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Daily news and analysis about the food tech revolution

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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.

City By the Bot: Postmates Gets Permit to Test its “Serve” Delivery Robot in San Francisco

San Francisco has given Postmates the city’s “first-ever permit for sidewalk robotics operations,” according to a story in TechCrunch. The move marks a turn in the city’s official attitude towards delivery robots on its city sidewalks.

Postmates unveiled its rover robot, dubbed Serve, in December of last year, but has been relatively quiet about the program since then. Serve is a cooler sized robot on wheels that can carry 50 pounds, go 25 miles on a charge and uses a combination of cameras, lidar and human assistance when needed to navigate.

But perhaps more intriguing than the robot itself is the city it will, errr, Serve. In December of 2017, the city of San Francisco enacted tight restrictions on the use of commercial sidewalk robots. At the time, San Francisco’s robot ban was seen as part of its attempt by the city to get ahead of a technology issue and avoid the civic complications things like ridesharing and corporate commuter busses created.

But while San Francisco clamped down, nearby cities like Berkeley and Sacramento and other towns across the country like Phoenix and Houston rolled out the welcome mat for delivery robots… at least for testing. Perhaps San Francisco felt that getting ahead of any robotic problems could wind up leaving it behind.

Postmates told TechCrunch that it has “…been eager to work directly with cities to seek a collaborative and inclusive approach to robotic deployment that respects our public rights of way, includes community input, and allows cities to develop thoughtful regulatory regimes,”

The robot delivery sector is certainly heating up this year. In addition to Postmates, rivals Kiwi and Starship have been heading to college campuses, Amazon is testing out its Scout robot in Irivine, CA, and Refraction AI just recently launched its three-wheeled autonomous delivery vehicle.

Postmates raised $100 million at the beginning of this year and is expected to go public later this year. If they follow through, perhaps a robot could ring the opening bell.

Postmates Scores Multi-Year Partnership With the Los Angeles Dodgers

Today, the Los Angeles Dodgers officially named Postmates its exclusive “on-demand delivery and pickup partner.” According to a press release, the deal is a multi-year partnership that will incorporate Postmates Live into concession stands at Dodger Stadium in Los Angeles.

Postmates Live, also called Postmates Pickup, debuted earlier this year. The feature lets users at festivals and sporting events order and pay for food, drinks, and in some cases merchandise ahead of time, so they can skip long lines and simply pick their items up when ready. The service kicked off at 2019’s Coachella festival in April.

For the Dodger Stadium deal, fans in the Top Deck section of the park will be able to order concessions ahead of time for the rest of the 2019 season. As noted in the press release, the service will roll out to the entire stadium starting in 2020. The press release didn’t specify which concessions will be available and if the Postmates service applies to things like alcoholic beverages.

When stadium-goers place an order via the Postmates app, they’ll be given a pickup time and a text notification when their order is ready. Orders will be available for pickup at branded Postmates Pickup points. For the rest of the 2019 season, those will be located only the top deck; the entire stadium will include Pickup Points once the service rolls out in full next season.

Postmates filed for an IPO in February but hasn’t made any movement on that of late, instead focusing on expanding to new cities and striking more deals with restaurant chains.

The partnership with Dodger Stadium is interesting because it gives Postmates access to an audience it wouldn’t otherwise be able to realistically serve. Baseball games, music festivals, and other arena-like settings typically don’t allow outside food and beverage through their gates, making it impossible for third-party delivery companies to have a presence in those places. A partnership that essentially makes Postmates an official part of the stadium, at least while the deal lasts, is a way to get that presence.

For Dodger Stadium, leveraging a third-party service’s technology and logistics capabilities is a way to offer the kind of convenience and instant gratification more and more consumers expect these days in a setting historically known for its painfully long lines at concession stands.

Now the Top Food Delivery Service, DoorDash Stands Behind Its Controversial Pay Structure

While Grubhub made a lot of headlines this week as the poster child for controversial restaurant fees, DoorDash was all over the news for its controversial stance on how it pays its drivers.

Once considered the underdog of third-party delivery, DoorDash has spent the last year or so doubling down on its expansion efforts. The service became the first of the top four (which includes Grubhub, Uber Eats, and Postmates) to be available in all 50 U.S. states, and it’s seemingly made its way into every nook and cranny of suburban America through high-profile partnerships with major chain restaurants like The Cheesecake Factory, Chipotle, and the ubiquitous Chili’s. It’s also raised lots and lots (and lots) of funding.

So far those expansion efforts are paying off. In the last week, news surfaced that DoorDash now holds the number one spot in terms of marketshare for third-party food delivery services, unseating longtime leader Grubhub. Currently, DoorDash is valued at $12.6 billion, which is almost double the $6.5 billion market cap of the publicly traded Grubhub.

The growth isn’t without controversy, however, because in addition doubling down on its expansion plans, DoorDash has also, it seems, continued its controversial pay structure for drivers that many feel is unethical. TechCrunch reminded us of that point yesterday when it called out a blog post by DoorDash CEO Tony Xu that was meant highlight DoorDash’s commitment to “transparency” but really just wound up highlighting the fact that despite its $12 billion-plus valuation, the company seems to be barely paying its drivers.

“With our current pay model, Dashers see a guaranteed minimum — including tips — prior to accepting a delivery,” Xu wrote in the post.

For every delivery the DoorDash driver (also called a “Dasher”) takes, they are guaranteed a minimum pay amount. (Dashers see this number before they ever accept or decline a job.) Unlike a serving job in a brick-and-mortar restaurant, that guaranteed minimum pay isn’t derived from any kind of hourly wage. Rather, DoorDash pays a $1 base fee then uses the tip from that order to count towards that minimum guarantee. If tips plus that $1 aren’t enough, DoorDash makes up for the rest:

Image via DoorDash.

Where this becomes really problematic is when drivers (which the company calls Dashers) get an especially large tip that winds up not being a tip, but instead subsidizing the minimum guarantee:

Image via DoorDash.

It’s the same pay structure that made waves a few months ago for services like Instacart and Amazon Flex. Instacart wound up changing its structure and apologizing to workers. Amazon stood firmly by its policy, and it seems DoorDash has as well. If Xu’s blog post is anything to go by, it seems that rather than backpedal on its controversial model, DoorDash is just taking further steps to make sure the pay structure breakdown is 100 percent apparent — to Dashers, at least. One small step for transparency, one giant leap backwards for the ethics of the gig economy. Or as labor rights group Working Washington said in a statement to TC, “Talking about transparency is good. And admitting you pay $1/job is better than denying it. But $1 is still $1.”

So what do we do about it?

The easiest solution would be for more customers to just skip the “tip” option in the DoorDash interface and tip in cash. That’s unlikely, given how integrated digital tipping is in both our apps and our lives at this point. Plus, consumers shouldn’t have to go searching through FAQ pages to find out exactly where their tip money goes during a transaction. If DoorDash really wants to tout transparency as one of its priorities and values, it should be making clearer to its customers, within the digital transaction process, where their money goes. Leading someone to believe they’re paying a gratuity when they’re really just subsidizing a base pay is just flat-out deceptive, and it’s the sort of thing that could erode customer trust over time.

Including customer relationships in those transparency goals should definitely be a priority for DoorDash. But at the end of the day, giving Dashers a fair wage rests on the shoulders of the company itself, not its paying customers. Some, like Working Washington’s Pay Up Campaign, want a minimum pay wage for workers of $15/hour plus expenses. That’s a larger conversation that’s making its way around many parts of the gig economy right now, and it’s one we’ll likely hear more debate around in the coming months.

Even if DoorDash doesn’t adopt that policy, you’d think a company valued at over $12 billion could find some kind of middle ground between $15 minimum wage and $1 to pay its workers, and to do that without roping unknowing customers into the process. Perhaps amid plans to tackle the whole of suburbia, DoorDash should tackle how to treat the people building that empire more fairly.

What to Expect at Today’s Oversight Hearing for Third-Party Food Delivery in NYC

Today, New York City will hold its first-ever oversight hearing for third-party food delivery apps and the effect they have on local restaurants.

The hearing, set to take place this afternoon, will focus specifically on the fees Grubhub and other companies charge restaurants for use of their services. Perhaps even more significantly, as the NY Post reported recently, it could set the stage for potential government action that would impact third-party delivery operations in NYC.

Titled “The Changing Market for Food Delivery,” the hearing, held by the council’s Committee on Small Business and chaired by Bronx Councilman Mark Gjonaj, invites comments from all stakeholders in the business: restaurateurs, representatives from delivery services, and customers. Grubhub, who also owns Seamless, has already confirmed that a spokesperson will be present. There’s no word on whether people from Uber Eats, DoorDash, or Postmates will attend. The hearing starts at 1 p.m. at 250 W. Broadway in Manhattan.

Having a food delivery strategy is at this point table stakes for most restaurants. But not every business has the brand reach, money, and resources to go it alone à la national chains like Jimmy John’s or Olive Garden. For many, it makes more sense to pay Grubhub et al a fee and let them handle not only shuttling the food from restaurant to customer 24/7, but also the back-end logistics (like order processing and tracking) and even some marketing aspects.

Now, however, many are calling these fees into question. Depending on the terms of the deal and the specific delivery company (e.g., Grubhub versus Uber Eats), third-party services charge the restaurant anywhere between 12 and 30 percent of the final check on each order. It’s why you’ll sometimes see a restaurant charge a little more for an item to be delivered as opposed to eating in house. Third-party services often tout the uptick in orders as a way to offset these costs, which is fine if you’re McDonald’s but less effective if you’re the independently owned deli down the block.

Atop those fees and the concerns surrounding them come reports of late of third-party delivery services charging restaurants hidden fees, such as calls made through the dedicated phone numbers Grubhub and other service set up for restaurants. A class-action lawsuit filed in May of 2019 claimed that Grubhub has been charging for calls made to restaurants via Grubhub’s app, even when the calls didn’t result in an actual order being placed and fulfilled. While that lawsuit was filed in Pennsylvania, the NY Post reports that New York restauranteurs have made similar complaints, with some businesses being charged $9 and more for phone calls that didn’t result in orders. Calls for things like dinner reservations and general customer complaints are also being quietly charged, the Post said.

In turn, restaurants have been demanding refunds from delivery partners, only to be told said refunds are only good on orders going back 60 days (though one unnamed restaurant got a refund from Grubhub to the tune of $10,000 for charges dating back to 2014).

Will all these matters be discussed this afternoon at the hearing? Undoubtedly. Will they make a difference in how third-party delivery companies do business? It’s too soon to tell, but depending on how the discussion advances, the hearing could have serious effects on third-party delivery operations in NYC.

“There is always the potential that this hearing will lead to an investigative hearing from the public advocate, the city comptroller or the state attorney general,” Councilman Gjonaj told the Post in an exclusive interview.

Such action could result in legislation that limits the percentage third-party services can charge restaurants. Or, as the Post noted, it could require Grubhub and other companies to get “disclosed and fingerprinted” for the thousands of restaurants they work with, since NYC law requires anyone who shares revenues in a restaurant to be listed on the liquor license.

And there’s always the possibility of a ripple effect. The tone set by today’s gathering could influence whether other cities hold similar hearings, as well as what those hearings mean for the way third-party services will operate in the future across the country.

One thing is certain: the volume has been cranked up on this side of the delivery conversation, and it’s not going to soften any time soon as more stakeholders in the restaurant business call into question the line between a right and an abuse when it comes to doing business.

We’ll be keeping an eye on today’s events and updating our coverage accordingly. Stay tuned.

The Coffee Bean & Tea Leaf Partners With Postmates for Delivery

Today, The Coffee Bean & Tea Leaf announced and kicked off an exclusive delivery partnership with Postmates at 180 company-owned Coffee Bean & Tea Leaf locations across California and Arizona. According to a press announcement, additional locations around the U.S. are planned “in the coming weeks.”

Delivery fees on orders start at $1.99. For customers of Postmates Unlimited, the company’s subscription service, the delivery fee is waived on orders over $15.

Southern California-based Coffee Bean & Tea Leaf joins a growing list of coffee retailers now delivering, usually via third-party services.

Starbucks already operates a delivery program via Uber Eats in certain U.S. markets. If you prefer the McCafe brand for your early-morning coffee needs, McDonald’s will deliver one through Uber Eats (though it recently bailed on its exclusivity contract with the service). Dunkin’, meanwhile, has been testing delivery since 2015.

Coffee has always been a bit of a tricky delivery item, largely because it’s historically been a hot, highly spill-able beverage. As one writer noted back in 2016, “Time and temperature seem to be the two biggest obstacles [to delivery] in repeating the experiences consumers have come to expect within the brick-and-mortar retail locations.”

Those were the days when ordering coffee for delivery meant getting a tepid drink wrapped three times over in cellophane. But times are changing. More and more tech around delivery operations and logistics has entered the restaurant industry over the last few years, as have business models like ghost kitchens, which typically only service delivery and could therefore speed up order fulfillment times. Starbucks, in fact, just announced it is testing ghost kitchens in China that could improve quality and timeliness on orders.

Plus, according to the National Coffee Association’s latest report, so-called non-traditional beverages like blended drinks, cold brew, and nitro coffee are on the rise, thanks to a higher demand for personalization and specialization from younger customers. Many (though not all) of these beverages are better suited to car trips than the old-fashioned cup of joe.

As drinks like these become more popular, and as technology gets cheaper and easier for restaurants to implement and the industry continues to innovate on packaging, tepid coffee in a paper cup could soon become a thing of the past.

DoorDash Inks Exclusive Delivery Deal With Chili’s

DoorDash’s breakneck expansion across the U.S. continues this week, with the the third-party delivery service announcing an exclusive deal with casual dining chain Chili’s.

According to a press release sent via email, the partnership takes effect immediately at over 1,000 participating Chili’s restaurants in the U.S.

Chili’s, who is something of a poster child for the fast-casual American dining scene, has been vetting third-party delivery services for some time. At the end of April, the company said it was looking for a delivery partner that could adequately cover the suburban markets, where Chili’s has a substantial presence. In that light, DoorDash seems the obvious pick, as it currently holds 30 percent of the market share in sales and is the only third-party delivery company currently operating in all 50 U.S. states (as well as in 50 Canadian cities).

But DoorDash’s ability to integrate with Chili’s existing POS system might have been the real determining factor. Chili’s, along with its parent company, Brinker Internatoinal, has been skeptical about third-party delivery services overall. Brinker CEO Wyman Roberts said back in January that his company was “. . . cautious on business model implications and significant fees, but more importantly, the impact it has on our systems isn’t great.” In the same interview, Roberts added that, “From a technology standpoint, given that so many of these third parties are really priding themselves on being experts, we’re challenging them to integrate better.”

Integrating DoorDash directly into the restaurant chain’s POS system means all DoorDash orders are sent directly to Chili’s, without a server needing to manually input the information. As well, a direct integration means it’s easier and faster for Chili’s to onboard more of its locations onto this new delivery program.

This ability to integrate almost seamlessly into existing restaurant systems may be key for third-party services in future as they rush to gain and retain customers. All of the top services — Grubhub, Uber Eats, and Postmates along with DoorDash — offer POS integration capabilities. The question at this point appears to be more around who can offer it at the best price point for restaurants, and do so without introducing a lot of disruption to day-to-day operations. Might operational efficiency be yet-another area in which DoorDash can stand out?

DoorDash raised another $600 million in funding this past May, bringing the company’s total funding to $2 billion. This came on the heels of a $400 million Series F round raised in February of 2019. DoorDash has also said that since that Series F round, its business has grown 60 percent. Pair those numbers with the company’s continued and aggressive push across North America, as well as high-profile restaurant partnerships like the Chili’s deal, and there’s reason to suspect the company could be well on its way to nabbing the top spot in the market for third-party delivery.

Forget IPOs. DoorDash Is the One to Watch Right Now in Third-Party Delivery

Grubhub still leads the third-party food delivery market in terms of sales, and of late, Postmates and Uber Eats have gotten a lot of attention for their respective pre- and post-IPO news. But DoorDash may well be the most important company to watch in the escalating showdown for third-party delivery dominance, according to new data from tech company Second Measure.

Second Measure analyzes anonymized credit card transactions and uses that data to shed light on customer behaviors. In the world of third-party delivery, those behaviors underscore the rapid growth DoorDash has undergone recently, growth that has the company almost on equal footing with Grubhub in terms of monthly sales. Grubhub leads the market, with 32 percent of total monthly sales. But the company’s growth is now slower than its competitors, as evidenced in the following graph:

Source: Second Measure

DoorDash, meanwhile, holds 30 percent of the market in terms of monthly sales, and unlike Grubhub, it’s still growing rapidly. In February 2019, DoorDash closed a $400,000 million round and had a valuation of $7.1 billion. Besides investors, Second Measure notes in its report that DoorDash saw “a staggering 216-percent year-over-year jump [in sales], compared to 58 percent at Uber Eats and 4 percent at Grubhub.”

Part of those rising sales numbers are no doubt due to DoorDash’s aggressive push across the country. The service is the only third-party delivery service right now to be in all 50 U.S. states, in case you couldn’t tell from the endless numbers of promotions and partnerships the company does with everyone from Canter’s Deli in LA to Taco Bell to the Wyndham Hotels chain. The service is also now in 50 Canadian cities.

Impressive as the numbers are, no one’s place in the third-party delivery market seems certain because the space changes so rapidly — something that will continue for the rest of 2019 and beyond. DoorDash will have to work hard at retaining its customers if it wants to keep up. And as Second Measure and others have noted, loyalty to any one service isn’t something third-party delivery customers prioritize. For example, in the first quarter of 2017, 88 percent of Grubhub’s customers didn’t use another service; two years later, that number has dropped to 62 percent.

Unless, that is, you’re in the south. It seems of all the third-party delivery services out there, Waitr, who’s business is more focused on second-tier U.S. cities, has the highest number of loyal customers on the list. Waitr (who recently acquired Bite Squad) doesn’t (yet) have the reach or growth rate of DoorDash, but focusing on customer loyalty in cities that aren’t New York, LA, or other major metropolises could eventually be hugely advantageous. DoorDash should take note.

Here’s The Spoon’s 2019 Food Robotics Market Map

Today we head to San Francisco for The Spoon’s first-ever food-robotics event. ArticulAte kicks off at 9:05 a.m. sharp at the General Assembly venue in SF, and throughout the daylong event talk will be about all things robots, from the technology itself to business and regulatory issues surrounding it.

When you stop and look around the food industry, whether it’s new restaurants embracing automation or companies changing the way we get our groceries, it’s easy to see why the food robotics market is projected to be a $3.1 billion market by 2025.

But there’s no one way to make a robot, and so to give you a sense of who’s who in this space, and to celebrate the start of ArticulAte, The Spoon’s editors put together this market map of the food robotics landscape.

This is the first edition of this map, which we’ll improve and build upon as the market changes and grows. If you have any suggestions for other companies or see ones we missed you think should be in there, let us know by leaving a comment below or emailing us at tips@thespoon.tech.

Click on the map below to enlarge it.

The Food Robotics Market 2019:

Postmates’ New Party Feature Is Another Way to Waive Delivery Fees

Yesterday, Postmates launched a new feature called Postmates Party, which lets customers in the same vicinity opt to share drivers and in return get food delivered for free.

As TechCrunch pointed out, the feature is a lot like Uber’s POOL feature. Postmates Party lets you see where others in your neighborhood are ordering from at that exact moment and essentially piggyback off those orders. Postmates waives the delivery fee and any peak time pricing when you order from those restaurants at that time.

There is a five-minute window from the time you select Party to the time you must checkout in order to get the free delivery:

The feature is clearly aimed at price-conscious customers who might not want to pay a delivery fee for every single order they place via Postmates, and it’s one of many new ways third-party delivery services are trying to stand out in the competition and also retain customers. Those moves include ghost kitchens from Uber Eats, DoorDash testing out self-driving cars, and Postmates experimenting with a delivery rover that looks like Minion.

Big moves and technologies like those above are great, and may even be necessary. But what’s interesting about Postmates Party is that it’s a small addition to the service that offers a solution to a big problem: fees. A Technomic forecast that explored off-premises restaurant trends recently honed in on per-delivery fees with third-party services as a barrier to consumer adoption. While the forecast was specifically talking about subscription models (another appealing new feature of most services), pooling orders with nearby strangers is appealing because it requires no additional steps from the customer, so long as they get that order in within the five-minute window Postmates has provided.

For Postmates, the feature could also streamline its operations a bit because it can cluster orders in the same neighborhoods and save on how many drivers it has to pay, how many trips those drivers take, etc.

Interestingly, Postmates unrolled the feature just as Uber Eats came under fire for a confusing new pricing structure that has Reddit users the world over calling bullshit on the service for actually marking prices up.

Also this week, CNBC reported that Grubhub is losing customer retention and, according to analysts, “will have to add three times as many new diners in the third quarter of this year compared to 2018 to make up for expected churn.”

While we don’t have any numbers yet on how Postmates’ new Party feature is performing, the service may be wise to focus its efforts on iterative changes to its app that cost the customer nothing (in terms of both money and time) and might even make the service more efficient in some places.

Postmates Party is currently only available in select U.S. cities: NYC, Las Vegas, Los Angeles, Chicago, Phoenix, San Francisco, Long Beach, CA, Miami, San Diego, Seattle, Orange County, CA, and Philadelphia.

Waitr Takes a Bite Out of the Third-Party Delivery Market, One Small City at a Time

A brief history lesson: When Walmart first became successful enough to expand outside its home state of Arkansas in the 1960s, the company didn’t immediately barrel into heavily populated coastal cities like New York or Los Angeles. Instead, it opened locations Missouri and Oklahoma — neighboring states but not exactly the epicenter of commerce. Walmart didn’t actually make it to California until the ‘80s and New York until the ‘90s.

Chris Meaux, CEO of delivery service Waitr, argues that this focus on smaller markets is how Walmart built the mega-popular status it enjoys today. And if he has his way, Waitr will eventually be able to tell a similar story.

“[They] had such brand equity that they eventually got pulled into [major] cities,” he says of the big-box retailer’s eventual coast-to-coast expansion. “And I think the same thing could happen to Waitr over time. We’re building a very strong brand in the markets we serve. If the demand for that brand requires we get pulled into major markets, we’ll do it.”

To the consumer, Waitr looks much like any third-party delivery service: You download an app, order food, and wait for someone to deliver it. The company operates in many of the same markets as — and many markets where those bigger players aren’t.

To be clear, Waitr isn’t trying to be the next Walmart. It is, however, following the retail giant’s strategy of expanding from its smallish hometown — in this case, Lake Charles, Louisiana — into other smallish cities before heading to the mid-sized markets a la Minneapolis or Amarillo, Texas. Major metropolises aren’t even on the wish list right now.

Even its website emphasizes this localish approach, pushing the image of a hometown food service rather than a faceless entity that’s in every other American city. As Meaux explained over the phone recently, these places are perfect markets for Waitr’s business “because they haven’t gotten attention from some of the larger companies.”

Waitr’s current territory includes much of the Southeast and two dozen cities in Texas. And with its recent acquisition of Bite Squad for $321.3 million, that reach expands to smaller coastal markets like Virginia and Hawaii.

“It was almost exactly the same business model as Waitr,” Meaux says of Bite Squad, adding that larger companies tend to be more focused on demand for consumers, whereas Waitr/Bit Squad puts a lot of emphasis on partnerships with restaurants and drivers, too.

How to employ drivers was a key area on which Waitr and Bite Squad agreed, and it’s the other thing setting Waitr apart from the larger delivery companies. Waitr has, according to Meaux, around 18,000 W2 employees as drivers on its payroll. And he’s aware of how absurdly expensive that sounds to most people.

“It’s really a policy that employees are more expensive,” he says. “Efficient employees are much less expensive.” Because Bite Squad can schedule employees to work when they actually need them, they can more easily accommodate busier periods of the day (dinnertime) and cut back when it’s slow (2 p.m.). Meaux says drivers are reimbursed for personal vehicle and cellphone use. “If you manage the driver flee right and you schedule the drivers when you need them, [you] can do it with a fraction of the drivers that [competitors] require. And as long as employees stay busy, the company profits, because its fees are hourly, rather than a flat rate. Bit Squad, who still maintains its own operations, uses an almost identical approach when it comes to drivers.

It’s impossible to now right now whether this is a sustainable model for the long term. But Meaux, along with Bite Squad CMO Craig Key, are optimistic. “We’re excited about the future about Wiater and Bite Squad, we’re deep into the integration,” says Meaux. “We have a lot of opportunity for growth and expansion. We believe in the next five to seven years or so, we have a chance to be a significant leader in the space.”

He says there will also be room in that future to continue exploring a subscription-based model, something other delivery companies are currently experimenting with, too. Bite Squad’s Unlimited service costs $5.99/month, and users can order from participating restaurants within a four-mile radius. Meaux says there’s “tremendous opportunity” for the unlimited model, though it won’t be as significant as, say Amazon Prime was for e-commerce. “Products or services are oftentimes options. Food is not an option.”

One could argue that delivery is optional, but at this point, it’s so widely and cheaply available it’s become commonplace. In fact, Waitr’s heaviest users, Meaux tells me, are “moms with kids” who “have no time.” Paying a five dollar fee to not throw kids in the car and drive to the restaurant or grocery store seems a small investment when looked at in that light, especially when it comes to smaller cities and longer distances between any two places.

Subscription Models Are the Future of Third-Party Food Delivery

When Postmates started delivering Starbucks back in 2015, the deal came with a glaring drawback: Postmates’ $5.99 delivery fee applied to any order, even if it was a single beverage. While it was fun and novel to try getting a tall latte delivered to the office once, just to say you did, most of us wrote the concept off as impractical and unsustainable.

Times have changed. Coffee delivery with reasonable delivery fees is now a thing, along with smoothies, Big Macs, $1.19 bean burritos, and pretty much anything else you can imagine. That’s thanks to the fact that off-premise sales are now 38 percent of total restaurant sales and growing, and, according to a recent forecast by Technomic, much of the growth comes from the rise of third-party delivery sales.

That makes now the perfect time to rethink delivery fees, and a growing number of companies are now looking to the subscription model.

Think Netflix for food delivery: You sign up for a monthly membership, and in return get unlimited delivery on food in your area. For third-party services, the subscription route offers users competitive pricing options that will (hopefully) keep the diehard delivery fans loyal to the service. In its forecast, Technomic noted that “subscription models that eliminate per-delivery fees in favor of a flat-rate subscription will emerge to present a clearer value proposition to customers.”

As this is a fairly nascent practice, it’s far from perfect at the moment, with restrictions and limitations that could put some people off. But the mere fact that most of the major delivery players now have some presence in the subscription model space suggests it’s an area of delivery we should watch closely over the rest of 2019. Here’s what folks are up to:

DoorDash unveiled its DashPass in August of 2018. For a monthly fee of $9.99 you can order as much delivery from participating restaurants as your heart desires and your pocketbook can manage. In a blog post, DoorDash called out some big-name chains as participants, such as Wendy’s, The Cheesecake Factor, and White Castle, suggesting major restaurants are at least partially on-board with the subscription-style business model.

Right now there are a couple restrictions with DashPass: orders have to be over $15 to qualify for DashPass, and the pass only applies to certain restaurants. For example, I’m writing this post from Nashville, TN, where DoorDash tells me 110 restaurants are available for DashPass, which is hardly the extent of Music City’s culinary landscape.

Postmates offers a similar service, and has done so since 2016. For $10 per month, you can use the Plus Unlimited service for delivery orders over $15. As with DoorDash, the program only applies to those restaurants participating, which limits your options somewhat. Postmates also promises member deals and discounts.

In the UK, Deliveroo rolled out a subscription service last year called Deliveroo Plus. At £7.99/month, it’s a steal for anyone ordering just a few meals per month. (Deliveroo typically charges a £2.50 delivery fee per order.) There’s no order minimum, either, making Deliveroo’s service something like the Amazon Prime of food delivery.

Uber Eats started testing a loyalty program in the UK last year that would potentially do away with delivery fees. Thus far, it hasn’t come Stateside. Grubhub, still the leader in third-party food delivery, hasn’t yet dabbled in subscriptions, either. But I wouldn’t be surprised if either of those two have something in the works.

The key to a successful subscription offering will ultimately lie in how much choice services can offer consumers while still providing a delivery-fee-free package. If that’s pie-in-the-sky thinking at the moment, I doubt it stays that way for long.