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Welcome to Expedite, a weekly (for now) newsletter by Kristen Hawley covering what’s important in restaurant technology.
It's been a minute! I've been out of the newsletter routine since May, but very happy to get back to it. To start, an incomplete* list of the biggest restaurant-tech news since the last time I’ve written a newsletter:
Amex buys Resy
May 15, 2019
Talk about a restaurant tech story to miss out on! In mid-May, American Express acquired the digital reservations and table management platform to expand in the hospitality industry. Terms weren’t disclosed.
This is symbolic of the current industry climate for a few reasons. Digital reservations and table management were the restaurant technology story before online delivery catapulted itself into the top attention-grabbing spot. Who didn’t love a good David and Goliath OpenTable vs. Resy story?
Now, though, the market has pushed consumer-facing reservations services into smaller parts of larger organizations. Free reservations aren’t a real money-maker for anyone. Companies like Resy charge restaurants to use their platforms, which includes restaurant-facing table management software, and visibility via marketing. As smaller parts of larger organizations with significant revenue streams not tied to booking restaurant tables, these larger companies can invest in product without having to worry about turning a quarterly profit to please investors.
Of course, these services' new positions as smaller entities within larger organizations could mean we expect less innovation and more status quo. It's been a few years, do online restaurant reservations really need to be flipped on their heads? Truthfully, they're working just fine.
OpenTable adds delivery options
July 24, 2019
Officially announced a few weeks after I noticed it in my OpenTable app (glad to know I wasn’t seeing things), OpenTable looks to be working to become a when-you’re-hungry destination, not just an app to open when you’re looking for somewhere to dine. Will OpenTable ever become the go-to app when you’re wanting restaurant food delivered to your door? Probably not. Will it deter many customers from booking a table at a restaurant? Probably not. Will anyone even use it? We’ll find out when OpenTable tells us (which is probably not any time soon.) But what it does do is position the company as an all-encompassing technology tool for consumers interacting with restaurants and restaurants looking to reach consumers. So… why not? (Remember what I said about reservations services not being the restaurant-tech news generators they once were?)
DoorDash buys Caviar
August 1, 2019
Coverage: The New York Times
DoorDash purchased Caviar from payments company Square for $410 million earlier this month. Square previously purchased San Francisco-based Caviar in 2014 for a reported $90 million in stock.
Caviar has always felt like a bit of an underling among other restaurant ordering and delivery services as they scaled across the country and beyond. Currently, Caviar is available in 15 U.S. cities. If anything, the type of restaurants Caviar worked with set it apart from its larger competitors, though as online food ordering and delivery grew in popularity, Caviar’s roster of higher-end restaurants had begun to feel a little less exclusive. (In San Francisco, at least, Caviar was my personal Souvla Delivery Engine.)
Square has invested big in restaurant products over the years, most recently Square for Restaurants, a point of sale system for table-service establishments. Since the beginning, Square’s payment products were a natural fit for counter service spots. So, running and maintaining an online ordering and delivery platform directly compatible with a payments system was a clear advantage for Square in the early days.
Tech has evolved now, and most online ordering platforms can integrate with most point of sale systems. This makes the logistics of recruiting and maintaining a strong list of restaurant clients — all while trying to scale up in a competitive marketplace — less than a priority for a company worth some $26 billion and counting. What makes more sense: selling the tricky and time consuming logistical part of the business to a different technology company that's literally built on logistics. (Read any interview with a DoorDash executive and count the references to “last-mile logistics.” That’s not an accident.)
Delivery robots, really, they’re coming (in test version only in San Francisco)
These stories always tend to feel a little sensational, probably because we’re still talking farther-in-the-future stuff. There’s still a lot of work to be done, not to mention regulatory hurdles and barriers to mass adoption. Oh, and the fact that these little robots are particularly well-suited to deliver in urban environments, but the total addressable market for food delivery is significantly broader than the urban centers we tend to think about when we think about food delivery. (It was literally every delivery company’s strategy last year to expand in the U.S. with particular attention to suburban and even rural markets.) But, score one for Postmates, which just landed the first permit in San Francisco to test these robots.
...All this said, online ordering and delivery companies really stepped in it recently.
Online ordering and delivery has clearly become a massive part of restaurant tech. But remember, these companies are technology companies first, logistics second. Part of this is just by design. It’s easier to move fast and break things on the internet than it is when you’re running point on coordinating real-life food deliveries for orders that have a lifespan with real-life couriers who depend on your company for work and a living wage. Plus, the tech press has never been more interested in these businesses. (A skyrocketing $12.6 billion valuation and hundreds of millions in SoftBank investment will do that, amirite DoorDash?)
The tricky thing is, they’re also fundamentally human-centric companies. Little is less digital than enjoying a meal in a restaurant or at home, delivered by a real person trying to make a living in the gig economy from a restaurant dealing with incredibly slim margins — and that’s before it pays 30 percent of the order cost to its delivery "partner."
If we’ve learned anything from Facebook (and others), it’s that the unintended consequences from a product, feature, or strategy can come to quickly define the business itself. After months of high-profile scrutiny and criticism for its tipping policy, DoorDash CEO Tony Xu announced a new policy regarding its tipping practices on Twitter, to “ensure that Dashers’ earnings will increase by the exact amount a customer tips on every order.” Fifteen-year-old Grubhub was recently criticized in the press — and by New York Senator Chuck Schumer for unfair business practices. (Specifically, for buying up online domains, potentially hurting restaurants’ business in the process; secondly for charging fees to restaurants when an online order hadn’t actually taken place.)
If this sounds like people might be getting a little tired of large companies running online food ordering and delivery, it kind of is. Last month, the Wall Street Journal reported that growth in the number of new restaurants offering online ordering and delivery is slowing.
Investment dollars are still pouring into the space, though, and interest has never been higher (for example: four of the five stories in this summary newsletter are about delivery.) Uber Eats is a not-so-small bright spot for its parent company, DoorDash is growing like crazy, hurling toward an IPO, and Postmates has finally publicly set a timeline for its own IPO this September. What may have actually tipped in recent months, though, is consumer sentiment toward these companies. As they grow and endure more scrutiny in the public eye, they may have to adjust more practices.
*What else did I miss?! Please share!
Expedite is produced by Kristen Hawley, a San Francisco-based journalist with over six years of experience covering the restaurant technology industry. Previous iterations of this content were available via Chefs+Tech and Skift Table. Thanks for reading.