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Uber Eats

June 5, 2019

Uber Now Offers Eats Functionality From Its Main App

Uber is making its Uber Eats service available from the main ride-share app in certain markets, with the hopes that cross-promoting its services could improve customer acquisition and retention for the company. TechCrunch reports that a web view version of Uber Eats is now embedded into the company’s ride-share app, which means users hailing a ride can order food without having to download and/or open the Uber Eats app separately.

Uber is currently testing this version in markets that don’t offer bikes or scooters. The company made the version available to iOS users in April, and as TC reports, it’s now rolling the functionality out to Android users, too. By clicking on the Uber Eats button placed in the top-right corner of the main app, users can automatically access Uber Eats functionality and order a meal while en route to their destination.

The hope is that offering this kind of seamless relationship between the two services will increase users for both Eats and the ride-sharing app. If it works, the integration could give Uber Eats an edge when it comes to keeping customers within the brand’s ecosystem. Not long ago, tech company Second Measure released data that indicates customer loyalty to any single brand in the third-party delivery space is declining, partly because of the number of options now available. By cross-promoting its services, Uber would potentially be able to persuade those who have never used Eats to try the service without forcing them to download yet-another app. And as Uber’s S-1 filing from April suggests, more Uber Eats customers can help boost overall usage for the company, whose stocks are currently down 5 percent from when it debuted on the NYSE in April.

And if the rumors are true, a forthcoming $9.99/month loyalty program, which a blogger discovered last month via hidden code within the Uber Eats app, could further boost the company’s lagging loyalty numbers. Said program has yet to be confirmed by the company, but if it does officially launch, it’s yet-more incentive for users to stay in the Uber world.

May 17, 2019

Forget IPOs. DoorDash Is the One to Watch Right Now in Third-Party Delivery

Grubhub still leads the third-party food delivery market in terms of sales, and of late, Postmates and Uber Eats have gotten a lot of attention for their respective pre- and post-IPO news. But DoorDash may well be the most important company to watch in the escalating showdown for third-party delivery dominance, according to new data from tech company Second Measure.

Second Measure analyzes anonymized credit card transactions and uses that data to shed light on customer behaviors. In the world of third-party delivery, those behaviors underscore the rapid growth DoorDash has undergone recently, growth that has the company almost on equal footing with Grubhub in terms of monthly sales. Grubhub leads the market, with 32 percent of total monthly sales. But the company’s growth is now slower than its competitors, as evidenced in the following graph:

Source: Second Measure

DoorDash, meanwhile, holds 30 percent of the market in terms of monthly sales, and unlike Grubhub, it’s still growing rapidly. In February 2019, DoorDash closed a $400,000 million round and had a valuation of $7.1 billion. Besides investors, Second Measure notes in its report that DoorDash saw “a staggering 216-percent year-over-year jump [in sales], compared to 58 percent at Uber Eats and 4 percent at Grubhub.”

Part of those rising sales numbers are no doubt due to DoorDash’s aggressive push across the country. The service is the only third-party delivery service right now to be in all 50 U.S. states, in case you couldn’t tell from the endless numbers of promotions and partnerships the company does with everyone from Canter’s Deli in LA to Taco Bell to the Wyndham Hotels chain. The service is also now in 50 Canadian cities.

Impressive as the numbers are, no one’s place in the third-party delivery market seems certain because the space changes so rapidly — something that will continue for the rest of 2019 and beyond. DoorDash will have to work hard at retaining its customers if it wants to keep up. And as Second Measure and others have noted, loyalty to any one service isn’t something third-party delivery customers prioritize. For example, in the first quarter of 2017, 88 percent of Grubhub’s customers didn’t use another service; two years later, that number has dropped to 62 percent.

Unless, that is, you’re in the south. It seems of all the third-party delivery services out there, Waitr, who’s business is more focused on second-tier U.S. cities, has the highest number of loyal customers on the list. Waitr (who recently acquired Bite Squad) doesn’t (yet) have the reach or growth rate of DoorDash, but focusing on customer loyalty in cities that aren’t New York, LA, or other major metropolises could eventually be hugely advantageous. DoorDash should take note.

May 10, 2019

Report: Uber Exploring Nuro Partnership for Self-Driving Restaurant Food Delivery

Just in time for Uber’s IPO today comes word from The Information (paywalled) that the mobility company has been chatting with autonomous vehicle company Nuro about a food delivery partnership. If such a partnership were to come to pass, using Nuro’s self-driving pods could be a way for Uber to lower driver costs and improve Uber Eats’ margins.

Nuro makes electric, low speed vehicles that are about half the size of a regular car and top out at 25 miles per hour. They are built for cargo and do not even have a space for a driver. According to documentation seen by The Information, the partnership with Uber would start later this year in Houston. This makes sense as Nuro is already operating there as part of its expanded pilot with Kroger to do self-driving grocery delivery.

Nuro’s partnership with Uber would be different from its program with Kroger. Instead of Nuro vehicles carrying food from restaurants directly to a consumer, they would instead take food from restaurants to a central hub. Once at this central hub, a human driver would take it the last mile, delivering it to doorsteps. The Information writes:

The hope is that the centralized hub for orders would allow drivers to handle more food orders than they currently do and potentially make more money because they won’t have to spend time going to each restaurant to pick up the food.

There aren’t many details, so this Uber/Nuro partnership could manifest in different ways, but two things immediately spring to mind. First is that it seems like more wear and tear on the food. Restaurants place meals in a Nuro that travels to the hub. Food is removed from Nuro and sits on a shelf until a human picks it up and puts it in their car. Human drives the food to the consumer.

Then there’s the temperature of the food because as we know, soggy food sucks. I’m sure Nuro’s can be outfitted with thermal zones to keep hot food hot and cold food cold, but that seems like a recipe for disaster when bundling together multiple entrees, sodas and desserts, especially when they need to be packed and re-packed.

The second thought that springs to mind is whether Uber would employ a similar hub system as Zume Pizza. Zume sets up mobile distribution points in various neighborhoods where delivery drivers come and pick up orders. Rather than leasing a brick and mortar location, Uber could set up a customized van or food truck that could be parked in different locations. Based on the data Uber has about what types of food people are buying, when and how often, Uber could change and optimize the location of these mobile hubs on any given night.

Then again, all this speculation is moot if the deal never comes to pass. Neither Uber nor Nuro would confirm the story with The Information. Uber is understandably a little pre-occupied with its IPO today, and thanks to the $940M investment from Softbank this year, Nuro has some runway to experiment with programs like this.

Regardless if this particular deal comes to pass, it’s nice to see companies are continuing to experiment and iterate the food delivery process. Whether its low-speed-vehicles, full-on self-driving sedans, rover robots, or even drones, the way we get our meals delivered to us is going to drastically change over the next five years.

April 17, 2019

Kitchen United Announces Another Expansion for Its Ghost Kitchens

Kitchen United (KU) is making good on its promise to open multiple new locations over the course of 2019. The company announced another expansion today, this time for new locations in San Francisco and Los Angeles as well as a second spot in Chicago.

KU launched in 2017 with the aim to provide extra kitchen space for restaurants needing to fulfill off-premises (delivery) orders. The first KU location, in Pasadena, California, holds enough space for 15 restaurants to use. Other locations are similar in size.

Whereas some ghost kitchens exist to let restaurants or entrepreneurs try out new concepts and brands they might not have otherwise brought to market, Kitchen United is specifically aimed at helping existing restaurants manage the extra volume in orders created by delivery.

And the demand for delivery grows, we can expect to see more of these so-called ghost kitchens, from Kitchen United and others. The market for online food delivery is projected to be $30 billion by 2022 — and that’s just for the U.S.

Various iterations of the ghost kitchen have been popping up in response, and raising some hefty funds. Berlin-based company Keatz recently raised €12 million (~$13.6 million USD) for its virtual-kitchen network that operates around Europe. Uber is dabbling with its own ghost kitchens in Paris. Uber’s former CEO, Travis Kalanick, now runs a cloud kitchen company in Los Angeles.

Kitchen United, meanwhile, has expanded from the original Pasadena, CA location to Chicago’s River North neighborhood, and has already announced plans to open new centers in Atlanta, Scottsdale, AZ, Austin, TX, and Columbus, OH in 2019. (These are currently under construction.) A quick look at the expansion map on the KU site reveals that Houston, Dallas, NYC, and Washington, D.C. are also in the works for 2019.

According to the press release, the new LA, SF, and Chicago locations are in the process of accepting restaurant partners. Each will house between 10 and 15 restaurant brands.

April 11, 2019

Revenue, Customer Counts and Cloud Kitchens: Some Uber Eats Takeaways from Uber’s IPO Prospectus

Uber unveiled its S-1 financials document as part of its impending IPO today. While most of the headline-grabbing numbers were around the company’s potential $100 billion valuation and the $1.8 billion in losses in 2018, we at The Spoon are more interested in what the document says about Uber Eats . So we pulled some tasty nuggets from the prospectus about the food delivery service for you (questions are ours, italics are direct quotes):

Number of people using the Uber Eats
Of the 91 million [Monthly Active Platform Consumers] on our platform, over 15 million received a meal using Uber Eats in the quarter ended December 31, 2018, tapping into our network of more than 220,000 restaurants in over 500 cities globally.

Where is Uber Eats available?
Uber plans to expand Uber Eats from 500 cities to the 700 cities where it currently offers personal mobility services.

How much revenue is Uber Eats generating?
Uber Eats grew to $2.6 billion in Gross Bookings for the quarter ended December 31, 2018, nearly three years following the launch of the Uber Eats app, which we believe makes our Uber Eats offering the largest meal delivery platform in the world outside of China.

Later on in the filing, Uber says that Uber Eats did $7.9 billion in gross booking for the year ending Dec. 31, 2018.

Average delivery time
For the quarter ended December 31, 2018, the average delivery time was approximately 30 minutes.

(Ed. note: time to fire up those delivery drones!)

The halo effect between ridesharing and food delivery
…Uber Eats attracts new consumers to our network – in the quarter ended December 31, 2018, 50% of first-time Uber Eats consumers were new to our platform. Additionally, in the quarter ended December 31, 2018, consumers who used both Personal Mobility and Uber Eats had 11.5 Trips per month on average, compared to 4.9 Trips per month on average for consumers who used a single offering in cities where both Personal Mobility and Uber Eats were offered.

Uber Eats expansion plans
We also plan to explore expanding into new food verticals, such as grocery, and different types of food providers, such as cloud kitchens, to our Uber Eats offering.

With its growth, Uber Eats’ successes are a major part of Uber’s IPO story. But the company faces stiff (and well funded) competition from the likes of GrubHub, DoorDash, Postmates and more (and that’s just in the U.S.). Now we have to wait and see how tasty the street thinks Uber Eats actually is.

March 22, 2019

Virtual Kitchen Network Keatz Raises €12M for Its Food-First Delivery Concept

Berlin, Germany-based Keatz has raised €12 million (~$13.6 million USD) in new funding for its virtual restaurant operation, TechCrunch reports. The round was led by Project A Ventures, Atlantic Labs, UStart, K Fund, and JME Ventures, with participation from RTP Global. This recent round brings Keatz’ total funding to €19.4 million (~$22 million USD).

Keatz operates a network of 10 virtual kitchens throughout Europe — that is, kitchens created specifically for delivery orders, which customers place online or via an app. Keatz’ menu items are currently available through Deliveroo, Foodora, Lieferheld, and Pizza.de.

Rather than partner with restaurants, as many virtual kitchens do, Keatz has taken a less-traveled route and keeps its own portfolio of restaurants created by an in-house culinary team. Also different from most virtual kitchens out there is that Keatz pre-cooks all food in a central kitchen, then ships frozen meals to smaller assembly kitchens. As my colleague Chris Albrecht pointed out recently, “this hub-and-spoke approach to meal creation also allows Keatz to easily swap new brand concepts in and out at each location.” So if Vietnamese cuisine isn’t selling in one area, the concept can be easily swapped out for fish ‘n’ chips, or whatever happens to be in high demand in that vicinity.

Right now, Keatz’ restaurants include vegan food, Hawaiian Poke, Thai curry, a soup brand, Mexican food, and salads and wraps. Keatz chooses its menu items based on which foods are best suited to delivery — that is, food that can withstand an extra 15 minutes getting jostled around during a car or bike trip. “We believe the last unsolved part in food delivery is the preparation of food itself,” Keatz co-founder Paul Gebhardt told TechCrunch.

He would hardly be alone in that opinion. In fact, a growing number of restaurants, restaurant tech companies, and others are starting to focus more on the food itself as the best way to improve the delivery experience for customers. Taster, headquartered in Paris, France, runs kitchens “with military-like discipline” and chooses foods suited to the delivery process.

In the U.S., all manner of companies offer delivery-only concepts with this “food first” focus. ClusterTruck operates a virtual kitchen with an enormous menu of delivery-friendly food items it creates, executes, and delivers itself. And earlier this year, Dig Inn launched its Room Service concept, using virtual kitchens that plan their menus around food that actually gets better in transit. “At the end of the day, the guest isn’t going to come back to you because your technology is amazing, they’ll come back to you because the food is amazing,” Dig Inn Director of Offsite Scott Landers told me recently.

But whether it’s avoiding soggy food or just providing more efficient delivery operations for existing restaurants, companies up and down the restaurant industry are now participating in the virtual kitchen craze. Uber turned heads last week when news broke that it was piloting its own kitchens in Paris. Kitchen United is expanding at a rapid pace, renting kitchen space to restaurants who need or want more space to fulfill delivery orders. And Deliveroo has operated its own kitchens in Europe for some time now.

Keatz launched in 2016. The company says it plans to use the new funding for further expansion of both its food portfolio and the number of kitchens it operates.

March 21, 2019

Checkers & Rally’s Launch “Franchisee Friendly” Delivery Program

Burger chain Checkers & Rally’s announced via press release a delivery program this week that enables delivery from multiple third parties and is also, according to a company press release, “franchise-friendly.”

To service multiple third-party delivery partners at once, and perhaps also to avoid putting franchises through the kind of franchise McSaga McDonald’s currently finds itself in, Checkers & Rally’s have integrated delivery from five major players into a single point-of-sales system. Customers can order from Uber Eats, DoorDash, Postmates, Grubhub, and Amazon Restaurants, and that order will appear as any other ticket item in the system.

Enabling third-party delivery with multiple partners can and does often create operational issues for restaurants. There’s the pileup of hardware devices that come with using multiple services, often referred to nowadays as “tablet hell.” Plus, multiple new ticket streams from these third-party providers means someone has to key in the different orders from different devices, which would slow even the most well-oiled machine down while simultaneously raising the potential for error.

Checkers & Rally’s sought to avoid these pains by enlisting digital ordering platform Olo, who raised $18 million earlier this year from Tiger Global Investment. For the Checkers & Rally’s partnership, Olo helped implement a system that funnels all orders from third-party services into one channel that goes directly into the main POS system. While this approach isn’t exactly new — Chowly and OrderOut both provide this type of integration — Olo’s platform is specifically designed for larger chains (Checkers & Rally’s has around 900 restaurants currently).

The program also offers a benefit to franchisees in the form of a single point of contact for business. Everything from contract negotiations with the third-party services to tech support to training is addressed through the same contact. I’ve spoken with enough restaurant operators in the last year to know that getting support from third-party delivery services can make a call to the IRS seem fun.

Rick Silva, President and CEO of Checkers Drive-In Restaurants, said in a press release that the company wants “to provide our franchisee community with a fully integrated platform that would make it easy and profitable to fulfill delivery orders.”

That’s an important point: delivery is more or less a mandatory part of business nowadays, but the economics of working with third party services don’t always make sense for franchises. Paul Flanders, CFO of Burger King franchisee Carrols Restaurant Group, recently noted that “The economics [of third-party delivery] are probably marginal for the [franchisee] operator.” Meanwhile, the aforementioned McSaga has McDonald’s franchisees questioning some of corporate’s decisions around the exclusive partnership McDonald’s has with Uber Eats, arguing for a better commission split with third parties, and, in some cases, the ability to work with more services than just Uber Eats. A post by the National Owners Association, a McDonald’s franchisee group started late last year, stated that, when it comes to the many changes franchisees have to face, “simplification needs to be priority one.”

Simplification appears to be what Checkers & Rally’s is after with its newly launched delivery program. Of course, making it easier to take multiple orders from multiple services is only one element of doing cost-effective, operationally efficient delivery. But Checkers & Rally’s appears to be making franchisees an integral part of the process when making decisions about delivery, rather than an afterthought you throw technology at.

The numbers will tell how effective this strategy is, and we’ll have to wait for those until the next round of earnings calls. In the meantime, the new program will serve both delivery and pickup orders.

March 21, 2019

Postmates’ New Party Feature Is Another Way to Waive Delivery Fees

Yesterday, Postmates launched a new feature called Postmates Party, which lets customers in the same vicinity opt to share drivers and in return get food delivered for free.

As TechCrunch pointed out, the feature is a lot like Uber’s POOL feature. Postmates Party lets you see where others in your neighborhood are ordering from at that exact moment and essentially piggyback off those orders. Postmates waives the delivery fee and any peak time pricing when you order from those restaurants at that time.

There is a five-minute window from the time you select Party to the time you must checkout in order to get the free delivery:

The feature is clearly aimed at price-conscious customers who might not want to pay a delivery fee for every single order they place via Postmates, and it’s one of many new ways third-party delivery services are trying to stand out in the competition and also retain customers. Those moves include ghost kitchens from Uber Eats, DoorDash testing out self-driving cars, and Postmates experimenting with a delivery rover that looks like Minion.

Big moves and technologies like those above are great, and may even be necessary. But what’s interesting about Postmates Party is that it’s a small addition to the service that offers a solution to a big problem: fees. A Technomic forecast that explored off-premises restaurant trends recently honed in on per-delivery fees with third-party services as a barrier to consumer adoption. While the forecast was specifically talking about subscription models (another appealing new feature of most services), pooling orders with nearby strangers is appealing because it requires no additional steps from the customer, so long as they get that order in within the five-minute window Postmates has provided.

For Postmates, the feature could also streamline its operations a bit because it can cluster orders in the same neighborhoods and save on how many drivers it has to pay, how many trips those drivers take, etc.

Interestingly, Postmates unrolled the feature just as Uber Eats came under fire for a confusing new pricing structure that has Reddit users the world over calling bullshit on the service for actually marking prices up.

Also this week, CNBC reported that Grubhub is losing customer retention and, according to analysts, “will have to add three times as many new diners in the third quarter of this year compared to 2018 to make up for expected churn.”

While we don’t have any numbers yet on how Postmates’ new Party feature is performing, the service may be wise to focus its efforts on iterative changes to its app that cost the customer nothing (in terms of both money and time) and might even make the service more efficient in some places.

Postmates Party is currently only available in select U.S. cities: NYC, Las Vegas, Los Angeles, Chicago, Phoenix, San Francisco, Long Beach, CA, Miami, San Diego, Seattle, Orange County, CA, and Philadelphia.

March 5, 2019

Waitr Takes a Bite Out of the Third-Party Delivery Market, One Small City at a Time

A brief history lesson: When Walmart first became successful enough to expand outside its home state of Arkansas in the 1960s, the company didn’t immediately barrel into heavily populated coastal cities like New York or Los Angeles. Instead, it opened locations Missouri and Oklahoma — neighboring states but not exactly the epicenter of commerce. Walmart didn’t actually make it to California until the ‘80s and New York until the ‘90s.

Chris Meaux, CEO of delivery service Waitr, argues that this focus on smaller markets is how Walmart built the mega-popular status it enjoys today. And if he has his way, Waitr will eventually be able to tell a similar story.

“[They] had such brand equity that they eventually got pulled into [major] cities,” he says of the big-box retailer’s eventual coast-to-coast expansion. “And I think the same thing could happen to Waitr over time. We’re building a very strong brand in the markets we serve. If the demand for that brand requires we get pulled into major markets, we’ll do it.”

To the consumer, Waitr looks much like any third-party delivery service: You download an app, order food, and wait for someone to deliver it. The company operates in many of the same markets as — and many markets where those bigger players aren’t.

To be clear, Waitr isn’t trying to be the next Walmart. It is, however, following the retail giant’s strategy of expanding from its smallish hometown — in this case, Lake Charles, Louisiana — into other smallish cities before heading to the mid-sized markets a la Minneapolis or Amarillo, Texas. Major metropolises aren’t even on the wish list right now.

Even its website emphasizes this localish approach, pushing the image of a hometown food service rather than a faceless entity that’s in every other American city. As Meaux explained over the phone recently, these places are perfect markets for Waitr’s business “because they haven’t gotten attention from some of the larger companies.”

Waitr’s current territory includes much of the Southeast and two dozen cities in Texas. And with its recent acquisition of Bite Squad for $321.3 million, that reach expands to smaller coastal markets like Virginia and Hawaii.

“It was almost exactly the same business model as Waitr,” Meaux says of Bite Squad, adding that larger companies tend to be more focused on demand for consumers, whereas Waitr/Bit Squad puts a lot of emphasis on partnerships with restaurants and drivers, too.

How to employ drivers was a key area on which Waitr and Bite Squad agreed, and it’s the other thing setting Waitr apart from the larger delivery companies. Waitr has, according to Meaux, around 18,000 W2 employees as drivers on its payroll. And he’s aware of how absurdly expensive that sounds to most people.

“It’s really a policy that employees are more expensive,” he says. “Efficient employees are much less expensive.” Because Bite Squad can schedule employees to work when they actually need them, they can more easily accommodate busier periods of the day (dinnertime) and cut back when it’s slow (2 p.m.). Meaux says drivers are reimbursed for personal vehicle and cellphone use. “If you manage the driver flee right and you schedule the drivers when you need them, [you] can do it with a fraction of the drivers that [competitors] require. And as long as employees stay busy, the company profits, because its fees are hourly, rather than a flat rate. Bit Squad, who still maintains its own operations, uses an almost identical approach when it comes to drivers.

It’s impossible to now right now whether this is a sustainable model for the long term. But Meaux, along with Bite Squad CMO Craig Key, are optimistic. “We’re excited about the future about Wiater and Bite Squad, we’re deep into the integration,” says Meaux. “We have a lot of opportunity for growth and expansion. We believe in the next five to seven years or so, we have a chance to be a significant leader in the space.”

He says there will also be room in that future to continue exploring a subscription-based model, something other delivery companies are currently experimenting with, too. Bite Squad’s Unlimited service costs $5.99/month, and users can order from participating restaurants within a four-mile radius. Meaux says there’s “tremendous opportunity” for the unlimited model, though it won’t be as significant as, say Amazon Prime was for e-commerce. “Products or services are oftentimes options. Food is not an option.”

One could argue that delivery is optional, but at this point, it’s so widely and cheaply available it’s become commonplace. In fact, Waitr’s heaviest users, Meaux tells me, are “moms with kids” who “have no time.” Paying a five dollar fee to not throw kids in the car and drive to the restaurant or grocery store seems a small investment when looked at in that light, especially when it comes to smaller cities and longer distances between any two places.

February 21, 2019

Subscription Models Are the Future of Third-Party Food Delivery

When Postmates started delivering Starbucks back in 2015, the deal came with a glaring drawback: Postmates’ $5.99 delivery fee applied to any order, even if it was a single beverage. While it was fun and novel to try getting a tall latte delivered to the office once, just to say you did, most of us wrote the concept off as impractical and unsustainable.

Times have changed. Coffee delivery with reasonable delivery fees is now a thing, along with smoothies, Big Macs, $1.19 bean burritos, and pretty much anything else you can imagine. That’s thanks to the fact that off-premise sales are now 38 percent of total restaurant sales and growing, and, according to a recent forecast by Technomic, much of the growth comes from the rise of third-party delivery sales.

That makes now the perfect time to rethink delivery fees, and a growing number of companies are now looking to the subscription model.

Think Netflix for food delivery: You sign up for a monthly membership, and in return get unlimited delivery on food in your area. For third-party services, the subscription route offers users competitive pricing options that will (hopefully) keep the diehard delivery fans loyal to the service. In its forecast, Technomic noted that “subscription models that eliminate per-delivery fees in favor of a flat-rate subscription will emerge to present a clearer value proposition to customers.”

As this is a fairly nascent practice, it’s far from perfect at the moment, with restrictions and limitations that could put some people off. But the mere fact that most of the major delivery players now have some presence in the subscription model space suggests it’s an area of delivery we should watch closely over the rest of 2019. Here’s what folks are up to:

DoorDash unveiled its DashPass in August of 2018. For a monthly fee of $9.99 you can order as much delivery from participating restaurants as your heart desires and your pocketbook can manage. In a blog post, DoorDash called out some big-name chains as participants, such as Wendy’s, The Cheesecake Factor, and White Castle, suggesting major restaurants are at least partially on-board with the subscription-style business model.

Right now there are a couple restrictions with DashPass: orders have to be over $15 to qualify for DashPass, and the pass only applies to certain restaurants. For example, I’m writing this post from Nashville, TN, where DoorDash tells me 110 restaurants are available for DashPass, which is hardly the extent of Music City’s culinary landscape.

Postmates offers a similar service, and has done so since 2016. For $10 per month, you can use the Plus Unlimited service for delivery orders over $15. As with DoorDash, the program only applies to those restaurants participating, which limits your options somewhat. Postmates also promises member deals and discounts.

In the UK, Deliveroo rolled out a subscription service last year called Deliveroo Plus. At £7.99/month, it’s a steal for anyone ordering just a few meals per month. (Deliveroo typically charges a £2.50 delivery fee per order.) There’s no order minimum, either, making Deliveroo’s service something like the Amazon Prime of food delivery.

Uber Eats started testing a loyalty program in the UK last year that would potentially do away with delivery fees. Thus far, it hasn’t come Stateside. Grubhub, still the leader in third-party food delivery, hasn’t yet dabbled in subscriptions, either. But I wouldn’t be surprised if either of those two have something in the works.

The key to a successful subscription offering will ultimately lie in how much choice services can offer consumers while still providing a delivery-fee-free package. If that’s pie-in-the-sky thinking at the moment, I doubt it stays that way for long.

February 13, 2019

The Brooklyn Councilman Who Wants to Ban Plastic Straws Is Now Going After Cutlery

There’s a new (plastic) target on the block for Brooklyn Councilman Rafael Espinal, otherwise known as the guy who introduced a ban on plastic straws in NYC last year. Today, Espinal introduced legislation that would lead to the eventual ban of disposable plastics like restaurant takeout cutlery.

The bill wouldn’t actually ban the cutlery itself. Rather, it would require the city to “review items made with single use plastics at least annually and ban those items for which reasonable alternatives are available.” That task would fall to the NYC department of Consumer Affairs, along with the department of Sanitation and the department of Environmental Protection.

From the legislation text:

The commissioner shall on February 1, 2020, and annually thereafter, report to the mayor and the speaker of the city council on single use plastic items considered, the evaluation including economic feasibility and environmental effectiveness, and the determinations.

Only after these areas are evaluated and a suitable replacement found would the ban on the actual plastic item, cutlery or otherwise, go into effect. Which sounds nice and orderly on paper but would in reality take a long time to go into effect — years, in fact.

Still, the proposed legislation continues the conversation around what to do about the amount of single-use plastic that goes into the trash. Investor Rob Kaplan of Circulate Capital, whose work is heavily involved in the environment, put it well last year when he told National Geographic: “There’s no silver bullet to stop plastic pollution. We’re not going to be able to recycle our way out of the problem, and we’re not going to be able to reduce our way out of the problem,” adding that we have to pursue both tracks while continuing to seek other solutions to make any sort of dent.

In the world of single-use plastics, particularly those at restaurants, Espinal’s legislation is aimed at finding those other solutions. How challenging that would be remains a question mark. Nix a plastic straw and your beverages are still drinkable; nix a plastic spoon, and you’ll have to get creative about how to eat that cup of mashed potatoes from the diner.

There’s also the question of what “reasonable alternative” would actually entail. The legislation discusses “economic feasibility” and “environmental feasibility,” but doesn’t point to specific materials that could replace plastic. There are a number of plastic alternatives when it comes to things like cutlery, from wood to vegetable starch and other plant-based materials. But again, there’s the economic factors to consider, and the proposed legislation text only says economic feasibility includes “direct and avoided costs such as whether the material is capable of being collected by the department in the same truck as source separated metal, glass and plastic recyclable material, and shall include consideration of markets for recycled material.”

We saw a number of private companies rally last year by banning plastic straws, or at least kickstarting the process to ban them. If Espinal’s new legislation were to be effective, it would need to happen in tandem with another massive effort on the part of companies like Starbucks, Alaska Airlines, and others to ban single-use items like cutlery, plastic bags, and other eating items. In this to-go-obsessed culture, that could be a huge ask.

So maybe it’s time for the delivery companies themselves to get involved. Ever the skeptic, I have my doubts this would ever happen. But companies like Grubhub, Uber Eats, and DoorDash are wielding a massive influence over U.S. culture at the moment. It would be nice to think they could use that influence (and money) to show the rest of us how to creatively counter the craze for single-use plastics.

January 31, 2019

For McDonald’s Franchisees, Delivery Is Another Point of Friction In an Ongoing Battle

Despite a drop in guest counts, McDonald’s reported positive global and domestic same-store sales during its Q4 2018 earnings call, which took place this Wednesday, January 30.

Among the many numbers and initiatives discussed, delivery was highlighted during the call as a particularly lucrative area for McDonald’s moving forward. The mega-chain has been delivering since 2017, when it launched a partnership with Uber Eats. According to the call transcript, 19,000 McDonald’s restaurants globally offer delivery, making it a $3 billion business for both international and domestic stores. CEO Steve Easterbook noted the company will make delivery a “high priority” in 2019.

That’s great if you’re in corporate, or if you want a Big Mac delivered to your office or dorm room. For McDonald’s franchisees, however, delivery appears to be yet-another point of tension lumped on top of an already large pile of grievances.

The National Owners Association (NOA), formed in 2018 and representing about 400 McDonald’s franchisees, conducted a survey recently wherein the majority of 800 franchisees surveyed said they were not “satisfied with the economics” of delivery, and want McDonald’s to push for a better commission split with third parties. McDonald’s has a massive partnership with Uber Eats, who takes roughly 30 percent of each transaction.

“We need to have several vendors delivering for us, not just Uber,” on franchisee surveyed said. “Paying rent and service fees on Uber commission is not fair. Delivery is a necessary service these days, but we must be able to do it profitably.”

The other side of that coin, of course, is that multiple delivery services can become overwhelming very quickly because of the many disparate sales channels they add to a restaurant’s ticket stream, not to mention the extra devices. Loads of different software options to streamline these issues exist, but they cost money, and so McDonald’s franchise operators would have to factor in those costs to their idea of “profitability” were McDonald’s to ever welcome other delivery partners.

These recent comments from McDonald’s and franchisees follow on the heels of a year of aggressive initiatives around McDonald’s Experience of the Future store redesigns, which have sparked concern and frustration among franchisees. McDonald’s revamped 4,000 stores in 2018, bringing its total Experience of the Future stores close to 8,000. But the NOA has said these redesign elements don’t necessarily drive competitive sales, and that McDonald’s is launching too many expensive initiatives that don’t pay off.

Kiosks are one such effort. McDonald’s has self-order kiosks in roughly 17,000 McDonald’s restaurants worldwide. But some franchise operators cite them as another area that doesn’t pay off. “What good will new buildings be when we cannot deliver service because we are short-staffed. Employee turnover is at an all-time high for us. Our restaurants are way too stressful, and people do not want to work in them. Kiosks are not the answer,” one operator stated. But on the call, Easterbrook noted that previous trials show how guests adopt the technology over time, indicating they will become more comfortable with the kiosk process as we go along.

Shake Shack is a good example in action of Easterbrook’s statement. The company unveiled a cashless, kiosk-centric store in October 2017 and abandoned the concept less than a year later, due to an influx of customer complaints around those kiosks. But in August of 2018, Shake Shack made an about-face and announced it would expand its kiosk locations (with some adjustments based on customer feedback). The company received much more favorable feedback the second time around.

Meanwhile, McDonald’s has extended the deadline of its Experience of the Future stores, giving operators the option to complete them by 2022, rather than the original date of 2020. Roughly 2,000 stores are expected to be overhauled in 2019 and 2020.

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