Big delivery faces more regulatory hurdles

NYC legislation further targets business models

New York City recently dealt a blow to third-party delivery’s business model after its city council passed a series of new regulations. Among them, an extension of the fee cap on what delivery companies can charge restaurants that last through February, and, most interestingly, a requirement that delivery companies must share customer data with the restaurant. This includes names and contact information and order history. 

The specifics of how this will be implemented are still being worked out — some companies say it would be better for consumers to opt in to data-sharing, vs. having to opt out. Some groups are concerned about privacy, too, and according to coverage in Gothamist, one councilmember vowed to work with the bill’s sponsor to add stronger protections on customer data so that others — say, Immigration and Customs Enforcement — can’t access it. 

No matter the specifics, the fact that legislators have successfully targeted this particular issue could signal more jurisdictions could do the same. As competitors to the largest services have popped up around the country, they’ve marketed themselves on the fact that they do  share data with a restaurant. In response (and in their defense), the big delivery companies have started to offer direct ordering options for restaurants, whether they’re a customer of the service or not. Regardless, it’s worth closely watching the implementation of this in New York. 

Dinner by DoorDash

Last week, DoorDash announced a new thing called DoorDash Kitchens full service, starting with a pop-up ghost kitchen-type restaurant in San Jose, California. It builds on DoorDash’s existing ghost kitchens model, which has been successfully deployed in northern California, and dovetails with other DoorDash programs that target independent restaurants, like the most recent “reopen for delivery” initiative in New York. 

What’s different this time around is that DoorDash is actually running the restaurant, managing hiring, training, supply chain, and the actual cooking for partner restaurants. The San Jose project features local Bay Area favorite Curry Up Now, nationally recognized dessert darling Milk Bar, and a handful of other businesses. (The San Francisco Chronicle has a good look at how one participating business, Canter’s Deli out of Los Angeles, is approaching the partnership.) 

The launch is a one-off for now, but if it’s successful, DoorDash will likely replicate the idea across the country. The big value proposition for restaurants is this: you can open a restaurant for takeout and delivery — to expand, to test new markets and new menus — with very little risk and overhead. DoorDash clearly has the cash to invest in a new project, and a year-and-a-half into the pandemic that decimated the independent restaurant industry while providing a tailwind to online ordering and delivery services is a good time to do it. 

I should have a piece coming out about this in a more reputable outlet than this one soon, so I won’t give away all of my thoughts here. But this is very much akin to what I wrote about in this newsletter two weeks ago — the possibility that success in the industry might eventually be tied to which large tech company a restaurant chooses to align itself with. 

OpenTable lets you text the restaurant now

As part of a continued effort to reduce no-shows at restaurants, OpenTable wants to make it easier for a diner to contact the restaurant. So it built… texting into its platform. A diner can message a restaurant, and a restaurant can message a diner, any time after they’ve made a reservation through 14 days after they’ve dined. Restaurants can initiate conversations, too. Apparently, 60 percent of people surveyed by OpenTable said they would rather clean their room than call a restaurant. That’s some real no-phone energy.

Also, in reservations news I’ve missed, Resy is apparently gaining on OpenTable in terms of popularity. According to an online analytics firm, Resy’s May 2021 traffic improved over 2,000 percent from May 2020. OpenTable’s improved just 568 percent. OpenTable is still a clear leader with over three times the actual number of site visits.

“What these numbers reveal,” according to a piece in Fast Company, “is both that people seem eager to start dining out again, and also they don’t mind switching their allegiances to alternate dining reservation sites.” 

I’d argue that it’s not the reservations provider, it’s the restaurants. But, sure. 

What else is happening? 

Lunchbox acquired Spread. Lunchbox, a company that provides online ordering for restaurants, announced it acquired Spread, a New York City marketplace connecting 1,500 restaurants to diners, in an all stock deal. “We created Spread to answer the question: What would it look like if restaurants banded together and built their own marketplace?” Andy Wang, Spread’s founder, said in a statement. Spread had just two full-time employees; only Wang joins the Lunchbox team. His updated LinkedIn profile lists him as Lunchbox GM.

DoorDash drivers take to social media in protest. Employees of the delivery company went on strike over the weekend, upset over low base fares. In the Reddit post where the strike appears to have originated, workers call for a higher minimum base pay, which they say just dropped from $3 to $2 per trip, and more tip transparency. While Dashers keep 100 percent of their tips, they are unable to see how much a customer has tipped until after they accept an order, and for those with larger tips, the app only shows an estimated amount. On Monday, DoorDash published its own blog post detailing how it pays its couriers and explaining why it only shows estimated tips. (tl;dr: “In deciding which orders to accept, some Dashers may wait for orders with exceptionally large tips and repeatedly decline lower- and even average-paying orders, with the goal of completing only high-tip deliveries.”)

- Danielle Hyams

Necesitas hablar Español. If you don’t, good luck getting a drink. A new, Vegas-based smart vending machine from Corona makes thirsty users ask for a hard seltzer in Spanish — dame una Corona Hard Seltzer Limonada, por favor —  before a free, promotional can is dispensed. If their pronunciation is off, they’ll leave thirsty, but with a one-month subscription to Duolingo.

- DH

A new hire at NextBite. William Espy, a 19-year veteran of Chipotle, has joined the team at NextBite leading its creative services team. Nextbite creates virtual brands that existing restaurants can sign on to create from their kitchens for delivery. “I have the good fortune to get to be a part of ANOTHER restaurant revolution,” Espy wrote on his LinkedIn profile. 

Also, in a statement, he said, “Back in the day, Chipotle was a key player in the fast casual revolution and now I see the next era happening in the restaurant space with virtual brands like we’re developing at Nextbite.”