Defend — but also build

Big delivery companies are trying to prevent regulation in court while rolling out product updates that show where all this is heading.

Clearly, regulators, lawmakers, and other people in positions of power are *very interested* in regulating big technology. Even after setbacks and pushback, there’s still talk of breaking up Facebook, somehow regulating Amazon, and figuring out how, exactly, to keep large third-party delivery services from becoming the next Facebook or Amazon. 

A new set of laws, regulations, and restrictions have been slapped on these companies — most, if not all, of which have been previously chronicled here. 

I am not a policy researcher nor a politician. But if it feels like maybe regulators are going after big delivery harder than they went after Facebook, it’s because they are. “All of these companies—Amazon, Google, Facebook—they’re all where they are because we haven’t been enforcing so many laws, chief among them the antitrust laws,” said journalist-turned-antitrust researcher Moe Tkacik in a recent excellent New Yorker Q&A

Restaurants are different, Tkacik says. As interest and use of third-party delivery apps sped up during the pandemic, so did interest in regulating their business. Stories of independent restaurants trying hard to survive in completely untenable circumstances tugged at heartstrings — after all who doesn’t love a good local? — while piquing regulatory interest. 

But none of this is new; delivery companies have been dealing with regulation for years. Some lawmakers were interested in reining in the apps well before Covid. In California, Assembly Bill 5, which would have required companies like Uber to make drivers employees, landed on the books in 2019. Big delivery’s rebuttal? The infamous Proposition 22.

Later, but still before the pandemic, the same southern California assemblywoman behind AB5 introduced legislation that banned the common practice of listing restaurants on delivery platforms without their consent. And later, she again took aim at delivery apps with state legislation that was just signed into law: delivery companies must disclose an itemized cost breakdown of every transaction to restaurants and their customers. (Okay, maybe some of this is new.)

Notably, part of the California legislation proposed in early 2020 would have required third party delivery services to share customer data with restaurants. This didn’t become part of any California regulation so far — but it’s now on the books in New York. Sort of. 

When New York City passed legislation requiring the large apps to share customer data with restaurants, DoorDash immediately pushed back, suing the city. The company called the requirement “a "shocking and invasive intrusion of consumers' privacy." Now, New York has agreed not to enforce the new law while DoorDash’s lawsuit remains pending in court. 

Meanwhile, cities continue to make emergency pandemic commission caps permanent, a practice that the apps have also promised to fight in court. (And so far, they’ve made good on that promise.) 

While the lawsuits play out, keep an eye on the companies’ product decisions. 

The big companies have already introduced tiered pricing models to offer different levels of marketing support for different price points. (Though again I’ll write, as I do every time I mention this, that a DoorDash executive said at the time of this announcement that the tiered pricing structure was not in response to commission-capping legislation.) 

DoorDash announced a few new features this week to endear itself to restaurateurs: a program that pairs restaurants with a dedicated point of contact for so-called “complex support issues” like banking reconciliation — but only from 8am until 4pm Pacific time, Monday through Friday. (The company offers 24/7 support for other less complex, more immediate real-time consumer, merchant, and courier needs.) It’s also introducing a mobile app for merchants. They can track orders and issues and look at live sales data from afar. (This feels a lot like DoorDash continuing to make itself indispensable to restaurants!) 

Then there’s the new revenue streams: DoorDash is selling ads to restaurants who want to appear at the top of search results in its app. Similar to other online search ads, restaurants pay for sponsored listings only if users click through and make orders, per coverage in the Wall Street Journal. DoorDash is launching featured listings for CPG brands on the platform, too.

Meanwhile, on the regulatory front, Uber’s CEO has eschewed the idea of the company becoming a so-called “superapp” — the sort of do-it-all mobile apps that have grown to massive scale in China. Instead, he said recently, he’s happy for the company to offer separate apps for separate use cases — so long as it’s “seamless and magical” for Uber customers to jump between apps, he said. That is, worry not, regulators, Uber isn’t a giant anticompetitive super app that does it all.

The New Yorker piece ends with Tkacik calling delivery companies “bloodsucking middlemen.” Will regulation help this? Maybe. But the real issue at hand is that consumers seem to prefer centralized markets — like, say, a mobile app that condenses all local restaurants into one ordering interface) to independently finding and vetting restaurants on their own. And that can’t be regulated away. 


What else is happening?

Grubhub’s founder and former CEO is leaving the company. Matt Maloney will step down December 1 “to pursue other opportunities,” according to the company. Per Crain’s Chicago ($) and “a source familiar with the situation,” Maloney decided to leave after disagreeing with Grubhub’s new parent CEO, Jitse Groen. In a statement, Groen said he was sorry to see Maloney leave the company. And in a note to Grubhub staff, Grubhub’s current CEO (and Maloney’s former second-in-command) Adam DeWitt wrote, “I talked to Matt, and he knows there is a lot more work to do. But after two decades of making food delivery better for everyone, he is ready to move on to the next chapter.” A Grubhub rep told Crain’s Chicago that the company does not comment on rumors or speculation. 

(I, for one, will forever miss Grubhub’s pre-JET earnings calls, which regularly veered into the unexpectedly exciting territory. Thank you, Mr. Maloney!)


Washington City Paper is hiring a carry-out food critic in D.C. “You’ll evaluate and celebrate the District’s rich and historic carry-out culture by penning monthly reviews,” the listing reads. Instead of a typical restaurant critic, the alt-weekly is hiring someone to review the food we’ve come to know and love in the pandemic (but also well before!) — businesses that focus exclusively on carry out. And guess what? Ghost kitchens and virtual restaurants count. What a rad gig. (Also kudos to the paper for publishing rates and reimbursement info in the listing.)


Rebel Foods achieves unicorn status. The India-based startup raised $175 million in a Series F funding round, bringing its valuation to $1.4 billion. The 10-year-old company has been expanding rapidly, achieving 60 percent growth month-over-month during the pandemic. Rebel Foods currently operates more than 4,000 internet restaurants and nearly 500 ghost kitchens throughout Asia, the Middle East and the United Kingdom, with plans to open at least 500 new locations by March 2022.

-Danielle Hyams


Chinese food, but make it NFT. Non-fungible tokens are, well, everywhere. And while some people look at them as speculative investments (like this $69 million digital art piece by Beeple), others view them as a hobby. In a piece for Food & Wine, Andy Wang writes about the joy of buying NFTs that “depict food in unlikely and whimsical situations.” These include a ghost with a turkey, a tuxedoed manatee eating a burger and a handful of animated baos. And when Wang, craving Chinese food (NFT art, that is), didn’t find anything worth buying, he simply created his own.

-DH


Another week, more Reef Technology news. Reef last week announced it is partnering with TGI Fridays to launch 300 delivery kitchens in North America and beyond in the next five years. The first location will open in Miami. This comes on the heels of Reef’s partnership with 800 Degrees Pizza, which will result in 500 new locations. The ghost kitchen platform also acquired its logistics partner, Bond, an NY-based startup focused on e-commerce brands delivery and distribution center services.

-DH


Periodic reminder that I am open to feedback and would love to hear from you! Just reply to this email. Thank you for your support!