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The convenience-to-necessity shift
Welcome to Expedite, a (mostly) weekly newsletter by Kristen Hawley covering what’s important in restaurant technology.
From Convenience to Necessity
The metrics used to measure restaurant success revolve around frequency and spend: same-store sales is a biggie. A winning strategy was one that attracted and retained new diners and satisfied (and sometimes rewarded) loyal ones. Today, everything is different, but restaurant businesses are still trying to find creative ways to make the numbers make sense.
Last week, I got a little fired up on Twitter as third party delivery services touted their services, promoting low or no fees to diners, but remaining more or less quiet when it came to supporting restaurants. Most are still charging restaurants for at least some orders. Last week, the National Restaurant Association issued guidelines for businesses looking to survive challenging conditions, and it included a call to reduce or eliminate third-party delivery fees paid by restaurants.
Grubhub is deferring fees indefinitely, but presumably those fees will someday become due. DoorDash (and Caviar, which it acquired last year) has suspended fees on orders placed for pickup. But no service, as of this writing, has completely suspended restaurant fees. I find this frustrating, after years of hearing how third parties are working to help restaurant businesses.
I also understand that these third parties are large and complex operations themselves. But, for example, Uber’s CEO has said on a couple of occasions that he believes his company will make it through the current challenges. It has $10 billion of unrestricted in cash on hand, according to details shared on an investor call last week. You don’t have to run the numbers to understand that the company would take a massive hit by not charging restaurant fees. But in the short term — as my eloquent fellow industry newsletter The Family Meal put it — delivery services have been presented with a once in a lifetime opportunity to dominate and grow their markets and be heralded as heroes for doing so. (Waive the fees. This is my position.)
Just a few weeks ago, we were talking about what had to happen for third party delivery companies to survive as they continue to lose money on most orders. We were eagerly awaiting details of DoorDash’s forthcoming IPO, welcoming a chance to dig into the numbers of a company that has received billions of dollars in funding. Now that dine-in restaurants aren’t an option in most of the country, off-premises dining and delivery has become a necessity for consumers who still want to enjoy restaurant meals. I’m interested to see if these companies who have built businesses on top of the restaurant industry change their strategies to reflect this reality. And if they don’t, what does that say about their motives?
There’s not much more to write about this until someone makes a move. I hope someone makes a move soon.
Where We Are
Things are moving fast, and hard data has been tough to come by, but a couple of weeks into the crisis, here are a few data points I’ve found interesting:
According to the NPD Group, restaurant transactions were down 8 percent nationwide the week ending March 15, compared to a year ago. For context, New York’s occupancy restrictions, which limited restaurant occupancy to 50 percent of their permitted maximums, went into effect the evening of Friday, March 13. San Francisco’s shelter in place order didn’t go into effect until midnight on March 16 — though many restaurants had closed or changed service models before then.
As of Friday, March 20, Yelp reported U.S. consumer interest for restaurants had fallen by 54 percent, nightlife businesses by 69 percent.
Grubhub CEO Matt Maloney told Marketwatch on Sunday that business leads (that is, restaurants that have shown interest in signing up for Grubhub) are up 10 to 15 percent right now, resulting in “four to five times more go-lives” than the company’s previously recorded best day. No data yet on whether or not people are using the platform more — demand is still a “mixed bag” according to Maloney.
OpenTable is maintaining a “state of the industry” dashboard. The numbers simply mirror escalating restrictions around the world: a near total decline of seated diners, worldwide. As of this writing, Australia was the only OpenTable market represented in the report that wasn’t equal or close to 100 percent decline, year over year.
On Launching New Products
Last week, I received an embargoed product announcement from a restaurant technology company. (For the uninitiated: this means that, upon accepting the embargo, a member of the press is given news that can be reported only at a certain time.) While the embargo was short — just a few hours — it gave me a bit of pause after I agreed to it.
We’re in uncharted waters right now with emotions running high. I personally don’t think that embargoing an announcement to the press about a feature that can help restaurant businesses is necessarily the right move right now, but the counterpoint to that is that perhaps a coordinated media push can help propel the news to reach more people.
To that end, covering new product announcements from technology companies that support restaurants feels tricky right now, too. For example, Yelp announced it would offer new products to help businesses, including banner alerts, easy ways to adjust listings to reflect changing hours or temporary closures, and contact-free delivery through Grubhub (an official Yelp partnership.)
I’m very curious if restaurant operators want new options and technology to support them right now, or if learning and enabling new features is just one more item on the to do list. I also expect offerings and sentiment around implementing them will change, as it seems that we’re going to be operating in this new reality indefinitely.
More things I’m thinking about:
Ghost kitchens: still working to collect my thoughts there.
Reviews and ratings in the age of coronavirus: Google has made some early progress here by suspending reviews and replies to reviews.
How to help, and how tech can help. Government legislation for relief (or the lack thereof) and help for hourly workers and laid-off staff beyond a spate of GoFundMe campaigns.
Feel free to get in touch with thoughts or ideas on the above. As it goes, we’re all in this together.
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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