Welcome to Expedite, a (mostly) weekly newsletter by Kristen Hawley covering what’s important in restaurant technology.
When the Real World Gets in the Way
Players in the third party delivery industry who talk about the potential for growth love to cite statistics that show the fast-growing takeout and delivery market as just a small fraction of its potential. These same players love to champion the new business models they’re ushering into the market. Most recently, that’s ghost kitchens (or commissary kitchens or dark kitchens or whatever you want to call them.)
Earlier this week, DoorDash announced its “first” shared ghost kitchen, operating from Redwood City, California, a peninsula town about a half hour south of San Francisco. (“First” is in quotes for a reason. Interestingly, the company backed a delivery-only commissary kitchen for Bay Area pizza restaurant Little Star in 2017, but the concept didn’t stick around. According to Nation’s Restaurant News, one of the few outlets to actually inquire about DoorDash’s 2017 move into delivery-only, that was an “experiment” that the company learned from.)
In a lot of ways, the new venture from DoorDash ticks all the right boxes: a curated group of restaurants operating in a shared space in an expensive and challenging market with fairly extensive suburban reach. According to a DoorDash rep, the company is offering restaurant businesses “transformational access to expand their reach and revenue.”
This is a common value proposition from all of the delivery companies, that their product offerings allow restaurants to do better, bigger, smarter business with limitless growth. But in the face of unprecedented opportunity comes big doses of reality, and to overlook them while talking about the evolution of the restaurant business would be short-sighted.
Delivery-only kitchens were built for speed and growth potential. Without a dining room, they can be set up quickly and run from small spaces. Delivery data and analytics mean that companies with access to data — and right now these are the big delivery companies — are able to pinpoint demand and adjust supply. This means they can show up in any given market rather quickly to serve a need that assuredly exists.
Traffic and Plastics
Even the most spectacular growth potential can’t make food arrive from A to B more quickly when streets are clogged with traffic — something that’s happening with increasing regularity. In San Francisco, services like Uber and Lyft contributed to a 60 percent traffic increase between 2010 (when Uber and Lyft weren’t totally ubiquitous) and 2016 (when they were). New York is set to become the first city to implement congestion pricing to help curb jammed roads in the busiest parts of Manhattan.
Plastic straws has a moment in the sun last year, and other to-go packaging is following suit. It’s one thing to create the right box for french fries to travel well inside (has anyone actually done this yet?) but another entirely to produce and use responsible packaging. New research from NPD Group notes that 1 in 10 U.S. adults consciously switched to a food brand that offers sustainable packaging. Over half of adults who reported ordering restaurant takeout or delivery in the last month say the restaurant used eco-friendly packaging. Customers are paying attention! Single-use plastics have come under fire in other parts of the hospitality industry — hotels, especially — and it’s becoming top of mind in other places. In fact, Uber Eats recently said it would end the automatic inclusion of utensils in its delivery orders. (Others do this too, and, notably, Grubhub started offering the option in 2010, four years before the inception of Uber Eats.)
Then there’s the pesky problem of… math. Business models meant to deliver convenience to the consumer aren’t necessarily sustainable in the long term, especially when they’re heavily subsidized by venture capital dollars — that will someday, soon, go away.
Even SoftBank’s Vision Fund, which arguably fueled this fire thanks to huge investments in companies with questionable paths to profitability, is grappling with reality. Last week, CNBC reported SoftBank CEO Masayoshi Son was considering changing the investment strategy for Vision Fund 2 to support companies that have clearer or faster goals to turning a profit.
This is not to say that ghost kitchens and other business changes propelled by third-party delivery and other tech companies aren’t a good idea, because they are. But nothing happens in a vacuum, and in these early days it’s important to temper the excitement of limitless opportunity with at least a little bit of reality.
What Else Is Happening?
Ghost kitchens are exciting, but big brands are really carrying third-party delivery right now. Partnerships are still novel, especially to loyal restaurant customers. The latest advertising splash: the Burger King mascot delivers Eats orders.
The on-demand workforce in Japan and Norway are forming unions. A transformed economy has a new type of workforce. Now workers in two different markets are organizing. They likely won’t be the last.
Panera wants its food to be transparent, but not too transparent. A worker was allegedly fired after posting a TikTok about the chain’s frozen mac and cheese — even as a company spokesperson explained why freezing and reheating isn’t bad. Eater called the sous-vide preparation a modernist trend. They’re not wrong.
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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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