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Daily news and analysis about the food tech revolution

restaurant delivery

Gopuff is Hiring to Get Into Ghost Kitchens

It looks like Gopuff, which is best known for ’round the clock, half-hour grocery delivery, is expanding into the ghost kitchen business. According to HNGRY (subscription required), Gopuff is hiring more than 100 cooks, managers in states across the country including Arizona, Texas, Florida and Pennsylvania to be a part of its new ghost kitchen endeavor (hat tip to Grocery Dive).

A job description for a Kitchen Associate in Chandler, Arizona on Gopuff’s site reads:

As a member of Gopuff’s new Fresh Food & Local team, the Kitchen Lead role is crucial to contributing to the success of Gopuff Fresh & Local by leading and managing a vertically integrated ghost kitchen.

Ghost kitchens are commercial kitchen facilities without dining rooms that restaurant brands can rent out to create delivery-only concepts. Meal delivery and takeout, of course, have risen in prominence over the past year as the pandemic forced the closure of dining rooms across the country.

Gopuff, which has micro-fulfillment centers in 650 cities in the U.S., raised a whopping $1.5 billion in funding earlier this year and acquired fleet management company RideOS last month. The general thinking at the time of that acquisition was that RideOS would be used as part of its core grocery delivery operations. But as Grocery Dive points out, that same feet management technology could also be used for routing restaurant meal deliveries.

The ghost kitchen space has certainly been a hotbed of activity over the past year with a number of players launching and expanding services. But perhaps what is more interesting about Gopuff’s hiring spree is the latest example of the lines between restaurant, grocery retail and ghost kitchen blurring. DoorDash, which started out as a restaurant delivery service, launched its own ghost kitchen and is expanding further into grocery delivery and expanding it own dark delivery only Dash Mart stores. Walmart is doing virtual food courts via ghost kitchens. And ghost kitchen operator C3 is running ghost kitchens out of hotels and residential spaces.

For Gopuff, adding hot meals to its existing grocery delivery business makes sense, given that it aims to complete deliveries in a half-hour. In that short amount of time your restaurant food arrives hot, while your pint of ice cream stays cool. Now the onus is on Gopuff to communicate clearly what it’s brand proposition is, so people will order both from the company.

Dishpatch Raises £10M for ‘Finish at Home’ Meal Delivery Service

Dishpatch, a finish-at-home meal kit service based in the U.K., has raised £10 million (~$14 million USD) in seed funding from Andreessen Horowitz and LocalGlobe, who co-led the round. Other participants to the round include Stride, Entree Capital, Entrepreneur First, and several angel investors.

The Dishpatch service is a cross between a meal kit company and a restaurant delivery service. The company works with local restaurants to offer consumers a pick of weekly meals that are delivered on Fridays. All food is fully cooked at the restaurant but arrives to customers’ homes cold. Customers themselves handle the final heating and preparation, aided by detailed instructions that accompany that food. 

Dishpatch, which has called itself “the antithesis of Deliveroo,” launched during the pandemic as an in-between option for off-premises restaurant meals that’s not quite restaurant delivery but not a box of raw ingredients a la HelloFresh, either.  

The finish-at-home meal kit concept as a whole became popular in 2020 during the pandemic. For many restaurants, particularly higher end ones, throwing a fully prepped hot meal into a takeout box and handing it over to a delivery courier was less than ideal. However, with dining rooms closed for the majority of 2020, businesses had to make revenue from other channels. Finish-at-home meal kits provided a way for restaurants to participate in delivery without compromising the integrity of their food concepts. Many of the restaurants now on Dishpatch’s platform started working with the company, which was founded in 2020, for exactly this reason. 

Dishpatch currently has 25 restaurant signed to its platform that delivery to the London area — over 50 miles from the city center in some cases. Funds from this seed round will allow 20 more restaurants to join the by the end of the year. The company will also further develop its tech, marketing, distribution, and customer service.  

Refraction AI Launches Robotic Delivery Service in Austin, Texas

Refraction AI announced today that it is expanding its delivery robot service outside of Michigan and into Austin, Texas. This is the second location for Refraction’s robots, which will offer restaurant delivery in the South Congress, Downtown and Travis Heights neighborhoods.

Refraction is a little different from other robot delivery players in the space. Unlike Kiwibot or Starship, which make cooler-sized sidewalk robots, Refraction’s REV-1 robot is bigger, faster, and meant to drive in city bike lanes. The REV-1 is meant for suburban areas with a sizeable population in a relatively contained geography. In Ann Arbor, Michigan, where Refraction originated, the REV-1 has a delivery radius of roughly 3.5 miles.

That Refraction chose Austin as its second location is really not a surprise. Though the company was founded in Michigan, Luke Schneider, who was brought in as Refraction CEO last fall, is based in Austin, TX. When Refraction raised $4.2 million earlier this year, Schneider told me that part of that money would go towards building up operations in Austin.

Southside Flying Pizza will be the first restaurant offering Refraction’s robot delivery option. The Austin pilot will debut with a fleet of 10 robots with the possibility of more being added as more restaurant partners join the program. Customers in the service area will place orders directly through participating restaurants and choose robot delivery. Text messages are sent to the customer with delivery updates, notification when the robot arrives and a unique code to unlock the robot.

Worth noting is that in the press release announcing the Austin expansion, Refraction only mentions restaurant partners at launch and not grocery delivery. With its rather sizeable cargo hold, groceries are a good fit for the REV-1, and during the pandemic last year Refraction quickly added grocery delivery in Ann Arbor as people looked for contactless ways to get their food. I presume we’ll see grocery partners added to the list should REV-1’s delivery catch on with consumers.

Indian Food Delivery Startup Swiggy Raises $800 Million

India-based food delivery startup, Swiggy, has raised an addition $800 million in funding, The Economic Times reported today. The round was led by Falcon Edge, Amansa Capital, Think Investments, Carmignac and Goldman Sachs, with participation from new investment from sovereign wealth funds Qatar Investment Authority and GIC of Singapore. This brings the total amount of funding raised by Swiggy to roughly $2.4 billion.

India went on a severe national lockdown during the pandemic last year and Swiggy reportedly saw its daily business drop to processing fewer than one million orders a day, down from three million prior to the pandemic. The strict measures forced Swiggy to cut more than 2,000 jobs and scale back on its ghost kitchen ambitions.

But the Economic Times writes that food delivery was designated an essential service by the Indian government and that since then, both Swiggy, and its rival, Zomato have rebounded. Each company recorded their highest levels of business on December 31.

In an internal email sent out to the company (and viewed by The Economic Times) announcing the new funding, Swiggy Co-Founder and CEO, Sriharsha Majety wrote:

The fundraise gives us a lot more firepower than the planned investments for our current business lines. Given our unfettered ambition though, we will continue to seed/experiment new offerings for the future that may be ready for investments later.

With its new funding, Swiggy is now valued at $5 billion. The fundraise and new valuation come as Zomato, which is valued at $5.5 billion is prepping to go public later this year.

Major Investors Avoid Deliveroo, Citing Concerns Over Worker Treatment

Ahead of Deliveroo’s initial public offering next week, six major investors in the U.K. say they will not buy shares of the third-party delivery service, citing concerns over the way the company treats workers. Additionally, hundreds of couriers plan to refuse making deliveries when the company starts trading next week, according to a report from Bloomberg.

Aberdeen Standard, Aviva Investors, BMO Global, CCLA, LGIM, and M&G said they would not participate in the Deliveroo IPO due to the working conditions for Deliveroo drivers and couriers. 

Like other third-party delivery services, including U.S.-based Uber Eats, Grubhub, and DoorDash, Deliveroo classifies its workers as contractors. In doing so, the company does not have to pay things like minimum wage or sick leave. 

Investor concerns come the same week the Bureau of Investigative Journalism published a report that found Deliveroo riders can earn as little as £2 per hour during their shifts. The analysis is based on “thousands of invoices from more than 300 riders over the past year.”

A BMO Global portfolio manager told Bloomberg that the workers’ rights issue “is too big a hurdle for me to take any risks with my clients’ capital today.” He added that there are “better business models” out there than the gig-economy one used by Deliveroo, Uber Eats, and others. 

One alternative model is that of Just Eat Takeaway.com, which has pledged to move away from gig workers recently in order to classify its drivers and couriers as employees. Uber, meanwhile, was recently forced to reclassify its workers as employees in the U.K., after a supreme court case in February, although for now the decision does not apply to the company’s Eats’ business. 

Deliveroo may at some point be forced to do the same. In February, the European Commission launched an initial consultation on conditions for gig-economy workers and is planning to draw up legislation that would govern how the gig economy works in the EU.

That potential legislation also makes Deliveroo a bigger risk for investors. “If Deliveroo is forced to change the way it classifies its riders in the future, it is likely to puncture its profits prospects, and could even derail the delivery giant,” the company said in documents outlining its IPO plans. It has set aside over £112 million to cover the potential legal costs around how the company classifies its workers. 

Chipotle Invests in Self-Driving Delivery Vehicle Company Nuro

QSR chain Chipotle announced today that it has invested in autonomous delivery vehicle startup, Nuro. The amount invested was not disclosed and according to the press announcement, Chipotle’s investment is part of Nuro’s Series C round, which was announced last November.

Chipotle has been playing the digital long game, adding features like advanced “Chipotlanes” for drive-thru customer. That shift was one reason it was able to weather the pandemic relatively well. According to today’s press release, Chipotle’s digital business grew over 174% year over year in 2020. On top of that, Chipotles also got into the ghost kitchen game last November as dining rooms remained closed thanks to COVID.

Tying these threads together, it’s not hard to see how digital ordering, high-tech drive-thrus, ghost kitchens and self-driving vehicles could all work together. An autonomous Chipotle pod pulls into a Chipotlane, a human (or conveyor belt!) puts the order in the pod, which then drives off to make the delivery. Repeat all day long.

The good thing about Nuro’s low-speed vehicles is that they travel faster and can go farther than a sidewalk robot like Starship or Kiwibot. Plus, Nuro’s technology has gotten approvals from both the federal government and the State of California. Nuro’s self-driving pods have actually been operating without human intervention for some time now.

But! Nuro’s pods are half the size of a regular car and have two compartments that can haul a week’s worth of groceries. The Nuro pod seems… excessive for carrying a burrito across town. I wonder if Chipotle will outfit its own Nuro pods with an automat-like cubby system to hold multiple orders. Or, perhaps they will initially reserve the use of Nuros for corporate catering, which bundles together a bunch of orders.

Regardless, a big QSR brand like Chipotle investing in autonomous vehicles is not just a feather in the cap (and money in the bank) for Nuro. It could help boost the overall autonomous delivery sector.

If you are curious about the future of autonomous vehicle food delivery, be sure to attend our ArticulATE food robotics virtual conference on May 18!

Delivery Hero Launches its Own VC Fund, DX Ventures, to Invest Across Food Tech

Global food delivery service Delivery Hero announced today the official launch of its own venture capital fund that will invest in food, delivery, and other areas of the food industry. Called DX Ventures, the fund has a dedicated pool of long-term capital to devote to companies working in on-demand services, food tech, fintech, artificial intelligence, and logistics, according to a press release sent to The Spoon.

Duncan McIntyre, Managing Director of DX Ventures, said the fund was something Delivery Hero has been thinking about for a number of years, and that investments into other companies is a strong part of how the service has been built over the years. “We’ve made about $500 million [in] minority investments over the last couple years,” he told me over the phone recently. Out of the success of those investments came the next obvious step: formalizing the concept of Delivery Hero as an investor. Hence, DX Ventures.

The fund will start off with a focus on early-stage companies, such as those at Series A level. “The aim of the fund is to look at industries and areas that are going to be disruptive over the next 10 years,” McIntyre said. That could include food delivery, but it might also include adjacent areas, such as alternative proteins, packaging alternatives, or supply chain features.

He added that DX Ventures will also look for companies that compliment the core Delivery Hero platform. Delivery Hero, for example, has added grocery delivery to its list of services (see the company’s $360 million acquisition of InstaShop last year). McIntyre suggested that companies contributing to the grocery delivery sector might be appropriate candidates to receive investment from DX Ventures. Other examples might include companies that can improve the restaurant delivery experience by providing better tracking, shorter delivery windows, lower price points, or healthier food options. “There’s a lot of efficiency to be gained in the food system,” said McIntyre.

All of the above examples are hypothetical at this point, as DX Ventures has yet to announce any companies it is investing in. At the moment, the fund is actively looking for companies in which to invest over the long term.

Potential companies can be located anywhere geographically speaking, though the fund will also focus on markets where Delivery Hero already has a presence. At the moment, that includes no less than 50 countries across Asia, Europe, Latin America, the Middle East, and North Africa. 

DX Ventures will be independently managed from Delivery Hero.

Yandex Robots Roaming Russia Delivering Restaurant Meals

Robots from Yandex, a tech giant which is kind of like Russia’s Google, have started making restaurant deliveries in the Russian cities of Moscow and Innopolis, the company announced in a corporate blog post today.

The Yandex.Rover robots are six-wheeled, cooler-sized robots similar to those from Starship and Kiwibot. They work in conjunction with Yandex.Eats, the company’s restaurant and grocery delivery service that has more than 30,000 merchants across 166 cities. Via the YandexEats app, users select their desired restaurant and choose the delivery-robot option to get their food delivered by one of the company’s bots. When the order arrives, recipients unlock the bot with their mobile phone.

Yandex’s blog post didn’t mention how many delivery robots are in its fleet in each city, or how big the service areas are. It did note that its robots are delivering in the White Square district, which is in central Moscow and home to many cafes and restaurants, and that robot delivery is free in Innopolis. Yandex said its robots can also handle inclement weather, which I imagine is an important feature for Russian winters.

The global pandemic has increased interest in robot delivery in part because of its contactless nature. Robots don’t get sick and can theoretically work around the clock. In recent months we’ve seen a number of rover robot deployments in different parts of the world. The City of San Jose partnered with Kiwibot over the summer to enable restaurant delivery. Save Mart in Modesto, California started delivering groceries via Starship’s robots. Pink Dot started making robot deliveries via Postmate’s Serve robot in the West Hollywood neighborhood of Los Angeles. And in South Korea, Woowa Brothers started making robot deliveries to an apartment complex in Seoul.

As part of its announcement, Yandex said that in addition to delivering restaurant meals, its robots would also be making grocery deliveries in the future.

Minnow Raises $2.2M Seed Round for Contact-Free Delivery Pods

Minnow Technologies, which make IoT-enabled, contactless delivery lockers, announced today that it has raised a $2.2 million seed round led by Elevate Capital with participation from Portland See Fund and the venture capital arm of Lincoln Property Company. This brings the total amount of funding raised by Minnow to $3.4 million.

With the pandemic still raging across the country, contactless delivery is basically table stakes for food operators and consumers alike. Minnow’s pods are installed in high-traffic locations and allow food deliveries to be stored in specified cubbies and unlocked by customers using their mobile phones.

Minnow’s go-to market strategy (and company name) has evolved since its inception back in 2017. The company was first called Veebie and the food locker was meant to be mobile. When the company changed its name to Kadabra, it took the wheels off the locker, installing them in locations and added IoT capablities. When it re-branded as Minnow (and moved headquarters from Portland, Maine to Portland, Oregon), and officially launched in March of this year, it installed seven Minnow pods in office buildings in the Portland, Oregon area.

The COVID-19 pandemic, however, meant that office buildings weren’t exactly bustling any longer, so the company started looking at apartment and other multi-family residential buildings as installation locations. In today’s funding announcement, Minnow added that its pods were also available for ghost kitchens and other cafeterias (a la Brightloom) to act as a contactless intermediary between kitchen and delivery people or customers. Minnow even added UV lights to the interior of its cubbies to further help with sterilization.

Minnow is certainly raising money at the right time. With restaurants going back and forth between opening and closing, off-premises eating is the really the main way for them to stay afloat. Delivery cubbies like Minnow’s also have the added benefit of flexibility for the customer. Instead of having to be at the door when the delivery person comes, food can be dropped off in the insulated cubby and picked up when its most convenient (the Minnow FAQ says that the cubbies are designed to hold food for 90 minutes).

With its move into residential buildings, having Lincoln Property Company, which has buildings in 28 states, is a good investor to have. Even after the pandemic recedes (whenever that will be), people will still be getting food delivered, and having a special locker in your lobby will be a nice perk for residents.

ezCater Lauches Relish to Reimagine Corporate Lunches

In case you hadn’t heard, the buffet as we know it is dead. That includes the catered office buffet. Now, as people head back to the office, companies need new ways to provide lunch that’s more sanitized, more socially distanced, and still quick and convenient for workers.

Online catering marketplace ezCater launched one such way this week. Relish, as the service is called, lets employees order from a selection of local restaurants then delivers all food directly to the office, according to a press release sent to The Spoon.

Using Relish, companies can choose which days of the week they want lunch catered to the office and set a budget for how much employees can spend. Relish then offers meal suggestions from local restaurants near the office. Employees can choose their food from the suggestions, and all meals arrive individually packaged to a central drop-off point in the office. 

Companies cover the delivery costs and can choose to subsidize some or all of the meals.

Like other areas of foodservice, office catering is undergoing a reinvention, thanks to the pandemic, and catering services are trying to become integral parts of companies’ return-to-work strategies. With more employees working from home for the foreseeable future, some brands, like Ox Verte and Slow Up, have created direct-to-consumer channels that deliver to employees home offices. Recently, too, Uber for Business launched its Vouchers program, which lets companies customize the types of meals they want to cater, whether it’s for a single employee working from home or a 1,000-person virtual event.

It’s too soon to tell which of the above strategies will prove most popular among corporate customers looking to subsidize employee lunches. Getting large numbers of people back to the office before there is a COVID-19 vaccine could prove challenging. The ability to pivot in this pandemic world is especially important for ezCater, which has raised roughly $320 million in funding. It’s tough to scale your corporate catering when corporations aren’t going into their offices.

On the flip side, once a vaccine is found and more people physically head back to work, the company could emerge as a leader thanks to its early start in redefining the concept of office lunches.  

Third-Party Delivery Integrator Deliverect Raises €16.25M

Deliverect, which makes software that integrates orders from multiple third-party delivery services into a restaurant’s POS system, announced today that it has raised a €16.25 million (~$17.63 million USD) Series B round of funding. EU-Startups was first to report the news, writing that the round was led by OMERS Ventures, with participation from Newion, Smartfin and the company’s founders. This brings the total amount raised by Deliverect to €19.9 million (~$21.58M USD).

Based in Belgium, Deliverect‘s software alleviates the so-called “tablet hell” situation many restaurants face when partnering with third-party delivery services. Typically, each different delivery service provides the restaurant with its own tablet to process incoming orders. Those orders then have to be manually inputed into the restaurant’s main POS system. The more delivery services a restaurant adds (Uber Eats, DoorDash, Deliveroo, GrubHub, etc.), the more confusing this proposition becomes.

Deliverect’s software acts as a middleman in this scenario. It’s software ingests the third-party delivery orders and unifies them into a single stream that automatically goes into the restaurant’s POS system. The result is that restaurant staff don’t need to monitor multiple platform for incoming orders.

Deliverect uses a SaaS model and as EU-Startups writes:

So far the startup has processed more than 3.5 million orders, supporting UK brands like Absurd Bird, You Me Sushi, Taqueria, and Crêpeaffaire. In addition, the company works with Unilever, which through Deliverect is able to integrate with Deliveroo and Uber Eats and deliver Ben & Jerry’s and Magnum ice creams directly to customers.   

Deliverect says it will use its fresh funding for product R&D, to strengthen its position in Europe and expand internationally. The company will face tough competition here in the U.S., where a number of entrenched players offer the same third-party integration services. Ordermark, Chowly and Olo are just a few of the startups promising to douse the flames of tablet hell (almost all of which are running pricing specials now to entice new, cash-strapped customers).

But there is a bigger, more existential question that dominates any talk of restaurant tech these days, and that’s the very future of restaurants themselves. Here in the U.S., at least 3 percent of restaurants have permanently closed. Even delivery services haven’t been spared as Deliveroo just laid off 350 people (15 percent of its staff). And while delivery and takeout have been a lifeline for some restaurants, this pandemic has restaurants re-evaluating their entire tech stack to see exactly what they actually need.

Deliverect’s ability to raise this much money right now speaks to at least some optimism in the world, which, is a delivery we can all welcome.

Report: New York City Council Eyes Capping Commissions Charged by Grubhub, et. al.

The New York City Council wants to limit the commission fees that third-party delivery services like Grubhub and DoorDash can charge restaurants while dining rooms remain closed in response to the COVID-19 pandemic.

According to the New York Post, the bill being considered would seek to to cap the delivery fees that third-party services charge restaurants at 10 percent.

Currently, the commission fees third-party delivery services charge restaurants can stretch up to 30 percent and sometimes higher. The economics of those exorbitant fees were barely justifiable for a restaurant back when they had dine-in customers to offset the cost. In these coronavirus times, when people are being forced to shelter in  place, and millions are losing their jobs, handing over 30 percent of an order is untenable.

The proposed cap expands on existing legislation that was introduced in NYC in February of this year. Deliver services that violate this provision could be fined up to $10,000 per infraction — up from the $1,000 fine during non-emergency times, according to Eater.

New York isn’t the only city looking to reign in third-party delivery fees. Earlier this week Toronto Mayor John Tory said he was exploring similar measures in his city and actually calling up delivery services himself in an effort to fight commission fees. And last week, San Francisco Mayer London Breed issued an emergency order capping delivery commissions at 15 percent.

Talk of caps on delivery fees is a good example of shooting the wolf closest to the sled. High fees are an immediate problem for restaurants and customers when money is tight but everyone still needs to eat. But there is a deeper, systemic problem around the economics of third-party delivery in general. Famed restauranteur David Chang knows it, and it’s been a bit of a crusade for my colleague, Jenn Marston, who wrote recently:

Temporary caps in the wake of this unprecedented restaurant industry fallout are fine for now. But until we start addressing some of the fundamental flaws with the inherently greedy — not to mention unprofitable — third-party delivery model, the problems will proliferate, pandemic or no. Restaurants and their hourly workers will shoulder the bulk of those burdens.

According to the Post, the New York City Council will take up the proposed cap on fees at their virtual meeting on April 29.

Update: Chicago is now also considering a cap on third-party delivery commission fees. A bill to cap those fees at 5 percent is currently in front of the city council, who will vote on the matter. If passed, this would be the lowest commission fee cap yet.