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Daily news and analysis about the food tech revolution

Shake Shack

Food Tech Show Live: Shake Shack, Delivery Bots & Cultivated Meat

Listeners of the Food Tech Show podcast know that in addition to our regular interviews with smart leaders in the food tech space, we also like to get together once a week on the podcast to talk about the top stories in food tech.

And now, this weekly wrapup includes a live studio audience (kind of) on Clubhouse. Like many other food tech and future food nerds, we’ve been having lots of fun over on the social audio app, and one of the best parts is the live interaction with listeners.

If you’re on Clubhouse, make sure to join us weekly every Friday at 1 Pacific on Clubhouse by following the Food Tech Live club. Here’s the link to this coming Friday’s show so make sure to add it to your calendar.

But before you do that, you’ll want to check out last week’s show (with special guest commentator Zoe Leavitt). The stories we discuss on Friday include:

If you’d like to listen to our latest news wrapup, you can do so now on Apple Podcasts, Spotify or just by clicking play below.

Shake Shack Is Trialing Biodegradable Cutlery and Straws

Shake Shack announced this week it is testing the use of biodegradable straws and cutlery at six of its 310 locations, according to Nation’s Restaurant News. Those items are now available at units in West Hollywood and Long Beach in California, Madison Square Park and West Village in NYC, and in Miami, Florida.

Manufactured by a California-based company called Restore Foodware, the utensils and straws are made from polyhydroxybutyrate (PHB), also known as AirCarbon. According to Restore parent company Newlight Technologies, PHB is in “almost all known life on Earth, from microorganisms and trees to the human body.” Restore gets its PHB from ocean microorganisms, cultivates it in tanks, then turns it into pellets that can be melted down and shaped into spoons, knives, and other utensils, just like plastic. 

Unlike plastic, PHB is biodegradable. Speaking to NRN, Newlight CEO Mark Herrema said the substance breaks down “just like leaves and stems do.”

Newlight launched its first commercial-scale production system for AirCarbon in 2019, and launched products in 2020. At the moment, it is making cutlery and straws under the Restore brand. These items are certified carbon negative by Carbon Trust and SCS Global.

At the moment, Shake Shack does not have a timeline on whether it plans to expand its pilot with Restore’s items to other locations. However, the mere fact that the chain is exploring this option is encouraging for the rest of the industry. The shift towards pickup and delivery orders has amplified the problem of packaging waste for restaurants. At the moment, however, smaller businesses are busy trying to keep their doors open and can’t be expected to champion packaging innovation at the same time.

Bigger brands are in a better position to do so (financially speaking), and recent efforts from the likes of McDonald’s, Burger King, Shake Shack, and others suggest the restaurant biz is now taking its packaging problem seriously. 

Survey: Drive-Thru Orders and Mobile App Usage at Restaurants Are Up

Consumers are using a mobile app more often than just a few months ago to order restaurant food, according to new survey data from Bluedot and research firm SeeLevel HX.

The survey, based on responses from 1,501 U.S. adults between June 23 and July 2, 2020, found that 50 percent of consumers are using restaurant mobile apps “more often or much more often” than they were before the pandemic, up from 42 percent in April. Meanwhile, 64 percent of respondents said they have downloaded at least one or more new apps to purchase restaurant food, up from 51 percent in April.

The spike makes sense, given the rise in off-premises restaurant formats, the push for so-called “contactless” ordering and payments platforms, and widespread consumer concerns around safety and social distancing. 

The report also examines the popularity of off-premises formats among consumers. The drive-thru is far and away the most popular. Seventy-four percent of respondents said they have visited the drive-thru “the same amount or more often than usual” compared to 43 percent in April. Respondents also named drive-thru the “safest” of the to-go formats, which also include curbside pickup and in-store pickup. 

Responses around both mobile app usage and drive-thru visits are in line with developments by restaurants over the last few months. Chains like Chipotle and Shake Shack are reformatting many of their stores to include drive-thru lanes. In many cases, those lanes are dedicated to customers ordering via the restaurants’ mobile apps. 

In many cases, these drive-thrus are one of the main reasons QSRs have fared much better in terms of sales so far during the pandemic.

All that said, the Bluedot and SeeLevel HX report also suggests that drive-thru lines are still frustratingly slow. Of the consumers surveyed, 81 percent said waiting more than 10 minutes in the drive-thru is too long. If you’ve been to a drive-thru recently, you don’t need data to tell you wait times are stretching far beyond that number oftentimes. 

Cutting down wait time in the drive-thru is an old story that pre-dates the pandemic. Making that particular restaurant format more efficient will continue to be a priority for QSRs going forward. 

Shake Shack Pivots to Drive-Thru, Adds Direct Delivery

Shake Shack said on its earnings call yesterday that it will start opening restaurants with drive-thrus, with the first of them slated to open in 2021. The chain didn’t name a location, though CEO Randy Garutti said on the call the chain plans ”to lead with traditional suburban high-traffic quarters.”

This is pivot for Shake Shack, a New York City-based chain that’s historically served urban settings. And unsurprisingly, the move is largely in response to the pandemic’s effect on in-house restaurant dining. Garutti said on the call that fewer than half of all Shake Shack’s have opened their dining rooms, and that while urban Shacks have been heavily impacted by social distancing restrictions, suburban locations are recovering faster.

The company released a rendering of the new drive-thrus (see above) that suggests these would have dedicated lanes for mobile orders as well as traditional ones. It’s a strategy already in use by chains like Dunkin’ and Chipotle. 

Shake Shack had a 49 percent nosedive in same stores sales for the second quarter, though that number is slowly improving, the company said. Digital and off-premises are a big reason the figure wasn’t lower.

And drive-thru lanes are just one piece of that off-premises strategy. On the call, Garutti highlighted the brand’s recent efforts, which include curbside pickup, Shack Tracks, a ghost kitchen in the U.K., and increased focus on digital ordering. In the second quarter, sales through the brand’s own app “more than tripled” compared to the same period last year. 

Perhaps most important, Shake Shack will start offering direct delivery via its own digital properties. Garutti plainly stated that the motivation behind this move is “keeping guests within our native infrastructure and deepening our ability to connect directly with them over time.” 

Direct delivery is becoming an increasingly important part of major restaurant chains’ digital arsenal, and is already in use by Panda Express, the Coffee Bean & Tea Leaf, and others. The benefits of direct delivery, where orders go straight to a restaurant’s own app, rather than getting funneled through a third-party delivery app, are obvious. Restaurants pay lower commission fees, since third parties like Uber Eats are only delivering the food, not processing the order. And brands retain valuable customer data they would otherwise not be able to access. 

None of Shake Shack’s announcements this week are particularly eyebrow raising, which is in itself an important point. Every day, off-premises gets further entrenched in consumers’ minds as the de facto restaurant format for quick service and fast casual. Adding drive-thru or curbside, doubling down on digital, and exploring direct delivery are quickly becoming the standard for those chains that can afford them. Those standards were emerging long before the pandemic arrived, and will exist long after it leaves.  

Shake Shack Will Teach You How to Run a Lemonade Stand This Summer

Shake Shack, the same chain that recently brought us DIY meal kits and to-go-only stores, this week introduced what’s maybe it’s weirdest pandemic offering yet: summer camp in a box.

Dubbed the Shack Camp Box, the kit contains a bunch of supplies with which to do craft-y activities, including food-related ones. The brand will run a virtual camp via its Instagram channel where folks can follow along through the summer. Build your own lemonade stand (complete with prompts on how to run a business), create ice cream sundaes, and other activities are on the agenda. The “camp” website also notes $75 worth of exclusive offers as a perk, so there’s doubtless some Shake Shack grub thrown into the mix, too.

Considering the various and strange ways restaurants are currently employing to connect with customers they can’t serve in dining rooms, a box of glorified swag doesn’t actually seem that outlandish. For those with kids, it might actually prove useful, since many summer camps have been cancelled and more kids are staying at home this year. 

There’s also a philanthropic angle to it, which means it’s hard to get too cynical here. The campaign supports The Fresh Air Fund’s virtual summer program that brings virtual camp activities to underserved children in NYC.

The Shack Camp Box is available as of today. Each box includes six activities and goes for $79 via the Shack Camp’s site. Corresponding Instagram videos start on July 13.

Shake Shack needs as much customer connection as it can get right now. Despite its efforts around improving its off-premises strategy during lockdown, the chain reported this week that second-quarter sales were down 49 percent as a result of both the pandemic and nationwide protests. In a business report released Tuesday, the company noted that “Shack sales were estimated to be negatively impacted by approximately $3.2 million in the fiscal period June due to nationwide protest activity and resulting curfews causing temporary Shack closures and reduced operating hours.”

The company has also had to re-close some stores because of the rise in coronavirus cases of late.

Virtual summer camp won’t be able to fix all the brand’s problems, but it is another example of a restaurant trying to redefine what the restaurant experience means, both right now and for the future. 

Starbucks Speeds Up Its Plans to Make Stores More To-Go Centric

As if it weren’t to-go-friendly enough, coffee behemoth Starbucks announced this week it is speeding up the reformatting of many of its stores to cater to more off-premises orders. Yes, the move is in response to the impact COVID-19 has had on the restaurant industry. It’s also part of Starbucks’ ongoing “Bridge to the Future” reopening plan, which CEO Kevin Johnson outlined in a letter yesterday.

A huge part of that plan is to accelerate the pace of development for what Starbucks calls its “third place” — that is, stores that cater heavily to on-the-go customers and off-premises orders. That includes drive-thru locations, Starbucks Pickup stores, and more recent formats, such as curbside pickup.

Starbucks, which claims 80 percent of its orders before the pandemic were already “on the go,” had already been moving in this direction. But as Johnson suggested in his letter this week, the pandemic has changed consumer behaviors and habits and made many folks more amenable to off-premises formats and less excited about sitting down in brick-and-mortar locations. In keeping with that, Starbucks’ plans to transition its store formats “over a three- to five-year period will now occur over the next 12 to 18 months.”

That will include building out more drive-thrus, creating more pickup locations in dense urban areas, and relocating low-performing stores (e.g., those in malls) to locations where they can have a drive thru. Johnson added in his letter that customers will “soon see more curbside pickup options as well as delivery – all formats optimized for the current crisis and a future of changing consumer expectations for the third place across the U.S.”

This emphasis on the so-called third space isn’t unique to Starbucks, although no other restaurant chain out there is pursuing it quite as aggressively. Probably because few restaurant brands have as much money or reach as Starbucks, who said this week it has now regained roughly 60 to 65 percent of prior year comparable U.S. store sales, according to Johnson.

Other brands may be able to incorporate some of these “third place” initiatives into their own operations. Buffalo Wild Wings just launched its first to-go-only concept store in Atlanta, GA, while Shake Shack unveiled its own off-premises concept earlier this month.

More interesting, though, are what smaller chains are up to. For instance, Austin, TX-based chain Torchy’s Tacos has been retrofitting existing drive-thru windows at its stores and creating on-the-fly curbside pickup at other locations. When we spoke back in April, the brand’s Chief Marketing Officer, Scott Hudler, said the company had “MacGyver’d” a bunch of technologies together to run these off-premises operations smoothly. So far it seems to be working. 

Few will be able to accomplish a total overhaul of their store formats a la Starbucks. But plucking one or two elements for the coffee giant’s playbook, at least when it comes to making to-go orders more efficient, could make all the difference as the entire restaurant industry moves closer to that third place.

Most Restaurants Will Mimic Shake Shack’s Digital-Centric Store Format in the Future

Shake Shack is modifying some store formats to be more off-premises friendly as the chain prepares to reopen dining rooms. These “Shack Track” stores, as they’re being dubbed, will include things like walk-up windows and more drive-thru lanes meant to encourage increased digital ordering, according to the company’s Q1 2020 earnings call this week.

Shake Shack CEO Randy Garutti said on the call that the chain will start opening dining rooms regionally, though with reduced capacity to ensure social distancing guidelines are in place. There will also be fewer cashiers and kiosks in stores, and the chain plans to “shift guests to mobile and contactless pre-ordering.”

Hence the new store formats the company will test as it reopens restaurants. On the call Garutti also mentioned interior and exterior pickup windows and, where space permits, curbside pickup and drive-thru lanes, which is new for Shake Shack. The company has been testing these formats over the last several weeks while dining rooms remain shuttered. Garutti said the current pandemic has “reinforced how necessary and beneficial this strategy will be for Shake Shack.” 

It has also reinforced how necessary digital ordering and payments will be to the future restaurant experience in general. On that front, Shake Shack is better prepared than most restaurants. As of April 29, digital channels represent roughly 80 percent of total Shake Shack sales. Garutti said on this week’s call that digital sales are “very literally keeping us in business.”

The new store formats will encourage this digital preordering, and Shake Shack said it will continue to improve its digital properties and eventually integrate delivery into those interfaces, which means less reliance on third-party services Shake Shack currently has partnerships with. 

“Contactless” is definitely the buzzword du jour in the restaurant industry right now as businesses look to reopen while maintaining social distancing requirements. Not every restaurant has the cash or resources to double-down on expensive mobile apps made in-house, and so some are turning to restaurant tech companies for those digital capabilities.

Meanwhile, Shake Shack isn’t the only major chain tweaking its store format to fit our to-go-centric times. Chipotle was testing new store types long before the pandemic and will continue building those out. McDonald’s had to step on the brakes a little in terms of its Experience of the Future stores but will continue building some of those, as well. 

These redesigns matter because they could set standards for the rest of the industry in the future. Smaller chains and independent restaurants have neither the time nor the money to extensively redesign their restaurants. But as states mandate reduced capacity in dining rooms, these smaller businesses may look to the major chains for guidance on how to incorporate off-premises ideas into their business. In time, a new, standardized restaurant format (or several) could emerge that no one would have predicted two years ago — and everyone will expect a decade from now.

Shake Shack’s Newest NYC Location Will Focus on Takeout, Delivery Orders

Shake Shack is set to open a new location in Midtown Manhattan, one that will focus specifically on delivery and takeout orders, according to Restaurant Dive.

The new location will have two separate entrances, one for delivery and takeout orders, including those made via the Shake Shack mobile app, and one that traditional dine-in customers can use. The latter will have very limited seating options, though there will be an outdoor patio. The store will also feature self-service kiosks, which Shake Shack has been testing for some time, with varying degrees of success.

The news makes the NYC-based burger chain the latest QSR to jump onboard the trend of opening stores either dedicated to or heavily focused on to go orders. Trend might be an understatement, though. The National Restaurant Association predicts that off-premises orders will drive the bulk of restaurant sales over the next 10 years. QSRs in particular — are responding to the demand by increasing delivery services (either their own or with a third party), building out digital order strategies, and in some cases, Shake Shack included, literally redesigning store layouts.

Locations dedicated to off-premises orders is another tactic becoming commonplace. In 2019, Starbucks opened its first express location in Beijing, China, and followed up that move with plans to launch a similar shop in NYC next year. Last week, IHOP announced a new standalone restaurant chain called Flip’d that will cater to delivery and takeout orders. The list goes on: Krispy Kreme, Sweetgreen, KFC, Chopt . . .

Spoiler alert: the rise in popularity of ghost kitchens is only going to increase the number of to-go-focused locations restaurant chains open. Some of these locations will become ghost kitchens themselves, fulfilling delivery and takeout orders for not just that location but all of a brand’s surrounding stores. This is how Starbucks’s express store in Beijing currently functions, with to-go orders from surrounding Starbucks cafes funneled to the express store, speeding up fulfillment times and allowing traditional locations to focus on in-store customers.  

Shake Shack plans to open a few of these to-go focused locations in the future.

As QSRs Double Down on Off-Premises Ordering, What Happens to the POS?

Whatever your food plans for the weekend, I’m betting there’s a good chance they’ll involve some kind of off-premises ordering. Delivery? Drive-thru? Drone? All of the above and more are becoming de rigueur for foodies and restaurants alike. With that in mind, here are a few more pieces of restaurant industry buzz from the week, all of which hint at what the next 12 months could look like when it comes to when, where, and how we get our food.

Grubhub and Shake Shack Expand Delivery Partnership Nationwide
Expanding on a deal struck back in August, Shake Shack is now available for exclusive delivery with Grubhub across the U.S. According to a press release sent to The Spoon, more than 140 Shake Shack restaurants now offer delivery through that third-party service and no other. While that’s great for customers who want Shack Burgers delivered to their couch, the partnership has also hurt Shake Shack’s sales, according to the chain’s third-quarter results. Part of that may have been due to the exclusive nature of the deal, exclusivity being a strategy increasingly discouraged in the restaurant industry when it comes to effective delivery services.

KFC’s Drive-Thru of the Future Is Open for Business
July brought the initial news that KFC had a drive-thru-only concept in the works down under, in Newcastle, New South Wales, Australia. Said location is now open for business. The new store features five drive-thru lanes that let customers order and pay via the KFC mobile app. While there is a designated lane for customers who want the traditional drive-thru experience (ordering on a crackly speaker, paying an actual person), there is no dining room at this location. If this pilot location proves successful, we’ll see more such KFC locations in the future.

Dunkin Donuts

Houston, We Have a Dunkin’
Dunkin’ (née Donuts), an institution here in the Northeast, is continuing its expansion across the U.S., and it’s bringing its next-generation store with it. The chain announced it is developing 18 new locations around Houston, TX that will emphasize to-go orders, self-service kiosks, and dedicated drive-thru lanes for customers who order via the Dunkin’ mobile app. The first of these new stores is slated to open in summer 2020.

Image via Unsplash.

RIP POS?
But is the POS about to become an endangered species? Not this week, and not probably in the next year. But the growth of ghost kitchens, which exist to fulfill off-premises orders and have no dining room, suggests that pieces of the front-of-house restaurant tech stack could be eliminated in the future. That’s the scenario posed by the folks at Reforming Retail this week. An excellent article from a few days ago points out that with no front of house or cashiers, and with customers ordering directly from their mobile devices, 99 percent of the tech in restaurants could disappear: “And instead of a restaurant needing multiple [sales] terminals they need, well, none.”

Agree? Disagree? Drop your thoughts in the comments below.

Grubhub and Shake Shack Team Up for Nationwide Delivery Deal

Grubhub announced this morning it has partnered with Shake Shack to become the burger chain’s nationwide delivery partner.

Shake Shack CEO Randy Garutti told CNBC that the company picked Grubhub for its nationwide program thanks to the NYC-based delivery service’s wide reach, as well as its technology: “We decided Grubhub was the best partner overall. With their national footprint and the way we are going to integrate on the tech side — we have a really good opportunity to give the best guest experience,” Garutti said.

Some of that technology includes direct integration of Grubhub into Shake Shack’s POS system, as well as more precise order timing and tracking via Grubhub’s Just In Time technology.

The deal with Grubhub follows comments Shake Shack made less than a year ago suggesting delivery didn’t really suit its brand, according to Bloomberg.

But times change fast in restaurant tech. Third-party food delivery apps will hit 44 million U.S. users by 2020, according to new forecasting, and QSRs are a key part of this growth. And last week’s news that DoorDash announced its acquisition of Caviar for a cool $410 million only underscores how big a business food delivery has become in the last several months alone.

Grubhub has received its own share of headlines recently — not all of them glowing. In June, the company was part of an oversight hearing in Manhattan that called into question third-party delivery services’ controversial fee structures for restaurants. Grubhub has also had numerous accusations lobbed its way since then over cybersquatting and unfairly charging restaurants for phone orders. The company has denied the accusations and recently put out a blog post addressing its “treatment of restaurant partners.”

The Grubhub partnership with Shake Shack will start in four locations total, in Manhattan, Chicago, New Jersey and Connecticut, with plans to expand to more locations over the next nine months.

Forget Catering. Shake Shack Ups Its Off-Premises Game With a Food Truck for Rent

Yesterday Shake Shack introduced the world to its new food trucks, available for rental for private events.

To be clear: the Shack Truck doesn’t drive around your city and land at the nearby food truck park come lunchtime. According to the Shack Truck FAQs, it’s instead a vehicle you can rent out for private parties like weddings, anniversaries, birthday bashes, and whatever else you could think to throw a party for.

The menu is determined based on each individual event, but in general you can expect the usual Shake Shack items — burgers, fries, and, of course, shakes. Pricing also varies by event and can be determined once you fill out a form and submit it to the company.

Right now, Shake Shack has two of these trucks: one operating in the tri-state area (NY, NJ, CT, and PA) and one in Atlanta. There’s no word yet on whether the company will have more trucks or more cities available in future, though given Shake Shack’s rapid expansion pace, it’s likely. For now, if you’re in the area, the company suggests booking the truck at least two weeks in advance of your event.

What’s most intriguing about this is not that you can serve Shake Shack at your wedding (although that is pretty amazing news), but that the company has found yet another way to reach audiences outside the traditional standalone restaurant setting. Nearly all of its 200 units currently deliver, and Shake Shack outlets have long been in places like Madison Square Park, Citi Field, and, more recently, casinos like the New York New York hotel in Las Vegas.

A food truck for rent is really just another form of catering, but it’s cleverly branded catering that screams “millennial,” a generation that’s borderline obsessed with off-premises food options. Plus, around 70 percent of customers (millennials or otherwise) are predicted to be ordering offsite by 2020. That means restaurant chains will have to continue to find unique ways of providing those experiences, and a rentable food truck is certainly a good start.

Food Tech News: Shake Shack Goes Mobile, McDonald’s Israel Adopts Tech to Help the Blind

After traveling these past few weeks to CES and the Fancy Food Show, we’re excited to kick back and do precisely nothing this weekend. Hopefully you have a similar amount of plans. But before you get to finally reading that New Yorker stack on your coffee table, take a quick read through our weekly food tech news roundup. This week we’ve got stories on everything from dairy-free yogurt to booze-free cocktails — enjoy!

McDonald’s Israel uses sensors to help blind customers
This week McDonald’s Israel announced that it would install a voice navigation app in all its stores in order to assist blind customers and those suffering from dementia. In-store Sensors from Israeli company RightHear will interact with customer’s phones, which will read out custom directional voice instructions. This move will make McDonald’s Israel the first restaurant chain in the world to offer full access to visually impared customers. It’s kind of shocking that it’s taken so long for this to happen, but hopefully if the sensor program has success at McDonald’s Israel it will spread to the rest of the chain’s global locations — and to other fast-food restaurants, too.

Photo: Shake Shack.

Shake Shack announces plans to launch mobile food truck
Shake Shack is going mobile. This week Randy Garutti, CEO of the wildly popular fast-casual chain, announced that Shake Shack would be launching a food truck concept in early February. The first two trucks will be in New Jersey and Atlanta, but move around throughout their respective regions. According to Skift Table, Shake Shack’s leadership team plans to mainly use the trucks for community events, private parties, and local festivals.

Photo: YoFix

Israeli company YoFix launches dairy-free/soy-free yogurt
Last week we wrote about how Chobani was getting into the plant-based dairy game — it seems they’re not the only ones. This week YoFix Probiotics, winner of PepsiCo’s European Nutrition Greenhouse Programme 2018, announced a line of vegan, soy-free yogurts made from a blend of oats, legumes and seeds. The three flavors will have the “same or better” nutritional value as regular yogurt but will have no dairy, soy, added sugars or preservatives.

Photo: Coca-Cola Company

Coca-Cola debuts non-alcoholic “cocktails”
If you’re doing Dry January (and hats off to you), good news: there’s a new mocktail option for you. This week Coca-Cola introduced Bar None, its new non-alcoholic cocktail concept, in various retailers in Atlanta. The booze-free bottled drinks come in four cocktail-inspired flavors, like Sangria and Ginger Mule. According to Food Dive, this marks the first time a Big Food/Drink company has launched a line of non-alcoholic beverages — we’ll see if their bet pays off.

Did we miss anything? Leave us a comment or tweet us @TheSpoonTech!