pizza With Delivery Strategy
LeBron James-backed pizza chain Blaze unveiled two new initiatives this week: larger pies and an integrated delivery partnership with DoorDash. Up to now, Blaze has been known for its 11-inch personal pies loaded with customizable toppings that don’t exactly travel well. The addition of larger, more shareable 14-inch pizzas makes Blaze’s offerings better candidates for delivery. As with a growing number of integrated delivery options, customers can place orders directly through the Blaze website or app and still get food delivered via a DoorDash driver. (Customers can also order Blaze via DoorDash or Postmates.) Blaze also says it’s taking on Big Pizza with this new delivery partnership — though it will be some time before an upstart pizza brand has the same reach as a behemoth like Domino’s.

Postmates Adds Group Ordering Feature

This week, Postmates unveiled Group Ordering, a new feature that allows individual members of the same group to choose their own items from their own devices and send them to a single shopping cart. In other words, if you’re getting group delivery among friends or ordering dinner for the family, you no longer have to corral everyone into the same room and pass around a single phone or tablet.

To use the feature, the group “host” creates an order and shares it with other group members, who choose items from their own devices. Hosts can set limits on how much group members are allowed to spend, and also set a tip amount ahead of time. Once everyone’s orders are in, the host can make any final adjustments before placing the order, which is delivered to a single location by a single Postmates driver. If the host has Postmates Unlimited, the delivery fee is waived.

Group Ordering will be rolled out over the next few days to Postmates customers. It joins existing features like Postmates Party, which launched earlier this year and allows users to piggyback off nearby orders and is another way to get that pesky delivery fee waived.

Postmates isn’t the first third-party delivery service to offer such a feature: DoorDash released a group ordering feature for its app in 2017.

What would eventually make such features even better would be the ability for group members to each pay their own tab — more or less the virtual equivalent of splitting the check. While there’s yet no indication such a feature will be added to Postmates or any other app, it’s something these companies should definitely deliver.

In-house? Third-party? Why Online Ordering Isn’t One or the Other for Restaurants in 2019

When it comes to online ordering, some restaurants will soon need to offer the functionality through their own apps as well as via third parties like Grubhub.

Restaurant-tech powerhouse Toast indicated that much in its recently released “Restaurant Success in 2019” report, which surveyed 1,253 restaurants and 1,030 guests across the U.S. In the report, online ordering plays a starring role, with both restaurants and guests calling it one of the most important technologies for today’s restaurant experience.

In and of itself, that’s not terribly surprising. Over half of restaurant spending will be off-premises by 2020 and will account for up to 80 percent of the restaurant industry’s growth over the next five years according investment group Cowen and Company. Unless every restaurant in America soon installs a chatbot to answer phones, online ordering via apps and websites will become a must for every eating establishment in the industry.

But according to the Toast report, what that looks like will vary from restaurant to restaurant, and businesses won’t necessarily have to sign their brands away to the DoorDash’s and Grubhub’s of the world to stay competitive. In fact, 51 percent of guests surveyed in the Toast report said they had placed an order via a restaurant website in the past month compared to 38 percent of guests who had ordered from third-party service.

That’s both good news and another challenge for restaurants. Customers ordering directly from a restaurant’s website can save the business some of the fees that stack up when customers order through a third-party service like Uber Eats. The flipside for restaurants is that if you don’t have your own delivery fleet, you still have to pay for drivers and, as the report rightly points out, developing an in-house online order system is expensive and probably not justifiable for independent businesses with only one or two locations. It’s a different story, though, for multi-unit chains, as the Toast report indicates:

Getting an app developed for your restaurant may not be viable for a small restaurant with one location, but if you franchise, it could be a boon to your business. The majority of diners are ordering online a couple times a month and looking for a variety of pickup and delivery options.

Even so, the Toast survey makes it clear that customers still want the option to order via third-party delivery services, with respondents having ordered most from Grubhub, Uber Eats, and DoorDash in the last year. (Postmates is completely absent from the list.) According to the report, it’s “extremely important for restaurants to be represented across multiple third-party delivery platforms.”

Despite the continued popularity of third-party delivery services, though, the litany of criticisms lobbed at them grows: commission fees, tipping policies, antitrust issues, and questionable profitability over the long-term. At the same time, companies like ShiftPixy and Olo are becoming more popular with technologies that actually make it easier for restaurants (chains, in particular) to develop and maintain in-house ordering capabilities.

Both those trends, coupled with the constant consumer demand for speed and convenience, will create a fine balance restaurants large and small must strike in the coming months.

The Proposed Cap on NYC Delivery Fees Could Ripple Across the Rest of the Country

The New York State Liquor Authority (NYSLA) has proposed adding a 10 percent cap on the commissions full-service restaurants pay to third-party delivery companies, according to Restaurant Business Online. While such a move would provide some relief for restaurants, whose struggles with these fees are well documented, it could also put up more road blocks for third-party delivery services as they struggle to reach actual profitability. And the fight probably wouldn’t stay put in NYC for very long.

The NYSLA’s advisory, as it’s called, urges that commissions paid by restaurants with liquor licenses be capped at 10 percent. The reason the NYSLA can make such a call is because third-party delivery services share in these restaurants’ profits, and are therefore by law subject to vetting by the authority.

Rather than prohibit delivery services from charging the current 12- to 30-percent commission fees, the law, if put into effect, would make it illegal for the restaurants themselves to pay more than 10 percent on those fees. Restaurants would then have to reject anything higher than 10 percent, making it virtually impossible for delivery services to charge more.

Grubhub, in particular, has criticized a draft of the proposal, saying it contains “internal inconsistencies, vague language and an apparent attempt by the SLA to go beyond their jurisdiction.” And while Grubhub didn’t explicitly say as much, the “vague language” could potentially open the door to third-party delivery companies sidestepping the 10 percent cap with other charges, like a convenience fee.

The NYSLA urged that the advisory be discussed during a meeting on August 20.

To be clear, the advisory would only impact restaurants with liquor licenses; the scores of food businesses in New York without licenses wouldn’t be able to reap any benefit, at least not now. Mark Gjonah, chairman of the Small Business Committee of the New York City Council, told RB that in regards to these restaurants that are left out, the committee “will continue its work to establish a comprehensive solution that levels the playing field for all of New York’s locally owned restaurants.”

Should these fee changes become law, it will create a scramble for third-party delivery companies to find ways manage profitability — rather a feat, considering these services aren’t actually profitable at the moment. And with DoorDash and Postmates both pursuing the IPO track, that struggle to gain profitability — and long-term investment and viability — is becoming more of a hot-button issue for delivery companies.

In NYC, meanwhile, commission fees are just one of the many griefs lobbed against these companies. Grubhub currently takes the lion’s share of the wrath here, since it still leads the NYC market. The company was not only the center of a June oversight hearing that called into question delivery services’ power, it’s also received accusations of cybersquatting and calls for an antitrust investigation.

The other major delivery players — Uber Eats, DoorDash, Postmates — may not be getting a constant barrage of bad press in the NYC market, but they’ll be subject to the same scrutiny as Grubhub if a law over fee changes were to be enacted.

And if that were to happen, there’s a high chance for a ripple effect to other cities, which could very likely play out the way the fight over the cashless business model has across the country. When NYC introduced legislation that would ban cashless businesses from the city, including restaurants, it was a matter of mere months before New Jersey, Philadelphia, and San Francisco did the same, essentially stifling Big Tech’s hold over local business.

If this week’s advisory advances further, it looks like third-party delivery services are well on their way to facing the same backlash — on an even grander scale.