Welcome to Expedite, a (mostly) weekly newsletter by Kristen Hawley covering what’s important in restaurant technology. I'm working to send updates as frequently as the news dictates during this time.
The future is...
A few weeks into life-under-pandemic, I’m feeling (slightly) less frantic as the initial shock wave passes. Unfortunately, the initial shock has been replaced by hard facts: nearly 10 million Americans filed for unemployment over the last two weeks — and those are just the numbers of people who were able to file, not the ones who lost jobs with no ability to receive that type of government support.
Trump signed a $2 trillion stimulus package into law just over a week ago, including $350 billion to support payroll and other fixed costs for small businesses. (I broke it down as best I could for Food & Wine this week.) Except… for restaurants, “small business” was defined as any restaurant location that employs 500 or fewer employees per location, opening up the pool of aid to larger companies with multiple locations. Additionally, operators are concerned with the timeline baked into the forgiveness portion: under the package, restaurants can be eligible for loan forgiveness if they use the funds for approved costs, like payroll, in the eight weeks following the date of the loan. Which doesn’t leave much time to rehire workers in order to claim maximum benefit, and, besides, restaurants can’t actually operate at full steam right now because of government-imposed shutdowns. (Wrote about those agonizing decisions, too.)
As written, there’s not a ton of hope for independent restaurants here, though many have their fingers crossed for phase 4 of the relief package. This might cover some practical costs, but what does the antisocial future look like for a social business?
The technology problem
For a good portion of the industry, income has gone to zero. Restaurants are closed — in “hibernation” as one CEO told me — or operating revised businesses at break-even (if they’re lucky) or a loss.
Several of the big-name technology companies that support these businesses have temporarily suspended fees: Resy isn’t charging clients for most of March, and according to its CEO will extend this if necessary. OpenTable isn’t charging restaurants that are closed (though it’s up to the individual business to alert the company by closing its books.) Tock, too, has waived fees for the month of April.
Other companies have offered relief in the form of free products or services. Yelp, for example, has made many of its marketing features free for now, for both existing and new customers. Point of sale system Toast has released a useful product called Toast Now, enabling online ordering and gift card purchasing for any business. It offers three months for free upon sign-up, but a rep for the company didn’t comment on the contract terms when I asked. For a business that is already actively using these features, this is thoughtful relief. But for those who may sign up for a short-term boost only to find themselves later locked into long contracts with fees they probably can’t afford to pay, it’s predatory.
Restaurants and restaurant technology companies have built a full ecosystem over the last decade, relying on a symbiotic relationship to move forward, together. What this crisis has made clear, though, is that restaurant tech alone can’t save a business. Further, restaurants can survive without technology, but restaurant tech can’t survive without restaurant businesses.
(I’ve made my feelings about third party delivery services clear here so I won’t hammer them home again. But… really?)
Last week, in partnership with the TechTable team, I wrote that for restaurant clients in the wake of this crisis. Mathematically, it might be a bad decision to watch as revenue zeroes out, but ethically, pulling money from an industry that’s facing its biggest challenge in modern history isn’t good business either.
When this is over, or at least when the strictest phase of this is over and restaurants can start to return to some semblance of operations, they’re not going to be able to pick up where they left off. They’re going to need a major infusion of capital to even stock their restaurants with food, not to mention the time, effort, and money involved in rehiring and re-training staff. Plenty of concepts will change or pivot, some influenced by new consumer behavior emerging from this time; others just taking a hard look at what works and what doesn’t.
Nothing about what’s going to happen on the other side of this is a sure bet. Plenty of industry leaders are already calling for big change in the way that restaurants operate, hopeful this time can serve as a reset button. Restaurant tech companies trying to win over customers with promises of free help only to lock them into contracts is predatory behavior right now. Maybe restaurant tech needs to look inward during this period, too, remembering who they serve and why they serve them. It’s going to take a lot of strength and ingenuity for a small restaurant to reopen to success; perhaps the tech that supports them can think similarly and become a true partner to the businesses that need help the most.
Thoughts, ideas, hopes, dreams for the future? Send me a note, please!
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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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