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The Spoon

Daily news and analysis about the food tech revolution

Square

Restaurants Offering Subscriptions Up 54% Over Past Year According to Square

According to a new report from payment processing company Square, the number of restaurants offering some form of active subscription plan to its customers has grown by 54% over the past year. These subscriptions – anything from a wine club to a taco lover’s pass – have become increasingly popular (among some, at least) in recent years as restaurants look for ways to create more stable revenue through automated payments and increase customer loyalty.

According to Square, over three-quarters of restaurant subscriptions remained active after one month, and 57% remained active after six months.

Of course, it should be noted that Square doesn’t represent the entire point-of-sale market for restaurants so the data might be somewhat skewed. While other POS players like Clover also offer support for subscriptions, Square has been probably the most active in building out subscription functionality over the past year. That said, given the success Square has had and the continued challenges restaurant operators face in the form of rising costs and constrained labor markets, my guess is most major POS providers will begin to offer this feature sooner rather than later.

The Square report also showed data that pained a picture of a slowly recovering, perhaps permanently changed, restaurant industry post-pandemic. Square data shows that while many urban work centers have seen their share of food and beverage transactions increase slowly since the early days of the pandemic, overall activity has largely flatlined. According to Square, downtown dining is at about three-quarters of what it used to be, a number that is primarily a reflection of a reshaped workforce that has seen many office workers continue to work from home for the bulk of the workweek.

However, Square data shows that one city has proven to be a significant outlier to the trend of decreased downtown dining traffic. According to Square, Detroit has seen its downtown dining jump an eye-popping 75% increase in traffic compared to 2019, something that’s likely attributable to strong hiring by US automakers, particularly as they look to build out their EV strategies over the past couple of years.

Podcast: The Hard Business of Building an At-Scale Restaurant Tech Company

Anyone who’s read Jordan Thaeler’s publication Reforming Retail knows he likes to tell it like it is when it comes to restaurant tech.

No matter whether it’s the business model of payment processors or the difficulties of building an at-scale restaurant tech startup, you can find his no-holds-barred analysis on a wide variety of topics on a website he describes as, “a cathartic output to all the nonsense” he sees in the industry.

We thought it would be fun to have Jordan visit the podcast to talk about some of this nonsense and more. On this week’s show we discuss:

  • The challenges of the restaurant tech market and why there aren’t more publicly traded companies to support a restaurant industry with a total market size of over half a trillion dollars
  • Why point of sale is still the focus and starting point for digital transition in restaurants
  • The ghost kitchen and virtual restaurant market
  • Jack Dorsey’s fixation with crypto and the potential impact of Web3/crypto on restaurants
  • And a whole lot more!

Click play below to listen. As always, if you want more Spoon podcasts you can subscribe on Apple Podcasts, Spotify or wherever you get your podcasts.

Now That Square is Block, Will Jack Dorsey’s Company Make it Easier to Buy Dinner With Bitcoin?

Here’s what we know: On Monday, Jack Dorsey announced he’s stepping down immediately from the top job at Twitter. On Wednesday, his payments company Square said it would change its name to Block and would, among other things, double down on cryptocurrency, blockchain, and building a decentralized payment system. I haven’t checked the news today, but I’m guessing he may have announced he’s creating a robot society or has plans for a teleportation system.

What does it all mean (besides the robots and teleportation)? For one, Jack Dorsey has had a busy week. But it also means the same guy who helped usher in real-time social media and democratize digital payments for small businesses may now be the one who helps make it easier for average Joe to buy everyday things with cryptocurrency.

Because right now, it isn’t easy. Crypto isn’t nearly as liquid as other conventional payment methods such as cash or credit. Sure, you can trade crypto without any problem – anyone with a Coinbase or Robinhood account knows that – but good luck paying for a bottle of mouthwash or buying a Big Mac with that wad of Dogecoin burning a hole in your crypto wallet.

So what can Dorsey do about it? Simple: with Square Block, he has all the different parts to make a payment value chain for crypto that will take it from what is mainly a highly volatile investment vehicle today to a street-spendable retail currency of tomorrow.

So what are Block’s business units?:

Square – the company’s original product (which will retain the Square brand) covers the digital payment portion of the equation. The company sells retail point-of-sale systems and has created restaurant-specific platforms and services.

Cash App – Started as Square Cash in 2015, Cash App is a personal banking, money transfer, and investment app for consumers. The app added crypto trading in 2018.

TBD – Announced earlier this year, TBD (long name TBD54566975) is a decentralized financial services unit. The launch of TBD followed other crypto-centric moves by the company such as creating a Bitcoin hardware wallet.

And perhaps most importantly, Dorsey and Block have the passion and conviction that cryptocurrency is the future and will eventually become our everyday currency. The company so much as said so when it began to buy and hold Bitcoin last year. “We believe that bitcoin has the potential to be a more ubiquitous currency in the future,” said Square’s Chief Financial Officer, Amrita Ahuja, at the time.

They also have the know-how. “We believe there needs to be a global native currency for the internet,” Dorsey said as his company launched the Cryptocurrency Open Patent Alliance (COPA) last year. Since that time, the company announced it would build a decentralized Bitcoin exchange in early 2021 and just last month TBD published a white paper detailing a protocol for such an exchange.

This is the type of hard, in-the-trenches work needed to create a more friction-free cryptocurrency financial system and, from all the looks of it, Block and Dorsey are intent on leading the way.

Once that happens, I imagine diners may someday more easily be able to buy dinner using cryptocurrency than was experienced by the folks behind Dinner Dao during their first-ever meal for the NFT dinner club. While the group really wanted to pay for dinner with the Ethereum they pooled together for their club, they had to resort to using a Coinbase credit card that converted the crypto to US dollars.

With the launch of Block, there’s a good chance that in five years (or maybe sooner), Dorsey and company will have put all the necessary tech, systems, and financial guide rails in place so when we buy a Big Mac, we can do so with crypto. At that point, Dorsey will have completed yet another society-shifting technological feat and, who knows, can finally get to work on that teleportation network we all want.

Square’s Back-of-House Display System Now Available for Delivery-Only Restaurants

Payments company Square recently made its restaurant software stack a little more versatile when it launched its Square KDS back-of-house display system as a standalone item available via subscription. The company says doing so will make Square KDS available to restaurant and kitchen operations that don’t necessarily have a POS system, or even a front of house.

Square’s KDS digitizes the ticket stream coming to into the back of house that chefs use to manage and fulfill orders. The system replaces paper tickets and can process orders coming from multiple different ordering sources, including the restaurant’s POS system, third-party online ordering platforms, and third-party delivery marketplaces. Kitchen staff can view all of these orders on a single screen, which provides a centralized place to see all incoming orders at the same time.

The system also includes features like ticket timers and alerts, performance reports, and customized notifications.

The product was originally released in November of 2020 as part of the Square for Restaurants POS software stack. Nowadays, though, not every business needs a POS system, since not every business has a front of house. Square says that offering KDS as a standalone product is “especially useful” for delivery-only kitchens (aka ghost kitchens) and businesses.

Tech that specifically caters to back-of-house-only operations is becoming more commonplace as more delivery-only restaurant concepts surface. While some of the bigger names in the business, like Kitchen United or iKcon, have developed their own in-house tech stacks, plenty of smaller delivery-only operations may find it easier to license software from third-party companies like Square.

Square KDS is now available as a standalone product in the U.S., the U.K., Canada, Australia, and Ireland. In the U.S., businesses can take advantage of a special price of $10/month per device through the remainder of 2021. Square for Restaurants Plus subscribers can access unlimited Square KDS devices at no additional cost.  

Survey: 91% of US Restaurants Will Invest in Kitchen Automation in 2021

The majority of U.S. restaurants have made or plan to make investments in kitchen automation technology in the future, according to new survey data from payments company Square. 

The company just released its “Future of Retail” and “Future of Restaurants” reports to offer an overview of what businesses are investing in from a technology standpoint and how processes and operations are changing.

Notable among the many pieces of data: Ninety-one percent of restaurants surveyed will implement some kind of automation technology into their kitchens if they haven’t done so already. 

It should be noted that Square has some skin in this game, since the company has some technology in the restaurant back of house. Therefore, automation in this context is more about software that runs in restaurants than it is about articulating robot arms making food.

Why the rush to digitize the back of house? “In order to take advantage of opportunities like multiple revenue streams and creative dining experiences, the back of house needs to be buttoned up,” notes the report. Restaurants certainly grappled with things like multiple order streams (e.g., delivery, takeout, etc.) prior to COVID-19. But few would deny the pandemic accelerated the widespread adoption of these off-premises formats, and up to now restaurant tech has only had time to react to the changes, not get ahead of them.

Hence more investment in back-of-house tech. Bruce Bell, Head of Square for Restaurants, said in the report he sees more of a “hub-and-spoke” model these days, where the kitchen sits at the center of a growing number of sales channels. “One channel might be the dining room, one channel might be first-party delivery, one channel might be meal kits, and so on,” adds Bell. “Having the kitchen run as efficiently as possible extends that efficiency into all of those channels,” he said. 

The hub-and-spoke model is already popular with some ghost kitchen setups. For larger restaurant chains, many of which are decreasing the sizes of their dining rooms or eliminating them altogether, this model could become the norm, too.

As far as those formats go, Square’s report found that restaurants plan to offer the following in 2021: curbside pickup (66 percent); drive-thru service (52 percent); drive-in service (48 percent); and drive-through dining (46 percent).

Loyalty programs, digital menus, in-house delivery, and digital ordering and payments are all technologies we can expect to drive these formats as well as the dining room experience in the future.

If you are interested in kitchen automation and robotics, make sure to attend the second food robotics summit on May 18th!

Square Moves Into the Restaurant Back of House With Square KDS

With COVID-19 restrictions putting the future of the restaurant front of house in question, many restaurant tech companies are turning to the back of house as the next area for innovation. Case in point: Today, Square, a company best known for its payments system, unveiled a kitchen display system that organizes and displays the flow of tickets coming into the back of house from multiple different sales channels. The feature is available to new and existing Square for Restaurants subscribers, according to a press release sent to The Spoon.

Dubbed Square KDS, the system replaces paper tickets and can process orders coming from multiple different ordering sources — of which there are many these days. With restaurant dining rooms either closing again or operating at reduced capacity, more customers are ordering via delivery platforms (e.g., DoorDash) or restaurants’ digital storefronts, in addition to the business’ in-house POS system. The idea is to do away with humans having to manage these multiple order streams by automating the organization of each ticket and in the process speeding up the time it takes to receive, cook, and prep an order and get it out the door.

According to today’s press release the KDS system can also track how long the kitchen is taking to prepare orders at each step of the process. The feature is available to Square for Restaurants customers as of now, with the option to try the product free for 30 days. 

Square’s new system is tackling the same challenge delivery integrators like ChowNow, Chowly, and Ordermark have been doing for some time now. The big difference is that Square is also a payments processing company with an existing suite of restaurant tech including a POS system. In theory, at least, that means adding one less piece of tech to the stack for restaurants that are already using the Square for Restaurants system, of which KDS is now a part. At a time when restaurants have an overwhelming number of options to choose from when it comes to technology, a simpler setup could be enticing. 

Square’s move into the back of house is also wise considering the demand these days for ghost kitchens and the number of restaurants shifting from brick-and-mortar locations to delivery-only business models. In many cases, the days of the traditional restaurant dining room are gone as businesses evolve to stay relevant with the (highly turbulent) times. Restaurant companies must do the same, which is what Square looks to be doing with this latest product.

Square Is the Latest to Launch QR-Based Software for Restaurant Dining Rooms

Payments company Square today launched a new feature for Square Online customers that will enable self-service ordering and payments features for guests inside the dining room.

Square’s feature is QR-based, meaning customers simply scan a QR code (usually on the tabletop or restaurant signage) with their own mobile phone to access a restaurant’s menu. Doing so takes them to the restaurant’s online order page where they can browse the menu and pay for their meal. The order goes directly to the kitchen.

In today’s press release, the company said the new feature will also allow restaurants to collect more sales data and in doing so own more of the customer relationship — a must in this age of the digital restaurant experience.

Square’s new feature is just the latest in a long line of “contactless” products that have emerged since dining rooms slowly started to reopen. It joins similar offerings from the likes of restaurant tech companies Presto, Bbot, Paytronix, and others. And at this point, even third-party delivery aggregators are trying to grab a piece of this very competitive space. Uber Eats recently unveiled its own contactless order and pay features for take-out and dine-in orders.

The promise of all these systems is that they minimize human-to-human contact in the restaurant dining room, so that the only real interfacing between customer and staff is when someone runs the food to the table, refills a drink, or addresses a problem. Those interactions, of course, mean the restaurant experience is not truly “contactless,” and Square’s been wise to brand its new feature “self-serve ordering” instead. The company says the feature can also improve order accuracy and speed up the entire customer meal journey inside the dining room. The latter is a definite plus, given recent CDC findings that those who eat inside restaurants may be at greater risk of catching COVID-19.

At the moment, Square’s new feature is available at no extra cost to Square Online merchants in the U.S., the U.K., Canada, and Australia.   

Square Launches New Service So Restaurants Can Take Delivery Orders Directly

Payment processing company Square announced today the launch of its new On-Demand Delivery for its customers using the Square Online Store. The service allows restaurants and other sellers to take and fulfill delivery orders directly through their own websites, rather than going through a third-party delivery service.

Off-premises eating had been a growing portion of the restaurant industry’s revenue before the pandemic hit. Once restaurants were forced to close down dine-in operations out of COVID-19 concerns, delivery and curbside pickup became the only way restaurants could stay afloat.

But typically if restaurants want to offer delivery, they need to sign up for a third-party delivery service like DoorDash or Uber Eats. Those third-party delivery services charge high commissions and fees that basically gobble up most of the money a restaurant earns and drives up the price for consumers.

Square is letting restaurants bypass some reliance on those third-party delivery services by letting restaurants accept delivery orders directly on their own websites. From a Square blog post today announcing the new feature:

When an order is placed on the seller’s online store, a courier from the restaurant’s delivery partner is dispatched to the business location, picks up the order, and delivers it to the buyer. The buyer receives text updates with links to live maps to track delivery progress. Sellers pay a flat fee of $1.50 per order to Square, plus a fee to their delivery partner that is calculated in real-time based on distance and other factors. Sellers can pass this fee entirely to the buyer or offer custom delivery promotions. When applied across hundreds of delivery orders each month, sellers can save a significant amount on per-order costs.

There are some devils in these details. For instance, Square’s On-Demand delivery is now powered by Postmates, which itself a third-party delivery service (Square says more courier services will be added). Per Square, the restaurant is still paying Postmates a fee “based on distance and other factors.” The question then is, how much cheaper is it for a restaurant to take the delivery order directly and just use Postmates as a courier than it is to take orders via Postmates? Because part of what you pay for with a third-party delivery service is access to their large marketplace of customers looking for something to eat. Will abandoning third-party services save enough money?

Regardless, this is another example of the continuing evolution of the restaurant industry trying to navigate this pandemic and beyond. Third-party delivery services were a hero, then the villain. Restaurants that had once outsourced delivery are now looking to bring it back in-house, or create some type of hybrid solution.

Square’s On-Demand feature is more fuel for even more change.

OneDine Raises $5M for Its Front-of-House Restaurant Tech Platform

Dallas, TX-based startup OneDine has closed a $5 million funding round with a pre-money valuation of $90 million for its front-of-house restaurant tech platform. The new funding came from “a private family trust” along with participation from TMW Capital and Hidden Lake Asset Management of New York.

OneDine founder and CEO Rom Krupp told The Dallas Morning News last week that his company will use the money to “staff into fulfillment.” OneDine plans to grow its staff from 24 to 100 persons by the end of the year to help meet the growing demand for the product, which currently serves over 60 brands and has a waiting list of others lining up to implement the technology.

The solution itself is a SaaS-based platform that lets customers with a OneDine app and profile check in to the restaurant, set dietary preferences and restrictions, order from a digital menu, and pay at the table, all from their own mobile device. Guests can also receive customized recommendations and fill out post-meal surveys. The platform integrates with restaurants’ POS systems so that businesses don’t have to do a major tech overhaul in order to incorporate the technology into their day-to-day operations. 

OneDine told The Dallas Morning News that restaurants using the platform can operate with 20 percent less waitstaff. At a time when restaurants are facing a labor shortage and turnover is high, being able to automate certain front-of-house costs is something many restaurants are looking into. 

“Labor has never had so many options as they do now and the industry has to change because of that to stay relevant,” Rajat Suri, CEO of restaurant-tech company Presto, told us last year. Like OneDine, Presto makes a front-of-house-focused tech solution that automates certain tasks, including the order and pay process for guests. Toast, Square, and many others are also automating the front of house.

For its part, OneDine says it plans to hire support and client fulfillment staff as well as expand across the U.S. in the coming months.

DoorDash Acquiring Caviar from Square for $410M

Food delivery startup DoorDash announced today that it has entered into an agreement to purchase Caviar from its parent company, Square, for $410 million dollars in a combination of cash and preferred stock.

The press release laid out the rationale for the deal, stating:

The acquisition underscores both DoorDash and Caviar’s strategic commitment to merchant selection. The addition of Caviar’s premium restaurants, with whom DoorDash will work closely to drive their growth, will enable the combined organization to cater to every food preference and occasion. Caviar’s complementary geographic footprint provides DoorDash with a significant number of new and unique customers, who will benefit from an even broader set of merchants.

Square acquired Caviar in 2014 for a reported $90 million, and reportedly tried to sell it just two years later but couldn’t find a buyer at the price the company wanted. A little more than a year ago Square acquired the assets of Zesty in a bid to bolster its corporate catering services.

But ultimately Square is in the business of transactions, not delivering the food itself, so offloading Caviar makes sense. Not having to deal with Caviar will help Square focus on the restaurant point of sale software platform that it launched last year that helped streamline orders from third-party services like DoorDash.

For its part, DoorDash has been making headlines all yearL raising a billion dollars in funding, becoming the first third-party food delivery startup to service all fifty states, and sticking by, and then ultimately caving in and changing a controversial tipping policy for its delivery drivers.

DoorDash’s deal to acquire Caviar is expected to close by the end of this year.

Toast Launches Real-Time Guest Feedback Tools for Restaurants

Real-time guest feedback is becoming the norm at restaurants, and today, restaurant-tech company Toast unveiled via press release a suite of new features meant to make it easier for customers to rate their meals and for restaurant managers and operators to understand and act on their feedback.

Toast Guest Feedback, as the new features suite is dubbed, lets restaurants collect guest feedback via the Toast Go and Toast Digital Receipts software. Toast Go is a handheld POS system made specifically for the restaurant industry. Both the hardware and software are Toast products. With the device, servers can take orders, receive real-time menu updates, swipe a customer’s credit card, and coordinate with the back of house so that cooks no longer have to scream “order up!” when someone’s food is ready.

With Guest Feedback, the Toast Go device also lets guests leave feedback about their experience via the touchscreen tablet in the form of thumb-up-thumb-down ratings. It also lets users type in comments on their experience. That feedback is processed in real time and, if they choose, managers can opt to receive SMS alerts every time a guest leaves a negative comment or review. Toast Guest Feedback can also run a report summarizing all reviews, so operators can see patterns and trends: what’s working, and what isn’t. Guest Feedback integrated into Toast Digital Receipts works much the same way, except for to-go food.

Right now, only about 2 percent of restaurant customers take the time to fill out a survey or comment card at the end of a meal. Having a digital, easy-to-use method for this could increase that number, and up the amount of information a restaurant can use to assess quality of service, popular foods, and other aspects of day-to-day operations.

Toast is hardly alone. Company Presto just raised $30 million, in part for its wearable tech that lets servers and managers see real-time feedback from guests. Square’s restaurant POS system allows the restaurant to communicate directly with a guest through the digital receipt and provides owners and managers a comprehensive summary of guest feedback.

Implementing real-time feedback brings a lot of obvious pluses to any restaurant operation. It’s easier to resolve a dispute or sooth an unhappy customer if said person is still in the restaurant when management is informed. The summary feature seems particularly useful, as it can alert managers to repeat issues in very clear terms. If five guests complain about the state of their after-dinner lattes, it might be time to retrain the staff on how to make those drinks. And Toast’s feature is already reportedly upping the amount of money individual servers bank each year, since the system as a whole makes it easier to tip, even suggesting tip amounts that might be higher than a guest might leave with cash.

One thing restaurant owners and managers will need to keep in mind with this brave new world of guest feedback: technology can’t communicate that some people are just assholes who take their frustrations out on servers. Not everyone, and not even most. My decade-long experience working in restaurants tells me the majority of people are reasonable, and that using real-time feedback as an alert, a manager could resolve an issue and therefore any negative tension before a guest even leaves the premises.

To be honest, a bigger problem than guests abusing the feedback feature is whether a constant stream of ratings will upset servers’ mental space during busy shifts and cause unnecessary tension. That’s one thing Presto has sought to address with its wearables: they only alert managers for super-important issues (as deemed by the restaurant), not every little gripe or hiccup.

Still, most owners and managers at restaurants worked their way up the ranks and have at one point or another stood in that server’s shoes. Real-time, tech-driven feedback has some horror stories to tell, to be sure. But I do think most folks working in the restaurant will be able to see the difference between a real problem and a high-maintenance customer, and real-time feedback will prove itself a huge help rather than make someone’s job miserable.

Coffee Survey: Lattes Reign, Oat Milk Soon to Be Top Alterna-Milk

Happy International Coffee Day! Technically, it’s tomorrow, but we’re so hopped up on caffeine right now that we can’t wait.

To give a little perspective on our worldwide daily addiction, the folks at the Specialty Coffee Association (SCA) teamed up with payment processor, Square to give us a sense of just how we like our java here in the U.S..

The Square Coffee Report 2018 uses data based on millions of anonymized Square transactions from thousands of coffee shops across the U.S. from June 2017 to June 2018. Here are some of their findings:

  • The latte is still by far the most popular coffee across the U.S., with more than 67 million ordered during data time period. The average price of a latte is $4.16.
  • Almond milk is currently top alterna-milk, but that could soon be supplanted by oat milk, sales of which have increased by 425 percent since June of 2017.
  • Sales of drop coffee peak at 8 a.m., iced tea at noon, and iced blended drinks at 2 p.m..
  • Cold brew coffee is hot. As of today, cold brew orders are 42 percent higher than ice coffee orders.

Of course this study should be taken with a grain of salt(ed caramel). Square doesn’t work with Starbucks, for instance, so that data is not included in this round up.

But it does provide a fun snapshot of our coffee consumption (and a bit of trivia to share) as you head out for your next cup.