Welcome to Expedite, a weekly (for now) newsletter by Kristen Hawley covering what’s important in restaurant technology.
Freaky Friday (on a Wednesday)
The evolution of restaurant technology in 2019 has caused an interesting role reversal: restaurant brands, which have traditionally competed on value (dollar menus! $5 foot-loooongs!), are competing on technology. Conversely, restaurant technology companies, which have traditionally competed on features and products are now competing on value.
Restaurants on Tech
On Tuesday, McDonald’s announced another major tech acquisition. Apprente is a California-based software company that will give McDonald’s a leg up on voice-based ordering. Earlier this year, McDonald’s acquired another artificial intelligence company, Dynamic Yield, for a reported $300 million. Both acquisitions are targeted to bringing the fast food restaurant — and more likely, the drive-thru — into the digital age.
Whether or not this is the start of a kind of tech-fueled land grab by restaurant companies is a story still unfolding. Given the size of the deals, though, only a handful of companies are poised to snap up the most relevant and best performing tech.
Tech on Value
Last week, technology company Grubhub announced a new offering thanks in part to its previous purchase of another technology company. A year ago, Grubhub finalized the $390 million acquisition of LevelUp, a restaurant tech company good for a lot of things, but especially targeted deals and loyalty programs. Grubhub now offers in-app deals at lots of restaurants via the Perks tag in its app. Deals for about $5 off delivery span well-known chains and local spots.
As you’d expect, plenty of people had plenty of opinions on this. Several industry experts say that the program should be beneficial to restaurants, but a number of factors, including cost to participate, could muddy any return on a restaurant’s participatory investment.
The feature is a long time coming in a crowded and competitive industry. In an earnings call at the time of the LevelUp acquisition, Grubhub CEO Matt Maloney explained the vision for his investment. “Over the medium and longer term, LevelUp’s technology and world-class team will help Grubhub dramatically expand our product offering for restaurants helping them compete most effectively in the online world for delivery and pickup business.”
Google + Online Ordering
A recent piece in the New Food Economy highlights restaurants’ individual struggles with Google’s continued work in the restaurant space. (Remember: we talked about this last week.) The gist: Google recently instituted a direct click for online orders, both pickup and delivery. It’s an attempt by Google to continue to corral our online search behavior, potentially capitalizing on it. Also from last week, this recent statistic: over half of Google searches do not result in a click to an external site. People are used to finding what they need in Google search results, and increasingly, translating those searches to physical actions like booking hotels or purchasing products.
This is an example of a troubling trend we’ve seen for years across all sorts of digital properties: seemingly hijacking people’s everyday digital behavior with preferred placement of advertisements or preferred products or services. (The New York Times just ran a great piece about this happening in Apple’s App Store, and that’s just the latest well-documented example.)
This begs the question: what would the democratization of restaurants on Google look like? A good start, posits the piece, would be individualized controls for restaurant owners. Especially for those same independent operators we keep reading about being steamrolled by the whims of Big Tech.
For a hint of ordering-delivery-on-Google's potential future, look to the search giant’s treatment of hotels. Google displays a “Book” option — a similar blue button — and then lists nightly rates provided by third party services like Expedia and Kayak alongside links to the hotel’s own website. (This is an oversimplification of a complex business model, but it's framework for what might be a more equitable use of an “order food” call to action.)
In the New Food Economy piece, H. Claire Brown wrote, “a customer might reasonably assume the Google button was presenting all delivery options.” In the age of a mature, indispensable-to-modern-life Google, I’d agree.
What else is happening?
Uber Eats hits a milestone:
A Tuesday social media push shared an Eats milestone: “In just 3 ½ years you have ordered 1,000,000,000 times in over 500 cities around the world.” The announcement comes the same day as the company laid off hundreds of workers in its product and engineering organizations in an effort to streamline the business amid years of rapid growth.
Starbucks will open a pickup-only store in NYC:
Starbucks’ wildly popular mobile app and order ahead feature are changing the way the company thinks about real estate. Expect a new location geared only to pickup to debut soon in New York.
Hot ticket: A former restaurant employee traffics in Instagram-famous cake.
Could there be a more 2019 restaurant headline? Probably only if the ex-driver worked for a third-party service and charged the restaurant 40 percent commission on what he stole. (This story is still bonkers, though. Don’t underestimate the power of Instagram influence!)
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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.
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