Close Ad

The Spoon

Daily news and analysis about the food tech revolution

restaurant delivery

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.

States Call for Restaurant Shutdowns, Businesses Switch to Delivery Models

The list of cities and states now mandating that restaurants close their dining rooms and switch to delivery- and takeout-only models continues to grow as governments and businesses work to slow the spread of coronavirus across the U.S. These moves arrive just as the CDC advises against gatherings of 50 or more for the next eight weeks.

As of Monday morning, Ohio, California, Illinois, Massachusetts, New Jersey, Connecticut, and Washington state have ordered bars and restaurants to close or switch to off-premises formats. New York City and Hoboken, N.J. are also requiring restaurants to shutter dining rooms, and around the country individual businesses have been voluntarily closing their establishments for the last few days. Starbucks and Chick-fil-A have moved all stores to a to-go model, Momofuku shuttered all of its locations, and Danny Meyer’s Union Square Hospitality group closed all its restaurants. Those are just a few names on a list that will in all likelihood include most restaurants in the U.S. in the near future.

How restaurants will manage this shift and what will happen to existing staff varies city by city, restaurant by restaurant, and in some cases by restaurants within the same brand. Starbucks, for example, is currently keeping the bulk of its locations open for delivery, mobile pickup, and drive thru orders, but will completely shut stores at malls and universities and in areas with “high clusters of COVID-19 cases,” according to a letter from the company.

Celebrity chef Jose Andrés, meanwhile, said he would be closing all of his restaurants but that some of them would be transformed to community kitchens staffed by volunteers giving takeout meals to those in need. Existing employees will get paid leave in the meantime. 

Other employees are not so fortunate. Seattle chef and restauranteur Tom Douglas has closed 12 of his 13 restaurants and laid off staff, saying that he will rehire them once business reopens.

And, of course, many businesses are switching to off-premises-only models and will be able to fulfill delivery orders and in some cases those placed at the drive-thru. On the one hand, that’s a plus for existing staff, who presumably in most cases will be able to keep their jobs. However, delivery, especially via third-party apps like Grubhub and Uber Eats, remains a challenge for many businesses, especially independent ones. Commission fees these services collect per transaction are often prohibitively high for small restaurants. And with recession looming (probably already here, actually), there are questions around whether consumers will even want to pay the delivery and service fees required to get restaurant meals sent straight to their homes.

Most of the major delivery companies have responded with initiatives aimed at smaller restaurants and customers at this time. Uber Eats just announced it will waive all delivery fees for orders at independent restaurants. And last week, both Grubhub and Postmates announced they will waive commission fees for independent restaurants for the time being.

However, not all restaurants are set up for delivery, and some worry that the closing now will permanently put them out of business. One owner told the L.A. Times that his shop is not set up for delivery and that, ““The numbers really don’t make sense; that’s why we haven’t done it in the past.”

Whether delivery companies negotiate more affordable rates with new restaurant customers during this time remains to be seen. Postmates, for example, said it would waive all commission fees for independent restaurants in San Francisco that sign up with the service. Others may follow.

We’ll be updating this post regularly, so check back for more news on restaurant closures as well as how businesses, delivery companies, and customers are managing this situation.

David Chang on Restaurant Delivery “It’s Going to Decimate the Business”

Famed restauranteur and Netflix’s Ugly Delicious host David Chang was on the Bill Simmons podcast this week. And while Chang was there to promote his new book, he and Simmons actually spent a lot of time discussing food delivery and its impact on the restaurant industry.

You should listen to the entire episode, but here are a few highlights.

Chang said that the biggest story in restaurants right now is the rise of delivery. “That’s going to be the story of the next ten years,” Chang said before adding, grimly, “It’s going to decimate the business.”

Basically, as Chang pointed out, because of delivery, restaurants now aren’t just competing with other neighborhood restaurants, they are competing with restaurant across an entire city. So restaurants now find themselves in even tougher environments when it comes to standing out from competitors.

Additionally, Chang suggests the math doesn’t really add up. If a restaurant is only eking out a 5–10 percent profit overall, what happens when they pay 30 percent commissions on deliveries through a third party like DoorDash, and customers are ordering 3 – 4 meals per week through delivery? Chang worried that this could turn restaurants into a form of indentured servitude, saying “The model has to improve for actual restaurants,” and “The 30 percent fee of delivery services is a model that’s not going to work long-term.”

Having said that, Chang also admitted that if DoorDash asked to be the exclusive delivery partner for his restaurant, he’d have to say yes “because they are driving so much traffic.”

Our own Jenn Marston has written quite a bit about this Faustian bargain that restaurants strike with third-party delivery services. And how that model is starting to change as restaurants begin to bring delivery in-house or create some kind of hybrid of in-house and third-party delivery.

Chang doesn’t think that eating at a restaurant will go away entirely, “They’re just going to be a specific kind of restaurant,” he said “They’re going to be the shit you can’t deliver, ultimately.”

In a fun aside, Chang actually ranked food that’s best for delivery. Pizza was the best followed by Chinese food and fried chicken. Host Bill Simmons lamented that “they have not been able to figure out fries.” Perhaps he should check out Smart Kitchen Summit Startup Showcase winner Soggy Food Sucks.

Chang’s opinions, of course, come during a global pandemic, where people are being encouraged to practice active social distancing and avoid large gatherings. In Jersey City, the mayor has asked bars and restaurants in that town to take attendance in an effort to minimize the impact of the coronavirus. And in Seattle, restauranteur Tom Douglas said that he is temporarily closing 12 restaurants for up to three months after seeing a 90 percent drop in business since the outbreak.

You should listen to the whole Simmons podcast. Chang is a great interview who doesn’t pull any punches. And while “decimate” is kind of a pejorative term, Chang is right, delivery will cause fundamental changes to the restaurant biz. How it does so, remains to be seen.

Google Adds Hungr to its Roster of Third-party Delivery Partners

Google continues to connect your search for food with the ability to get it quickly, as the company has now integrated third-party restaurant ordering and delivery service Hungr to Google Search, Maps and Assistant.

Hungr announced the partnership today. With it, restaurants using Hungr’s ordering and fulfillment platform can now offer those services directly from a user’s Google search.

For Hungr, the move opens up a new sales channel for restaurants using its services by shortening the gap between a user’s search for food and their ability to order it.

For Google, Hungr is the latest third-party delivery service that it has baked into its search results. In May of this year, the company integrated DoorDash, Postmates, Delivery.com, Slice, and ChowNow into its Search, Maps and Assistant products.

Google is quietly becoming a sleeping giant in the world of restaurants and food delivery. In addition to adding delivery into search results, the company has also added features to surface popular dishes at restaurants, point out nearby restaurant discounts, and a virtual assistant that can make reservations for you. As we wrote earlier this year:

In the age of the attention economy, it’s not that hard to understand why Google busily adding more food related features to its roster. Everyone, everywhere eats. If it can make that eating more “frictionless,” to borrow a Silicon valley phrase, then you are more likely to stay in Google’s ecosystem. The more you use Google, the more data they collect from you to make more apps that, in the company’s mind, will make eating out, or order in, better (and make Google more money).

It looks like the Hungr/Google partnership isn’t quite live yet. In today’s announcement, Hungr said that it will happen “soon.”