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Daily news and analysis about the food tech revolution

third-party delivery

Toronto, Canada Considering a Cap on Third-Party Delivery Fees

Toronto, Ontario mayor John Tory is considering imposing a cap on the commission fees third-party delivery services like DoorDash charge restaurants. He has said he will impose an emergency, temporary cap on those fees “if his emergency powers allow him,” according to an interview with Canada-based publication The Star.

Tory’s words come shortly after San Francisco, CA imposed its own emergency order last week, mandating that delivery services must cap restaurant commission fees at 15 percent if they want to continue doing business in that city. (Delivery services typically charge around 30 percent per transaction.) For now, that’s a temporary order, meant to assist restaurants struggling with dining room closures as residents shelter in place.

Unfortunately for Tory and Toronto restaurants, imposing a similar measure might be more of an uphill battle. Speaking to The Star, the mayor said that’s at least what “preliminary feedback from city legal suggests.”

So in the meantime, Tory is trying other tactics — including reaching out to the delivery services themselves. At the end of last week, he also left the following tweet, directed at those services:

Not surprisingly, delivery companies are defending their stance on commission fees, according to The Star. How long they can keep that up is another matter, because Toronto isn’t the only city considering potential commission fee caps. Last week, Eater pointed out that elected officials in NYC are asking Mayor Bill de Blasio to issue an emergency order similar to the one in San Francisco. Others are urging the same, including council member Mark Gjonaj, who previously introduced legislation around commission fee caps.

There’s no guarantee a measure will pass in Toronto, NYC, or any other place at this point. Even if they do, emergency caps are a surface-level fix to a much deeper problem around the amount of power food delivery services have over the livelihoods of restaurants. For many (most) businesses, offering delivery via DoorDash et al is still cheaper than trying to manage the logistics and driver fleet oneself.

That doesn’t negate the fact that charging a restaurant 30 percent of each transaction practically annihilates already-thin restaurant profit margins. Third-party services were also the subject of (yet another) controversy recently when a new lawsuit emerged, alleging Grubhub, DoorDash, and others are using their market power to push menu prices higher during the pandemic.

Finally, there is growing evidence that a delivery strategy in the midst of a pandemic won’t be enough to save restaurants.

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.

New Data Tells Us What We Already Knew: Delivery Won’t Save Independent Restaurants

Only 1 in 5 restaurant owners believe with certainty that they’ll survive the COVID-19 pandemic, according to new survey data from the James Beard Foundation and the Independent Restaurant Coalition (IRC). 

Since the pandemic broke out and states mandated dining room shutdowns, IRC and the James Beard Foundation have been polling chefs and restaurant owners. A total of 1,4000 owners from mostly small and/or independent restaurants responded to the latest survey, which closed last week on April 13.

“The data is clear: The Paycheck Protection Program isn’t working as designed for restaurants and Congress needs to fix it,” Clare Reichenbach, CEO of the James Beard Foundation, said in the survey announcement. 

Some of that data includes:

  • Nearly 80 percent of independent restaurant owners said that government stimulus assistance won’t save businesses from shuttering permanently.
  • Over 38 percent of respondents said they have closed temporarily or “potentially permanently.”
  • Over 77 percent said they have seen at least a 50 percent reduction in sales. 
  • More than 5 in 10 restaurant owners estimated needing $100,000 or less over the next quarter to remain viable to reopening.

Some argue that delivery and off-premises orders are vital to restaurants’ survival during this time and indeed one of the only lifelines businesses have while dining rooms remain shuttered. None of that is untrue. It’s just that said lifeline provided by delivery and takeout isn’t as helpful as some folks — usually delivery companies and delivery integrators — make it out to be. 

Case in point: two-thirds of restaurants surveyed by the IRC and James Beard are “uncertain” that off-premises can sustain their business until they reopen. 

“Staying open is going to require a rethinking of our business models,” said IRC founding member Kwame Onwuachi.

Rethinking business models so that they’re geared towards delivery and takeout models means not just having the cash to pay the commission fees third-party delivery services charge (which only some services are currently waiving). It also requires an operational overhaul and retraining of staff, while simultaneously trying to keep everyone safe and maintain high cleaning standards.

Some restaurants are visibly struggling to even offer takeout meals efficiently. Others have closed up shop entirely for the time being, citing concerns over workers’ health. And, to beat a dead horse for the hundredth time this month, the fees lobbed at restaurants by third-party delivery services can go as high as 40 percent per transaction. As one restaurant owner told me, delivery doesn’t make money, at least not for the bulk of independent restaurants. 

So what do we do?

Average consumers can jump online and contribute to relief funds and charities for restaurants, and order directly from restaurants for pickup. Really, though, this is one problem tech can’t solve. As IRC and James Beard note, the industry, and especially independent businesses, need adjustments made to the PPP loan program and probably much more. 

Amazon Gets Approval for Its Deliveroo Investment Thanks to the Pandemic

The UK’s Competition and Markets Authority (CMA) provisionally approved Amazon’s investment in Deliveroo over the weekend after Deliveroo warned its business could collapse without the funds. The third-party delivery service cited the COVID-19 pandemic, which has forced many restaurants worldwide to close, as the reason for “significant decline in revenues,” according to a statement from the CMA.

Deliveroo announced a $575 million Series G funding round in May of 2019 — of which Amazon was set to be the largest investor. In July of that year, the CMA put Amazon’s involvement under scrutiny, saying there were “reasonable grounds” the two companies would “cease to be distinct” with the investment.

As I wrote in December, when the investigation entered Phase 2:

As regulators have stressed, the Deliveroo investment would give Amazon a path back into the market and immediate access to Deliveroo’s existing customer base. That in turn would undercut competition from other food delivery services in the UK such as Uber Eats and Just Eat. 

The ongoing pandemic coupled with the restaurant industry fallout has changed that. Many of the restaurants Deliveroo previously worked with have closed. That includes major QSR chains like McDonald’s and Burger King, have stopped all operations including delivery and takeout, in the UK.

In its announcement, the CMA said “it has become clear that the coronavirus pandemic is having a significant negative impact on Deliveroo’s business” and has “provisionally concluded that Deliveroo’s exit from the market would be inevitable without access to significant additional funding, which the CMA considers that only Amazon would be willing and able to provide at this time.”

The CMA is currently taking views on its findings until May 11 2020, and has until June 11 2020 to make a final decision. 

Curbside Bots and Contactless Everything: What the Post-Pandemic Restaurant Will Look Like

Even an introverted work-from-home veteran like me is starting to get kind of daffy during this here quarantine. But I will say that being stuck at home has given me a lot of time to think (and write) about the state of the restaurant industry, and I catch myself imagining what eating out will be like once we’re past this pandemic. So when Starbucks CEO Kevin Johnson posted a letter this week to employees about the chain’s future, it caught my attention.

In his letter, Johnson more or less said the chain is planning to reopen some of its locations and outlined a plan for doing so. To be clear: Johnson uses the words “open” and “reopen” several times in the text, but at no point promised that your local Starbucks will reopen overnight with the usual setup and operations that existed before the pandemic. 

Which is why I’m singling out Starbucks in the first place. As an international chain that has already dealt with this recovery process overseas, and as a leader in digital business and operations, Starbucks’ plans for reopening stores give us a good hint of what we can expect restaurants to look like once the process of opening the economy begins.

Pulling from Johnson’s letter as well as numerous statements and activities from other restaurants, tech companies, and governments, we put together some predictions for what the post-pandemic restaurant experience might entail.

Note that most of these predictions are around operations and the customer experience. There are a host of other issues, from labor to food waste, I’ll be unpacking those over the next few weeks, so stay tuned.

More space, fewer tables. This is less prediction and more fact, with public figures like California Governor Gavin Newsom saying restaurants will have more space between tables and fewer seats, to ensure social distancing when eating out. Separately, the WSJ noted that restaurant chains may operate at half capacity going forward, and include things like plexiglass shields between booths. That could also spell the end of buffet-style dining and family-style seating. Golden Corral, that bastion of all buffet restaurants, has closed all units for the time being. Even before state-mandated shutdowns, other businesses were nixing community seating. And grocery stores are closing down hot bars.

Lots more mobile payments. Some restaurants are already pushing customers to use their mobile apps to order and pay for food, eliminating the need to touch a kiosk or swipe a credit card. Granted, you have to have a well-designed, easy-to-use app in order to do this, which means we’ll see a surge in smaller restaurant chains developing and/or improving their own mobile experiences for customers, whether in-house or through a third-party service. I expect we’ll also see an uptick in mobile-only locations (though it’ll vary based on state laws around cashless businesses).

Curbside delivery for all. Curbside pickup was once the territory of Sonic and the odd McDonald’s location. With dining rooms shuttered these last few weeks, restaurants have had to find other ways of bringing food out. And since not all of them have been equipped with drive-thru, curbside pickup has become the default option for many. This is one of the methods Starbucks has put into practice over the last few weeks, in some cases even taking it a step further to offer “entryway pickup” for locations without parking lots.

Contactless everything. “Contactless delivery” barely existed as a phrase before China implemented it during the peak of its fight against the novel coronavirus. Now, everyone from Instacart to Pizza Hut offers it, and I doubt we’ll revert back to the old way of handing goods off between courier and customer. For contactless to live up to its name, though, brands need to think about the technical logistics behind the operation. Restaurants’ online order systems need to have the option built right into the checkout process. They should consider providing additional features, such as push notifications to alert customers when and where their order is ready. Contactless will stick around permanently for delivery and curbside orders and, when companies figure out how, probably for in-store purchases, too.

More drive-thru lanes. Austin, TX-based chain Torchy’s Tacos explained to me recently that once the chain was forced to shut down dining rooms, it quickly opened drive-thru windows in locations that had always had the feature but had never utilized it. Many restaurants set up shop in locations that were once a Wendy’s or other fast-food chain. If they haven’t already, they could utilize that space to start offering drive-thru on the regular to customers.   

Gloves and face masks for workers. Restaurants I’ve spoken with over the last couple weeks are quick to emphasize the steps they are taking to protect both customers and workers when it comes to health. Gloves and face masks nearly always come up in that conversation. They’re also part of Gov. Newsom’s plan for restaurants, and will definitely make their way into other states’ frameworks for reopening business.

Robot staff.  Having said that, though, some might just opt for robots when it comes to who’s going to handle your food. My colleague Chris Albrecht recently pointed out that dining customers might prefer “the cold sterility of a robot” to a server wearing a face mask and gloves. Robots, of course, bring up the whole loss of human jobs angle. However, as Chris notes, with fears around the virus and human-to-human contact unlikely to subside for some time, for those restaurants that can afford it, robots might be an appetizing option, at least where city laws permit. Somehow I think they would come in especially handy for running curbside orders to cars.

Okay, wait a minute. Does all this mean my future restaurant experience will involve ordering food ahead of time via an app, then waiting at a plexiglass-encased table for a wheeled bot to roll up with my burger? That sounds lonelier than a month in quarantine.

I doubt it comes to that scenario, though. The COVID-19 situation changes daily, which mean so do expectations about what restaurants will look like when the economy reopens. Maybe all of these predictions will come true. Possibly none of them will. The most likely scenario is that a few of them, like curbside pickup and mobile payments, will become industry standards, and restaurants will use a mixture of the others based on time, money, and customer volume. As states begin discussions around reopening the economy and more chains like Starbucks start outlining their plans, we’ll get a clearer picture of what to expect in the the post-pandemic restaurant experience.

Thanks to Tech, Restaurant Employees Are Accessing Earnings Faster

One area that’s part of any good discussion about the future of the restaurant concerns employees — that is, the servers, baristas, drivers, managers, and others who make up the backbone of the industry.

How they get paid is something that’s fast changing as the industry grapples with dining room closures, mass layoffs, furloughs, and general economic tension. This week, we wrote about Domino’s teaming up with challenger bank Branch to offer employees instant access to their earnings via the Branch app.

Branch is one of a few apps out there that lets hourly workers — who often live paycheck to paycheck — get faster access to much-needed cashflow. DailyPay, which we’ve written about before, is another popular one.

I see an uptick in restaurants making it possible for employees to use these types of apps in future. As everything in the previous section of this newsletter suggests, the restaurant model is rapidly changing, and it’s hard to guess now which formats are most likely to be around next week, next month, or even next year. That means it’s also hard to predict how many people a restaurant will need on staff, and how many hours those individuals can work.

With so many questions up in the air, the least restaurants can do is integrate with one of these apps to get their employees paid faster.

Delivery Service Waitr Is Supposedly Rebounding During the Pandemic

In the midst of a pandemic, it seems beleaguered third-party delivery service Waitr is seeing some uptick in demand for its service. After a slump in March, the Louisiana-based company says it has seen an increase in orders as more people stay at home under shelter-in-place orders, according to The Advocate.

It’s been a rough several months for the company.

Last July, the company became the center of protests when it changed its commission fee structure for restaurants to a “performance-based structure” that was largely seen as a move that punished smaller restaurants with lower sales volumes. The service ignited another controversy earlier this year when it shifted its model to classify drivers as contractors, rather than the W-2 employees they had been previously. 

In between those events, the company has done three rounds of layoffs, was in danger of getting delisted from the Nasdaq, and according to one report only had enough cash to run through March of 2020.

All that, of course, was pre-pandemic. Now that delivery is one of the only lifeline’s restaurants have, Waitr has seen demand for its service go up from both customers and restaurants. CEO Carl Grimstad said in a statement this week that “driver supply is at an all-time high and new restaurants are signing up for our services rapidly.” The company has also said it has seen an increase in driver applications.

Like other third-party delivery services, Waitr hasn’t adjusted commission fees for restaurants during this time, though the service said it is “working with restaurant partners to offer free delivery and marketing programs.”

A growing number of governments, advocacy groups, and restaurants themselves argue that the best way to help the restaurant industry right now is to slash commission fees for restaurants, who often pay fees of 30 percent or higher for each transaction. Waitr has not yet made any mention of either cutting down or waiving those fees.

The company’s real test will come as states slowly begin to reopen businesses and customers are once again seated in dining rooms.

Grubhub, DoorDash, and Other Delivery Services Are Getting Sued Over Restaurant Prices

A class action lawsuit filed Monday alleges that third-party delivery companies DoorDash, Grubhub, Postmates, and Uber Eats are using their market power to push menu prices higher during the coronavirus pandemic, according to Reuters. 

The three consumers who initiated the suit allege that third-party delivery companies dictate in their contracts the prices restaurants can charge for orders — even those placed directly with the business and not via delivery apps. These terms along with sky-high commission fees that can reach 30 percent or higher for each transaction, are in turn forcing restaurants to raise menu prices across the board. Paying customers ultimately shoulder that cost, whether they’re getting food delivered or eating in the restaurant dining room.

Of course, no one is eating in the restaurant dining room at the moment, but that’s another motivating factor behind the lawsuit, which has been filed against the backdrop of a global health crisis that’s shut down dining rooms and sent the entire restaurant industry spiraling.

With off-premises orders one of the few lifeline’s restaurants have right now, more businesses are forced to work with these third-party delivery services in an attempt to keep from going under. Customers ordering directly from the restaurants is better for business, but when third-party companies are dictating the menu prices, the cost hike ultimately falls on the consumer.

As the lawsuit, notes, third-party delivery apps offer “a devil’s choice” to restaurants: “In exchange for permission to participate in defendants’ meal delivery monopolies, restaurants must charge supra-competitive prices to consumers who do not buy their meals through the delivery apps, ultimately driving those consumers to defendants’ platforms,” it said. 

The lawsuit is just the latest addition to an ever-growing list of griefs advocates, lawmakers, customers, and the restaurants themselves have with third-party delivery companies. Many of those griefs, such as the high price of commission fees, are even more pronounced now that dining rooms are shuttered and some restaurants are having to close their doors permanently.

Meanwhile, reading any announcements about “relief” companies like DoorDash or Uber Eats are providing restaurants during the pandemic has become an exercise in reading between the lines to decipher the fine print. Case in point: Grubhub said in March it would provide relief by deferring commission fees for restaurants. Those fees have to be paid back within four weeks of the relief period ending, and simultaneously lock restaurants into a full year of being on Grubhub’s platform.

Last week, San Francisco introduced an emergency measure to cap commission fees from third-party delivery services at 15 percent. Some services, notably DoorDash and Postmates, are cutting down or waiving those fees for a set period of time. However, those measures are band-aids to a problem that existed long before the pandemic hit and will persist long after it subsides.

Unless enough customers get fed up with third-party delivery tactics. This week’s lawsuit suggests that is already happening. As of last week, 17 million people have filed for unemployment in the U.S., and analysts expect that number to keep rising. Many consumers are finding themselves in a position where it will be hard to pay the bills, let alone a hiked up menu price on a bowl of pasta from their local restaurant. And if a restaurant doesn’t have the power to change the price on that pasta, everyone loses out, and the power of these delivery companies has, in the words of this week’s suit, “come at a great cost to American society.”

San Francisco Places Emergency Caps on Third-Party Delivery Commission Fees

San Francisco Mayor London Breed issued an emergency order at the end of last week to put temporary caps the delivery fees that third-party services charge restaurants. The order is effective now and dictates that delivery services must cap these commission fees at 15 percent if they want to continue doing business in San Francisco as the city shelters in place.

The point of the order is to help restaurants as they struggle to stay alive during state-mandated dining room closures. Many have turned to delivery and take-out models to try and make up at least some of their lost sales, which for most businesses means partnering with third-party services like Grubhub and Uber Eats. However, those services charge as much as 30 percent per transaction in commission fees.

“We’ve listened to our restaurants and the struggles they’re facing during this unprecedented time,” Supervisor Ahsha Safaí said in the official announcement about the order. “The high commission fees being charged to our businesses remains unchanged and that cannot continue as every dollar can mean staying open or laying- off more staff.”

Of the major third-party delivery companies, some have already made moves to address high commission fees. Postmates is temporarily waiving those fees for new merchant partners operating small businesses in San Francisco. And last week, DoorDash, which owns Caviar, said it would cut commission fees by 50 percent for restaurants with five or fewer locations in the U.S., Canada, and Australia. 

In a move that should surprise no one at this point, Grubhub is opposing the order — and urging its customers to do the same. As Eater SF noted, the Chicago-based service claims caps on commission fees will increase customer fees by $5–$10 and “immediately cripple delivery orders, outweighing any potential benefits when takeout is the only option restaurants have to stay open.”

The trouble with that logic is that it seems to assume delivery and takeout will actually save restaurants during this time, which is far from certain. Transactions for full-service restaurants — many of which have quickly had to pivot to an off-premises model — have dropped 79 percent, according to NPD Group. Even after the switch to off-premises, restaurants are struggling to ensure smooth, safe operations. Others are simply shutting down temporarily, citing health concerns for their workers. Still others are closing their doors permanently, already unable to weather the storm. 

San Francisco’s emergency order to cap commission fees seems aimed at trying to ensure more restaurants won’t have to permanently go under during shelter-in-place orders. And actually, while SF may be the first city to actually pass such an order, it’s not the first to consider it. In August of 2019, the New York State Liquor Authority (NYSLA) proposed adding a 10 percent cap on the commissions that full-service restaurants pay delivery services.

At the time, I wrote that a measure like that passing could have a ripple effect on other cities around the U.S. The same is true of San Francisco’s emergency order. As more time passes and more data surfaces about how dire circumstances are for most restaurants, other major cities — Seattle, Los Angeles, NYC — could be motivated to put similar measures in place. They won’t necessarily turn delivery into a thriving business for all, but they might lessen some of the damage these commission fees are wrecking on an already damaged industry.

In a Time of Broken Norms, Restaurants Experiment to Stay Intact

So earlier this week I was chatting with a food industry colleague who pointed out the sheer amount of opportunity food businesses have right now to experiment with existing norms. At the moment, breaking those norms feels less risky because in many cases we can’t do things the old way.

No one knows this better right now than restaurants. Dining rooms are closed and once they reopen they won’t look the same. Shifting to a delivery-takeout model is a necessity, but it may not make up for all the lost sales. And lately, restaurants are going far outside their normal territory for ways to survive the double whammy of a global pandemic and an industry on the brink of meltdown.  

Selling groceries is one way.

Case in point: Subway this week announced Subway Grocery, a site where you can buy pantry staples straight out of the Subway supply chain. Think foot-long bread loaves, frozen soup, bagged lettuce, and bulk amounts of bacon. The move is a way to get consumers goods that might not actually be in the grocery stores right now (thanks, panic shopping). More importantly, it lets the chain supplement its to-go format while dining rooms stay closed due to coronavirus.

Panera quickly followed that news with a similar concept, Panera Grocery. Customers can order grocery items like breads, produce, and dairy items straight from Panera’s supply chain and via the Panera app or through Grubhub. Like any Panera meal, the goods get delivered to customers’ houses.

And in NYC, just salad launched Just Grocery, which says it will deliver household staples — from produce to paper towels — in 90 minutes or less to Manhattan residents. The company also launched a meal kit service of items from its own menu, which customers can also order from the Just Grocery site.

If I were a betting woman, I’d say more of these initiatives are to come. Right now, big chains like the ones above as well as smaller restaurant businesses (see below) have no choice but to adapt their businesses to new formats so they can add incremental revenue to severely declining sales Plus, I imagine prepping grocery and meal kit orders is another way to keep employees occupied in the process, not to mention save on food waste costs.

But what about when dining rooms open again? Will restaurants need an additional grocery business?

I’ll go on a limb here and say yes, and that at least some of these initiatives will be in place for a while. The reason is that once dining rooms re-open, they’re not going to resemble their former selves. I’m just going off my own speculation here, but I foresee the days of cramped tables close together and family-style seating as a thing of the past. Restaurants dining rooms will have way less capacity, and more than a few people will be wary of going out to eat.

That makes the additional revenue from grocery businesses an attractive long-term play for many of these chains.

Small Restaurants Turn to Big Grocery

Other restaurants are turning to grocery stores themselves, not to sell pantry staples but to get their own meals in the hands of customers at a time when eating out isn’t an option. Texas chain H-E-B launched a pilot program to carry ready-made meals from restaurants in 29 of its stores. For the program, the chain has partnered with local restaurants, some of which have been able to bring back furloughed employees thanks to the extra work (and presumably money). 

And in some cases, grocery stores are actually doing the hiring themselves. When Greensboro, NC-based chain The Fresh Market realized it didn’t have enough staff to keep up with the demand for groceries as well as the chain’s deli counter, it reached out to Darden Restaurants to hire out-of-work employees from the company’s restaurants (Olive Garden, Longhorn Steakhouse).

The sharing of employees seems more of a stop-gap measure than long-term employment solution for many individuals, particularly those building a career in the restaurant industry. Selling restaurant food in stores, however, might stick around. Like I said above, there’s a pretty good chance restaurants won’t be operating at their old capacity once dining rooms reopen, which means other sources of revenue — even incremental revenue — will be a necessary staple for some time to come.

DoorDash Slashes Restaurant Commission Fees By 50%

Of late, I’ve approached most news from third-party delivery aggregators with more than a little skepticism along with the question: Is this really helping restaurants?

DoorDash announced it is reducing commission fees for “local” restaurants by 50 percent, from April 13 through the end of May. “This is not a deferral of fees, nor will merchants be asked to pay anything back,” the company said.

Third-party delivery companies are getting an increasing amount of flack for those commission fees, which can go as high as 30 percent per transaction. Cutting back those fees would obviously help restaurants during this time.

What I’d like to know is, when will the other shoe drop? More and more, the major third-party delivery companies are seen as predatory entities that are astoundingly out of touch with the daily realities of running a restaurant. Is this news from DoorDash an about-face for the company or is the other shoe dangling in the air right now? Maybe it’s hidden fees or getting locked into a contract. Maybe it’s none of those things, though that feels too optimistic an idea in a discussion about third-party delivery.

I’ll be having a third latté and digging into the fine print, so more on this to come.

Keep on truckin’,

Jenn

This is the post version of our weekly restaurant tech newsletter. To get the newsletter delivered to your inbox, just sign up here.

iFood and Domicilios.com Merge to Take on the Latin American Food Delivery Market

Brazil-based food delivery service iFood announced this week it had purchased a controlling stake in Colombian service Domicilios.com, according to TechCrunch. The deal gives iFood a 51 percent equity stake the partnership, while Delivery Hero, which owns Domicillios.com, holds the remainder. Financial terms were not disclosed. 

Behind the purchase is iFood’s ambitions to compete more fiercely with Softbank-backed delivery service Rappi, which is based in Bogota, Colombia and currently holds the top spot in terms of market share in that country. The iFood-Domicilios.com merger gives iFood a larger geographic presence in Colombia — over 12,000 restaurants across 30-plus cities. It also brings the battle for food delivery dominance to Rappi’s home turf.

Prosus-backed iFood has raised nearly $600 million to date. Rappi has raised over $1 billion. Both companies also compete in the region with Uber Eats.

Carlos Moyses, iFood’s corporate vice president for Latin American operations, said in a statement that the company hopes to expand beyond its current markets of Colombia, Mexico, and Brazil. “We are growing faster than anybody else in LatAm.” 

Meanwhile, the Latin American market is the fastest-growing one for food delivery outside of the Asia-Pacific region, with sales from delivery quadrupling between 2014 and 2019. And with the coronavirus expected to hit the region especially hard, competition for customers is likely to intensify even more as the population hunkers down.

Fabricio Bloisi, iFood’s CEO, said Colombia, in particular, was a “strategic country” for the service, hence the merging with a service headquartered in that country. As for the rest of Latin America, this new consolidation should ensure competition is more fierce than ever when it comes to gaining and retaining customers.

Swiggy, Zomato Expand Delivery Services to Groceries and Beyond in India

Swiggy, one of India’s biggest food delivery services, announced this week it has raised $43 million as part of its ongoing Series I round. The round was led by existing investor Tencent, and new investors Ark Impact, Korea Investment Partners, Samsung Ventures and Mirae Asset Capital Markets. it brings Swiggy’s total funding to date to $1.42 billion and values the company at $3.6 billion, according to TechCrunch.

The round is also part of Swiggy’s ongoing efforts to expand its business from restaurant food delivery to include other items, including grocery, laundry, and other household items. The company says it will use the new funds to address market gaps in those areas.

Pre-pandemic, Swiggy was already headed in this direction. Two services, Swiggy Stores and Swiggy Go, launched in 2019 to deliver grocery, medicine, house keys, and many other items to customers within a one-hour timeframe.

With cases of COVID-19 on the rise worldwide, the company isn’t alone in branching out from restaurant meals — more services that traditionally peddled only restaurant food are widening the range of products they can deliver. DoorDash recently expanded its food delivery capabilities to include convenience-store items from 7-11, Wawa, and other such places. Postmates has a delivery partnership with Walgreens through which customers can get wellness products, medicines, and general household items. 

Those examples are in the U.S., though. In India, expanding into new delivery categories could give Swiggy a competitive edge at a time when the entire country is on lockdown and most business is disrupted. However, Swiggy’s biggest competitor, Zomato, has also gotten hip to the potential profitability of delivering more than just restaurant meals. The service just announced Zomato Market, which identifies nearby grocery stores delivering goods and delivers items.

Zomato also bought Uber Eats’ business in India earlier this year, creating a two-man race in the India food delivery market. With 1.3 billion people in the country on lockdown right now, there are plenty of customers to go around. Post-pandemic, whenever that is, the market may become more of a race to see which service can better prove profitability.

COVID-19 Summit: How to Get Up, Running, and Efficient With Restaurant Delivery/Takeout

At today’s jam-packed yet socially distanced COVID-19 summit, we’ve been exploring the different strategies food businesses can take to survive the sudden changes brought about by coronavirus, a stopped economy, and massive disruptions to daily life. And no other sector in food has been hit harder than the restaurant industry, thanks to mandatory state closures of dining rooms that are forcing businesses to reach for off-premises ordering formats as a lifeline or die trying. 

So how exactly to you grasp that lifeline to keep your business from going under? Today, The Spoon’s Managing Editor Chris Albrecht talked with Sterling Douglass, co-founder and CEO of POS integrator Chowly to find out. Chowly’s platform simplifies (and automates) the process of a restaurant taking orders from multiple sales channels, so Douglass knows a thing or two about restaurants and off-premises orders. Here, I’ve broken his advice down into three different steps restaurants can take in order to get up and running faster and more efficiently with their own off-premises strategies. 

The Spoon's COVID-19 Summit: Sterling Douglas & Building an Off-Premise Business

1. Prepare your staff.

Douglass mentioned that Chowly is currently working with a lot of restaurants that are implementing delivery and takeout strategies for the very first time. And the very first thing he tells them has nothing to do with software or delivery services. Rather, he recommends restaurants examine and prepare their staff for the changes necessary to operate right now.

Consider what roles your workers will play now that there is no more dining room? That doesn’t change much for those in back of house, but what about servers? Can you afford to keep them and, if so, how can they be used to help the off-premises business along?

One thing that changes for everyone is scheduling. Right now, for example, many workers have children at home because of school closures. A workers’ normal schedule might need to be adjusted. Restaurants need to work with their staff to try and accommodate the different situations brought on by social distancing and shelter in place orders. 

2. Get set up with delivery companies. All of them.

Setting up a delivery program isn’t simply a matter of plugging DoorDash into your POS and getting some takeout boxes. Accounts with third-party delivery platforms can, especially now, take weeks to set up — a hardly ideal scenario right now. Chowly, along with other integration companies like Ordermark and Olo, compress a lot of this timeframe so that restaurants don’t have to go through the set of moves for each different delivery partner.

Those decisions include which platforms to work with (all of them, for now), how they want to be integrated (tablets versus the pricier but more efficient direct POS integration), and, once up and running, what food they’ll serve.

There’s also menu pricing to consider. Right now, independent restaurants and smaller chains without the deep pockets of, say, Starbucks, don’t get much negotiating power when it comes to commission fees they must pay delivery aggregators. Douglass suggested in the session that higher priced items on third-party marketplaces. That puts the burden on consumers, which could be risky in a recession-bound economy but does shift some of the financial stress off the shoulders of restaurants themselves.

Unless you also run your own driver fleet, the process for setting up delivery and takeout is fairly similar. Douglass said Chowly encourages potential customers to do both.

3. Get virtual.

Virtual restaurants have gotten more popular and more numerous over the last year. Imagine al of the above steps — delivery integration, a smiple menu, etc.—applied to a restaurant concept that doesn’t have a dining room and relies on delivery and takeout to reach customers. 

In today’s session, Douglass pointed out a few such concepts, most notably those Grubhub has been doing with restaurant group Lettuce Entertain You and non-restaurant food brands like Bon Apétit and Whole30. The rise of ghost kitchens has also led to many more virtual restaurants, and even virtual restaurant networks like Keatz.

This is not a step most restaurants are even in a position to consider right now. But it doesn’t but it doesn’t hurt to think about long term strategies, particularly since we don’t yet know what the restaurant industry is going to look like when we all finally emerge from our houses again. Right now, getting your operations ready for delivery and takeout and getting on delivery platforms should be the number one priorities for restaurants for the foreseeable future.

Uber Eats Launches an In-App Donation Button for Restaurants

Uber Eats has added an in-app donation feature to its checkout process in some locations that lets customers contribute extra cash to a restaurant. The company said in a blog post that 100 percent of donations will go directly to the restaurants. 

Once a user proceeds to checkout within the Uber Eats app, they will see an option to give $2 to the restaurant. Uber Eats will match donations dollar-for-dollar up to $3 million to the Restaurant Employee Relief Fund. The company is also contributing an additional $2 million to the fund, which goes towards restaurant workers whose jobs have been impacted by mandatory dining room closures. The National Restaurant Association, which runs the fund, predicts the loss of millions of restaurant jobs over the next few months.

Uber Eats’ donation fund comes on the heels of some donation controversy Yelp found itself at the center of recently, when it launched a fundraiser with GoFundMe for local restaurants without actually getting those restaurants’ permission. There was no opt-in option, and according to some restaurants, the opt-out process was overly complicated. After quite a bit of bad press, Yelp paused the program. 

Uber Eats’ donation program doesn’t have an opt-in option, either. The company says restaurants can opt out easily if they choose, and the decision to bolt donations onto the checkout process may be less intrusive for restaurants than setting up a full-on fundraiser without their consent.

Uber Eats previously announced it was waiving delivery fees for customers of independent restaurants in the wake of the ongoing pandemic that’s disrupted daily lives and business. However, the service is still charging restaurants high commission fees on every order. Small donations from customers aren’t going to offset the financial burden of those commission fees.

Uber is trialing the donation program in NYC and plans to expand the program to other U.S. cities this week.