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Daily news and analysis about the food tech revolution

third-party delivery

VDC Rolls Out Linked Eats, a ‘Value Layer’ Software That Optimizes Virtual Restaurant Operations

It’s no secret that the virtual restaurant space has struggled over the past few years. Longtime operators like Reef, Kitchen United, and NextBite have laid off employees, shut down locations, and, in some cases, sold to another company well below their current valuations.

Those who survived have been rolling up competitors through acquisition and building out their technology stacks. At the top of that list is Virtual Dining Concepts (VDC), the company behind virtual restaurant brands like BeastBurger and Pardon My Cheesesteak.

For much of the past year, VDC has stealthily rolled out its new platform, Linked Eats, to restaurants operating within its network. The software, which is the combined result of tech built by VDC for its restaurant partners and technology acquired through the acquisition of Sauce (which built dynamic pricing tech) and Crave Delivery (ghost kitchen software), is described as an ‘AI-powered’ software tool to optimize virtual restaurant operations. The company says Linked Eats helps operators with revenue management (automating uptime, dispute management, error reconciliation), marketing & promotion management, and dynamic pricing.

According to VDC President and Co-founder Robbie Earl, Linked Eats sits on top of existing POS and delivery management software as a “value layer” designed specifically for virtual restaurant brands.

“We work with a number of the middlewares, we work with the DSPs (delivery service providers), and we’re starting to work with the POS companies and tying it all together,” said Earl. “We want to drive you towards automated actions and have an action-oriented product versus a dashboard-oriented product.”

Linked Eats has rolled out its software with 30 partners to four thousand locations over the past six months, including names such as California Pizza Kitchen, Chuck E. Cheese, and Brio Italian Kitchen. In addition to Earl, who is also the co-founder of VDC, Linked Eats is led by company CEO Devin Wade, who came over when VDC acquired the remnants of Wade’s previous company, Crave.

“In just around six months since going live, Linked Eats is already at a run rate of adding over $10 million per year in gross profitability to restaurants,” said Wade in a press release issued to The Spoon.

The expansion into developing a standalone software business alongside its virtual restaurant brand comes after what’s been an extremely active last year for VDC on its virtual brand side. The company once had 20 virtual brands and trimmed that number down to under a dozen.

“We took the number of brands we had – twenty – down to eight, and we’re at ten now.”

Another big challenge VDC faced over the past years was the ongoing lawsuit with MrBeast over BeastBurger, perhaps the most well-known celebrity-branded virtual kitchen effort of all time. According to Earl, the dispute between VDC and MrBeast is still in the courts, but he says we should hear something on the status of that soon.

“We are still operating the brand. It is still on offer and available, but there will be, I think, some other news coming on it soon,” said Earl.

Looking forward, Earl thinks the growth for Linked Eats will be fueled by demand for operators to expand their digital business, whether it’s a digital order for a virtual brand running out of their kitchen or for their own native business.

“The exciting thing is it doesn’t discriminate between a virtual brand and your regular brand. So, with all of the learnings that we have, this massive data set of hundreds of millions of dollars of digital orders that we generate, we now have all those learnings that we can give to you and your brick-and-mortar restaurant.”

You can watch and hear my full conversation with Robbie Earl below.

The Spoon Catches Up With Robbie Earl to Talk Virtual Restaurants & Linked Eats Roll Out

The Minnow Pickup Pod

CES 2022: Minnow Shows Off Pickup Pod, an Unattended Cubby System Designed for Food Delivery

Food tech startup Minnow showed off their contactless, asynchronous smart lockers for food delivery at CES 2022 — and The Spoon got a demo and sat down to talk to CEO Steven Sperry.

Minnow began shipping the pods in the last four weeks through Hatco, a manufacturing partner who creates Minnow pods on demand. On one end of the spectrum, Hatco is serving customers where food is picked up, including restaurants, ghost kitchens, and cafeteria operators. On the other end, Minnow is focusing on selling their pods into commercial real estate including office buildings, residential spaces like apartments and condos, and college campus locations — basically, where food is delivered.

While delivery lockers aren’t a new idea, Minnow differentiates by being designed specifically for food. Each pod is insulated, lit from the inside, and includes UV lights and antimicrobial surfaces.

“We did research and found that people don’t like the idea of reaching into a dark space to get their food — they want to know that the space is clean and sterile,” said Sperry.

Not only is the Minnow pod designed for food and strong connectivity with 5G on board, it’s also providing a standardized and easier way for third-party delivery drivers to find a delivery location to drop off food without navigating secure lobbies and elevators, gated entryways or confusing campus maps.

When asked about Minnow’s support model and whether a multifamily property owner would be able to use the Minnow pod “as a service” versus a straight purchase, Sperry responded, “The purchase typically has a SAS component because the device is always connected to our servers and monitored in real-time. We monitor the food continually, we know what’s happening in every pod and in most cases, it’s considered an amenity for the residents of that building.”

The Spoon video crew was able to get a quick demo of a Minnow pod live on the CES show floor — check it out below.

CES 2022: Demo of the Minnow Pick Up Pod

Restaurants Are ‘Always Blamed’ When It Comes to Bad Delivery. Here’s How Tech Can Help

Who is responsible when something goes wrong with delivery?

A succinct-yet-apt answer to that question recently came from fast casual chain Wow Bao’s President and CEO Geoff Alexander, who spoke at The Spoon’s Restaurant Tech Summit this week: “As the restaurant brand, you are always blamed.”

If you’ve ordered via third-party delivery with any frequency, you’ve likely dealt with the following scenario: The order is late or does not arrive. The customer calls the delivery service and gets an automated response. The customer calls the restaurant itself, who may not know where the food is because it left the the building ages ago. If and when the meal finally arrives at the consumer’s door, it will be cold, soggy, dry, or all of the above. It’s usually not DoorDash, Uber Eats, or any other delivery service that gets blamed for these problems. 

By way of example during the event, Alexander brought up Fargo, North Dakota, where Wow Bao operates one of its dark kitchen locations. For these kitchens, other restaurants cook some of the Wow Bao brand’s signature items and sell them on the usual third-party delivery channels as a way to make incremental revenue. Wow Bao has about 350 dark kitchen locations around the country right now, with a “moonshot goal” of reaching 1,000 by the end of the year. 

Brand integrity is always something to watch for with these kitchens. “When an issue happens there, it’s not Wow Bao,” Alexander explained at the event. “It’s somebody running one of our dark kitchens. And [the food is] delivered via one of three or four delivery platforms. I get the phone call. Wow Bao corporate gets the phone call, we get hit on Instagram or social or Google Reviews. That whole brand transfer hast to be the most guarded and respected piece by the brand itself and by the operator to work together. At the end of the day, the way that guest is handled is what’s going to decide if the guest is going to come back and who they’re gonna tell.”

As to how tech can help restaurants guard this brand transfer, the other panelists pointed to tools that can optimize operations. Ava Ghaiumy, Delivery Hero’s regional director for global foodservice operations, pointed out that there is “almost no bigger KPI than speed.” Her company, which is investing heavily in various tech initiatives, is working on things like improved dispatching and rider-tracking features that can help with speed of service when it comes to delivery.  

Olo’s Marty Hahnfeld, who was also on the panel, said it’s all about “precision in operations.” That includes improving order accuracy, making sure menus are up to date across all ordering channels at all times, and that pricing is correct on those channels as well. Olo offers its Dispatch service that allows restaurants to order directly from a restaurant’s own website or mobile app. Though in most cases, there is still a reliance on third-party delivery to handle the last mile.

At the end of the day. the most important technology to keeping brand integrity intact may be one that’s been around for quite some time: the POS integration.

Such an integration connects, among other things a restaurant’s main POS system with the many different channels through which customers buy meals nowadays, including third-party delivery. Whereas in the old days (two years ago), delivery services provided an external tablet and restaurant staff manually key’d in orders to the main POS system, more restaurants are now directly connecting delivery to that main system. Panelists were unanimous in their belief that this is an extremely important technology when it comes to improving order accuracy, timing, and a generally smoother experience for everyone.  

Lunchbox Acquires Online Restaurant Marketplace Spread

Online ordering platform Lunchbox announced today it has acquired Spread, an online marketplace that aims to offer both restaurants and customers an alternative to Grubhub, DoorDash, and other major third-party delivery services.

Lunchbox’s online ordering software will power the transactions, while Spread will handle the deliveries. Pickup options will also be available for customers.

NYC-based delivery marketplace Spread was created to connect customers and restaurants without charging the former hefty commission fees, as third-party delivery services like Grubhub do. Restaurants that use the Spread platform can send promo codes and weekly specials directly to customers, who are then directed back to the restaurant’s own website to order. Spread charges a flat fee to restaurants (usually $1 or $2), rather than the typical percentage third-party delivery marketplaces use. 

Until recently, that percentage could reach as high as 30 percent per transaction, a figure that gutted restaurants’ already dwindling margins in 2020 as the COVID-19 pandemic shut dining rooms down. Many cities in the U.S. have since introduced caps on commission fees (some permanently), though the numbers still hover around 15 to 20 percent. 

Since the technical logistics of delivery are expensive and complicated, most restaurants can’t afford to to manage their own operation and more or less have to use Grubhub et. al. to reach customers. This is the cycle Spread and Lunchbox are hoping to break with their newfound partnership. 

The acquisition will also widen Lunchbox’s potential customer base to include independent, single-location establishments and mom-and-pop restaurants. (The company’s platform currently services multi-unit chains.)

The acquisition comes at time when more companies are emerging claiming to be an alternative to the major third-party delivery services. Companies like Ritual, Fare, and Inhousedelivery.com make claims similar to Lunchbox/Spread about reducing restaurants’ reliance on those services.

At the same time, third-party delivery services are offering their own alternatives to high fee caps. Grubhub debuted a “commission-free” option earlier this year, and DoorDash launched a tiered pricing structure for such fees. While these services come with their fair share of fine print, they’re nonetheless evidence that third-party delivery isn’t going to take the competition lying down.

San Francisco Makes Restaurant Fee Caps for Delivery Services Permanent

San Francisco, California voted this week to permanently cap the fees delivery services charge restaurants at 15 percent. The San Francisco Board of Supervisors unanimously approved a resolution. 

The 15 percent fee cap was first introduced in April 2020, when Mayor London Breed issued an emergency order that dictated the limits of what third-party delivery services like DoorDash could charge restaurants in commission fees. The cap was in response to a two-fold problem. Historically, delivery services have charged restaurants (in S.F. and everywhere else) commission fees that can run as high as 30 percent per transaction for being on their marketplaces. Said fees became even more problematic once the COVID-19 pandemic shut cities down and restaurants were left with no way to reach customers save through these delivery platforms.

The original fee cap was set to expire on August 15, 60 days after restaurants were allowed to reopen dining rooms at 100 percent capacity. The new resolution will permanently cap commission fees at 15 percent. 

This week’s resolution marks the first time ever a city has passed a permanent cap on commission fees. Certain amendments are still up in the air, including one that would allow delivery services to charge “marketing fees.”

It’s also unclear how this resolution will change existing moves by delivery services, which have already introduced initiatives that look to be their own answer to the commission fee debate. Most notably, DoorDash introduced tiered commission plans in April that start with commission fees at 15 percent. However, that tier covers only the smallest delivery radius and has the highest cost to customers, who would ultimately have to shoulder the cost burden. 

DoorDash and others have said these fee caps ultimately lower order volumes and hurt the drivers and couriers doing the last mile of food delivery, and that fee caps in certain markets mean customers will wind up paying more for their food.

San Francisco was one of the early movers when it came to capping fees. Dozens of other cities followed, though the cap percentage varies from 5 percent (Chicago) up to 20 percent (NYC). Many of those caps have now expired, though NYC is also considering a permanent cap.

Grubhub and Resorts World Las Vegas Partner on New Hotel Concept

Resorts World Las Vegas has announced a partnership with Grubhub for a new mobile order service. Guests of the forthcoming Resorts World Las Vegas property will be able to use the service to get food, drinks, and retail items for delivery and pickup during their stay.

Dubbed On The Fly at Resorts World Powered by Grubhub, the service lets guests order from all of the resort’s onsite food and beverage locations as well as certain retail stores. Items can be scheduled for pickup or delivered to the guest’s hotel room or the resort’s pool complex.

To use the service, Resorts World guests either access the Grubhub app or scan one of the many QR codes that will be located throughout the property. Users will also get the option to charge the purchase to their room, just as they would with a traditional room service order, or use their credit card. For poolside deliveries, guests access their order at a QR-code activated restaurant locker on the pool deck. 

The 88-acre Resorts World Las Vegas property will include three Hilton hotel brands in addition to the usual trappings of a Las Vegas property — casino, stores, restaurants, etc. The whole thing is slated to open this week, on June 24. 

It also marks the first time Grubhub’s service has been available at a hotel/casino property. The sheer size of Resorts World Las Vegas — three hotels and 40 food/bev outlets in an 88-acre property — gives Grubhub automatic access to a potentially huge customer base in Sin City. 

Last week, Netherlands-based Just Eat Takeaway.com said it had completed its acquisition of Grubhub, a $7.3 million all-stock deal that was originally announced one year ago. Currently, Grubhub’s strongest markets are New York City, Boston, Chicago, and Philadelphia. 

JustKitchen Raising $20M, Expanding into the U.S., Asia

Vancouver, Canada-headquartered JustKitchen announced this week it is in the process of raising $20 million to expand its network of ghost kitchens and virtual restaurant brands. The company said it is getting $16 million from Canadian investment dealerr Beacon Securities Limited, which will buy 11.9 million shares of JustKitchen at $1.35 per share. JustKitchen is also looking to raise an additional $4 million.

The company has a number of plans for this new funding, including international expansion, more software development, and some brand acquisition, too.  

JustKitchen operates what it calls “hub-and-spoke” commercial kitchens. Ingredients are prepped in a central main kitchen (the “hub”) and sent to smaller “spoke” kitchens located strategically close to customers. Once a user places an order via the JustKitchens app or website, the spoke kitchen closest to that person completes the order and a delivery service shuttles the meal to its final destination. 

This version of the hub-and-spoke model isn’t widely used at the moment, with most ghost kitchen providers operating traditional commissaries a la Kitchen United or restaurants utilizing space on their own properties. However, the definition of “ghost kitchen” no longer just applies to restaurant food. Another Canadian company, just called Ghost Kitchen, is a good example of this: Ghost Kitchen sells some easy-to-assemble restaurant food, but it also sells pints of Ben & Jerry’s ice cream and packages of Beyond burgers. These simpler types of orders that require minimal prep lend themselves to smaller, spoke-like kitchens closer to customers and powered by a main central kitchen.

In addition to working with third-party restaurant partners, JustKitchen also operates a portfolio of in-house delivery-only restaurants. The company also offers a delivery-only grocery service called JustMarket. Users can add grocery items onto their restaurant meal orders or simply get groceries delivered directly. 

Though based in Vancouver, the company currently only operates its services in Taiwan and Hong Kong. Part of the new funding will go towards opening new spoke kitchens in Taiwan. There are also plans to expand into the western half of the U.S. and into other Asian countries later this year, including Singapore and the Philippines. In the U.S., JustKitchen will begin in Seattle, Washington and several cities in California.

DoorDash Expands to Japan

DoorDash today announced the official launch of its delivery service in Japan. This is the San Francisco-based company’s first foray into the Asia market, and its third international expansion after Canada and Australia. 

Service begins today in Sendai, a city with just over 1 million inhabitants in the northeastern part of Japan. The choice of location is in keeping with DoorDash’s strategy elsewhere, which is to focus on smaller cities and suburban markets over major metropolises. Historically, this has helped DoorDash reach customers normally outside most restaurants’ delivery ranges, and it’s arguably a factor that has kept DoorDash in the top spot for marketshare, at least here in the U.S.

Whether the company can repeat that success in Japan remains to be seen. Japan is a restaurant-dense country, which means plenty of prospective DoorDash merchants and customers. However, the country is also home to a lot of competition in the delivery space, including major services like Uber Eats and Delivery Hero.

DoorDash, meanwhile, has recently added services like grocery and convenience store delivery as a way of reaching new customer types and also standing out from the competition. (Uber also offers grocery delivery in some U.S. locations.) The company has not yet said if these services will be immediately part of its expansion to Japan. 

DoorDash went public at the end of 2020. Last month, the company reported revenues of $1.08 billion for the first quarter of 2021, up from $362 million in the previous year and beating out Wall Street estimates.

Restaurants in Sendai will also be able to use DoorDash’s Storefront feature, which lets businesses process orders and payments directly, rather than going through the marketplace. 

Grubhub Debuts ‘Commission-Free’ Platform Aimed at Independent Restaurants

Grubhub on Wednesday launched Grubhub Direct, a platform independent restaurants can use to build their own online storefronts and process orders free of commission. According to a press release from Grubhub, the platform also gives restaurants control of their customer data. 

The launch comes after more than a year of heavy criticism of delivery services over the commission fees they charge restaurants. Though Grubhub and others have done this for years, the issue became a lot more hot-button in 2020 when the pandemic shut dining rooms down and forced businesses to rely on third-party delivery services. Many cities across the U.S. introduced mandatory fee caps to keep commission fees in check. 

Seemingly in response, third-party delivery services have, one after the other, launched various means of addressing the restaurant commission fee issue. Uber Eats was first, in July of last year. DoorDash followed, with a “tiered commission” setup. 

Grubhub’s particular version is, the company indicated today, particularly geared towards independent restaurants — a group that’s historically paid the most in commission fees. Grubhub direct offers these restaurants the option to build a branded website, create loyalty programs and promotions, the ability to process and manage orders, and access customer names, email addresses, and order history.

Grubhub says there is no marketing commission on Grubhub Direct orders, and that it is waiving the one-time setup fee (normally $99) on the product until May 2022. 

Per the fine print, restaurants will pay Grubhub a $49/month non-refundable hosting fee for their website for each location. Restaurants must use a URL provided by Grubhub, and of course, since it’s a Grubhub platform, all the data still lives in the hands of the delivery service. Like any other third-party service, Grubhub will still charge a commission fee if the restaurant uses a Grubhub driver to handle the last mile. 

Direct also seems to be Grubhub’s way of competing with software platforms like those from Ontray, Lunchbox, and others. These services also let restaurants build their own digital storefronts and manage orders, and many already integrate with third-party delivery services for the last mile of delivery.

Grubhub, meanwhile, may be undergoing some big changes in the near future. Just Eat Takeaway.com, a Dutch delivery service that acquired Grubhub for $7 billion in 2020, recently published its prospectus for the merger. As it noted, Grubhub shareholders will meet to vote on the offer in June. 

Delivery Hero’s Tackling a Major Hurdle to More Diversity in Tech

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When Berlin, Germany-based Delivery Hero launched its recent Tech Academy recently, it showed us one way to create both more and better jobs in the restaurant industry — and make those available to a wider swath of the population. The question is, Will the Delivery Hero Tech Academy be successful enough to influence others in the increasingly tech-centric restaurant industry?

The Tech Academy will teach tech skills to “underrepresented groups” to promote more diversity and inclusion, and also give people more options when it comes to finding a job. To do this, Delivery Hero teamed up with the Digital Career Institute (DCI). Founded in 2016 in Berlin, DCI was originally launched as a way to help refugees get jobs in the tech world. (This was in the wake of the record 1.3 million asylum seekers that came to Europe in 2015.) The organization now operates four locations across Germany and works with over 600 companies to link DCI graduates to job opportunities. 

The Delivery Hero Tech Academy will teach coding languages (Java and Python are specifically called out), and the 9.5-months-long program is free to all participants. Those participants may also get an opportunity to move into a permanent position on a backend development team at Delivery Hero following the program. While that’s not a complete guarantee, participants presumably won’t be left out in the cold after graduation, either. DCI’s large network of partner companies will no doubt provide other potential opportunities.

A lack of diversity has long been a major problem in tech. Companies and leaders have made efforts in the form of diversity reports and pledges to do more, but critics have said these efforts will “ring hollow” until changes show up in diversity data.

At the same time, the restaurant industry is getting increasingly digitized thanks to the shift towards to-go orders (e.g., delivery) and digital ordering, payment, and management platforms. Theoretically, the switch could create not just more jobs in the industry but jobs that pay higher, are less dangerous, offer the kinds of challenges that make work fulfilling, and lead to new career opportunities down the line.

For many around the world, the above litany remains firmly out of reach. In fact, it’s more common for refugees, undocumented workers, and those with less formal education to wind up working the last mile of delivery. And if there’s one job type that’s the antithesis of safe, fulfilling work that pays well, it’s gig worker jobs like food delivery.

Restaurant tech companies have been saying for a couple years now that they don’t want their AI, automation, and robotic platforms to displace workers. Rather, they want that tech to take over the dirty, dangerous, and boring pieces of the restaurant so that human workers can focus on the proverbial “more meaningful” tasks. So far, few have defined what “meaningful” is in this technocentric restaurant world, or how one manages to acquire the skills to get there.

Until now, that is. By helping to provide he education needed to get into the tech part of restaurant tech, Delivery Hero is addressing an area that’s until now not really been talked about. Let’s hope the Tech Academy can start to change that, and inspire other restaurant tech companies to do the same.

More Headlines

Too Good To Go Expands Its Food Waste App Nationally Across the U.S.: The company announced its plans to expand service for its food-waste-fighting platform across the United States, following a successful program in select East Coast states.

Foodetective Raises $2M in Seed Funding: Switzerland-based Foodetective raised funds for its B2B software, which is an operations platform restaurants can use to organize and run their many disparate pieces of software and view them from a single dashboard.

Over Half of U.S. Consumers Are Comfortable Dining in Restaurants: More than half of U.S. consumers (60 percent), are comfortable with the idea of dining out at a restaurant, according to new data from tech intelligence firm Morning Consult. 

Delivery Hero’s Tech Academy Will Promote Diversity by Teaching Coding

As of today, Delivery Hero is taking applications to its newly launched Delivery Hero Tech Academy, which aims to promote more diversity and inclusion in the tech industry through education.   

Done in partnership with the Digital Career Institute (DCI), the program will teach coding languages (Java and Python are specifically called out) to “anyone who would like to learn how to code.” While anyone may apply, Delivery Hero specifically encourages “underrepresented groups” to apply.

The program itself will take place in Berlin and last 9.5 months. Seven of those months will be spent on curriculum, while the final stretch takes the form of an internship with one of Delivery Hero’s backend tech teams. Students may get the opportunity for a permanent position at Delivery Hero following the program (though it is not a guarantee).

For now, the program is open to those based in Berlin. Since Delivery Hero is funding the entire thing, those selected to participate pay nothing. 

There’s a growing need for opportunities that teach tech skills to wider swaths of the population. The robots may not have eaten up all the jobs yet, but automation is increasingly changing the nature of work, especially in the wake of the havoc brought by the Covid-19. Some estimates from economists have found that 42 percent of the jobs lost during the pandemic are gone forever, partly because companies are replacing humans with technology to keep costs lower. 

In the food delivery industry, specifically, we’ve long wondered when robots would take over the work of couriers and drivers, and to some degree that is already happening with autonomous delivery vehicles and the digitization of the restaurant back of house.

Delivery Hero’s Tech Academy offers one potential solution to these problems by providing individuals with new skillsets. Instead of these people getting elbowed out by tech, they are instead invited to participate in the inevitable changes facing the food delivery industry. 

The application period for the Delivery Hero Tech Academy runs from now until July 15.

 

Food Delivery Service Zomato Files to Go Public

Zomato, one of India’s leading and largest food delivery startups, announced today it has filed for an IPO from which it plans to raise $1.1 billion. 

To date, the 12-year-old company has raised $2.1 billion in total from the likes of Kora Investments, Tiger Global, and Ant Group, among other investors. Once public, it plans to list on the Indian Stock Exchange as NSE and BSE.

The company said it plans to invest 75 percent of its IPO proceedings into further building out its Zomato Pro subscription program as well as its business-to-business supply operation called Hyperpure.

Like most other restaurant-related companies, Zomato saw its fair share of ups and downs in 2020, including having to make cuts to its workforce about a year ago. However, the company has largely recovered from that, though its paperwork notes that the COVID-19 pandemic “has had and could impact our business, cash flows, financial condition and results of operators.” 

According to its filing documents, Zomato has more than 350,000 active restaurant listings on its platform across 24 different markets. The company says it faces “intense competition,” citing Prosus-backed food delivery service Swiggy as its competition along with cloud kitchen operator Rebel Foods and restaurant chains like Domino’s and McDonald’s. Amazon entered the Indian food delivery market last year but is not named as a competitor in Zomato’s filing. Uber Eats, meanwhile, sold its India business to Zomato in March of 2020 for $206 million.

Earlier this month, chief rival Swiggy raised a whopping $800 million and is now valued at $5 billion. As yet, Swiggy has made no announcements around a potential IPO.