Welcome to Expedite, a (mostly) weekly newsletter by Kristen Hawley covering what’s important in restaurant technology.
Every month, Expedite partners with the team behind the annual TechTable Summit to look closely at themes and headlines that affect the industry. This month, we spotlight the themes that will influence the industry to come — in the new year and new decade. Here’s a summary, or find the.
The evolving restaurant business model is intended to support an increasingly digitally savvy consumer.
Ghost kitchens, delivery-only, optimizing for off premises — all of these ideas an exciting headline make. When it comes to ghost kitchens, though, these capital-intensive business models feel perfectly suited to this moment, but that doesn’t make them sustainable. In the 2010s, several similar businesses launched, backed by millions of dollars in capital, to quick demise. If that trajectory continues, big companies underwriting expensive real estate plays could find themselves at a loss — though in other ways, many small businesses are rightly concerned that the proliferation of digitally infused delivery will give these operations staying power.
Businesses are bracing for a potential economic downturn.
In uncertain times for businesses, one expert says that businesses are looking to insulate themselves from third-party erosion of their diners and data. This will lead to more advances in customer relationship management technologies to paint a robust picture of a restaurant’s audience — plus technology that supports growing, retaining, and engaging diners.
Technology is no longer niche, and the companies that invested early and often are seeing their benefit.
For proof, look no further than a small restaurant brand’s leadership team: more and more are adding chief technology officers who lead teams focused on growing the business by engaging consumers in new ways. What’s most interesting here is to watch as all companies grow to embrace digital technology. The playing field is now leveled with many products and services available to the brands that want to use them. It’s time for everyone to embrace a mature technology strategy, but the brands who may be only a few years ahead in real time are already leaps and bounds in front of the competition.
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What else is happening?
This is a very 2020 problem.
A recent high-profile case in San Francisco put a spotlight on weakness in the third-party delivery industry. Chef Pim Techamuanvivit owner of lauded SF restaurants Kin Khao and Nari tweeted over the weekend that Seamless (part of Grubhub) was advertising delivery from Kin Khao even though she had never signed up for the service.
There have been several good articles highlighting what went wrong — I like this one from Eater and this one from Wired. The short version is that two restaurants with similar names were confused. But in this case it was a well-known, Michelin-starred business and a relatively unknown virtual kitchens operating from different neighborhoods in San Francisco.
According to Grubhub, the breakdown happened because of an algorithm, not human error or malicious intent. A company spokesperson told Wired that an automated system that scrapes menus from websites, matching them with listings, caused the trouble. However, Grubhub’s listing Kin Khao on Grubhub was intentional, part of a strategy to grow its base of serviceable restaurants. This is a common practice.
This shows exactly the problem with emerging business models in the restaurant business as they are put under the stress of fast growth. Automated systems don’t take nuanced differences into accounts. Menus are often out of date. Operating hours can be out of date. Partnerships between delivery companies and ratings and review companies like Yelp and TripAdvisor can quickly spread the wrong information. The systems that are sold to restaurateurs as time-saving measures to encourage incremental delivery business are potentially damaging their reputations among the very customers they are trying to attract. Oh, and adding to the intrigue: the confusion was spurred by a listing for a ghost kitchen restaurant, operating from a space that can support up to five virtually branded businesses. If those don’t sketch you out yet, they might start to feel a little… disconnected.
Here’s how we got here: In the early days of third-party delivery competition, adding restaurants on the platform without their permission was common. The convenience was targeted to the consumer and the third-party company would handle sending the order to the restaurant — calling, in many cases — and then sending a courier to pick it up. As the services grew and became more “official,” they also became more efficient, signing contracts with restaurants, and offering an iPad or tablet to accept orders directly from the third-party placement (remember the days of the “tablet problem”?). Next came point of sale integration, with third parties feeding orders directly to the system. But with this increased technology has come increased scrutiny of customer data, privacy, and retention as businesses struggle to understand if the restaurant-diner relationship belongs to them or to the third-party service.
Scaling hospitality digitally is really, really hard.
Techamuanvivit hasn’t backed down from her promise to sue these companies for listing her restaurant without permission, a saga that will likely unfold over the coming months should she pursue legal action. At the very least, this is a wakeup call to the entire industry — restaurants and delivery businesses alike — to closely examine their technology and reach as they race to scale and claim a greater market 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.
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