DoorDash gives restaurants more of what they want
...and thoughts on representation
I’ll start with a note on representation:
This week, Restaurant Business magazine released a list of nominees for its top award of the year. The list includes five male restaurant industry CEOs. All previous winners of this award — at least since 2015, which is as far back as I could see — are male. As someone who tried (and, ultimately failed at least once) to create a successful b2b restaurant media brand, I understand and appreciate the challenge of representation in a male-dominated industry. As a woman who has experienced this sort of exclusion online and off, I also understand the importance of opening up these spaces — especially the prestigious ones — to a diverse set of leaders. In fact, helming a 2018 restaurant industry conference with a majority-female speaker and moderator roster remains the highlight of my career.
I asked Restaurant Business about the lack of representation on this particular list and received an answer that falls far short of what this current moment dictates and the industry deserves. Fair representation and leadership across the restaurant industry is important, corner offices included. I can think of no better opportunity or point in time to address these industry shortcomings head-on. Those with the largest platforms have a responsibility to do so. To not acknowledge these challenges is to minimize them.
If you’re a underrepresented restaurant leader I haven’t met, I’d love to meet you. Drop a line! If you know underrepresented restaurant leaders who deserve more time in the spotlight, please share their names. It would be my honor to compile a representative list. I don’t have access to flashy awards ceremonies or superlative titles, but I do operate with an eye on the future and have great enthusiasm for where we’re headed.
Thanks for reading. I welcome your thoughts.
Kristen
DoorDash says it’s giving restaurants what they asked for
DoorDash recently unveiled a new pricing strategy that targets independent restaurants. It’s a three-tiered plan that gives restaurants the option to choose between different commission rates based on features. A business offering delivery on DoorDash or Caviar can choose between plans with 15, 25, and 30 percent commission rates.
In a media event Monday, DoorDash chief operating officer Christopher Payne said that these changes were not in response to mandated fee caps in some markets. Instead, he said, they’re a result of research and recent feedback from restaurants.
Restaurants located in cities that have placed temporary caps on commissions (most cap at 15 percent) won’t see higher fees even if they sign up for a higher-tier plan. “When [fee caps] expire, then the rates discussed here will go into effect,” Payne said.
DoorDash also cut the prices it charges restaurants for pickup orders to 6 percent, and eliminated all fees except payment processing from its Storefront product, an option that encourages restaurants to accept digital orders from their own websites.
It’s Storefront that interests me most, because online ordering is a very crowded space. By offering an essentially free product to restaurants — no setup fees, no monthly fees — DoorDash is creating an easy entry-level product for restaurants who may choose to not be on their platform otherwise. “Previously only available to restaurants who were on the DoorDash App, Storefront is now available to all restaurants in the U.S., whether or not they are already partnered with DoorDash,” the announcement reads.
With Storefront, DoorDash is also competing with the likes of Tock, BentoBox, and plenty more (Allset, for example, announced its own commission-free ordering platform last week but it costs restaurants $49 per month to join.) While this has been a third-party delivery offering for some time, the company’s renewed focus on marketing the option — free to use, no commissions! — shows it has become an important part of the narrative around third party.
Uber Eats offers direct ordering too; currently there’s no marketplace or payment processing fees on online orders through the end of June. Its first marketing point? “Leverage your existing settings.” Instead of a new vendor, restaurants already on these platforms can add in online ordering from an existing third-party relationship. Or, restaurants curious about third party delivery can add a direct option through one of the big companies to start; I suspect the up-sell will follow. (I have no proof of this, it’s only a guess.)
One thing that won’t change is that DoorDash owns its customer data for orders placed through its own channels. “Our research shows that that is the consumer expectation,” said Payne.
Digital’s still winning in Q1 2021
Chipotle’s digital sales continue to climb. In the first three months of the year, digital sales overtook in-store sales for the first time. They grew nearly 140 percent from the same period last year, accounting for $870 million in sales as the company continues to knock on the door of a billion-dollar digital quarter. One in ten customers ordered a quesadilla in that time period, a menu option that’s only available to order via tech channels. The company has continued to raise prices on its menu items for delivery, something Chipotle’s chief financial officer says has gone over fine with consumers.
At Starbucks, mobile orders accounted for 26 percent of order volume in the first three months of the year. The company’s CEO also touted his company’s investment in artificial intelligence, an initiative know as (I’m serious) “deep brew.”
Meanwhile Yum Brands, parent company of Taco Bell, KFC, Pizza Hut, and Habit Burger, set a record with $5 billion in digital systemwide sales and managed to buy two tech startups during the quarter, too. Terms of those deals weren’t disclosed; the company’s CEO said both acquisitions were “on the smaller side” but expects high returns and competitive advantage.
What else is happening?
An Insider report on CloudKitchens revealed that 300 employees have left the company, and that’s just the beginning. There are also reports of culture problems and warning signs of the same problems Uber faced in its early days. CloudKitchens has recently rebranded, including adding a LinkedIn company profile — something its employees were reportedly prohibited from doing — as Hngry’s Matt Newberg pointed out in a recent newsletter.
Good news if you like celebrity-backed virtual brands! Nextbite, parent company of HotBox by Wiz, a collaboration with rapper Wiz Khalifa, hired a new executive to further expand its celebrity partnerships. Brian Furano joins Nextbite from a talent and brand agency and has worked on celeb-restaurant collaborations in the past including George Lopez’s Chingon Kitchen in southern California. Nextbite says it’ll make its next celebrity virtual brand announcement next week but if I had to guess based on this trademark application, George Lopez’s Carnitas Bonitas might be coming soon. (Nextbite already works with Lopez on a virtual concept called Lopez Tacos.)
Olo and DoorDash have reached an agreement outside of court. The lawsuit I first mentioned a couple months ago has been resolved, according to a press release. The companies have agreed on a new three-year contract. “Today’s announcement of a multi-year collaboration with DoorDash reflects our commitment to best serve the restaurant industry,” said Marty Hahnfeld, Olo’s chief customer officer. “We look forward to our continued partnership over the years ahead.”
“We are pleased to have resolved this matter and continue to work together for the benefit of our merchants,” said Tom Pickett, DoorDash chief revenue officer.
Zagat launched in Miami. Years after buying Zagat from Google, The Infatuation has launched the review and ratings service in Miami. (To be fair, we were stuck in a pandemic for over one of those years.) True to its legacy and previous format, diners are encouraged to submit reviews of their own. On an industry panel on Monday, Infatuation co-founder Andrew Steinthal reminded listeners that Zagat will be “the first platform to be filled with post-pandemic content,” which is… something I hadn’t considered. More in the Miami Herald.
I’m biased because the journalist who wrote this piece used to work with me, but this piece about food businesses on Instagram is a must-read. Erika Adams has the story for Eater New York and it’s a great mix of business, digital culture, and the evolution of chef and restaurant in 2021.
Indian delivery company Zomato has filed for its IPO. It plans to raise over $1 billion in the offering and was most recently valued at $5.4 billion. Per TechCrunch, “A lot is riding on Zomato’s eventual listing on Indian stock exchanges. A successful listing is poised to encourage nearly a dozen other unicorn Indian startups to accelerate their efforts to tap the public markets.”
Grubhub will announce its first quarter results later today. As in quarters past since its acquisition by Just Eat Takeaway was announced, there will be no conference call. Yesterday, the company filed a preliminary proxy statement with the SEC about the acquisition, which requires a shareholder vote. The companies have said that the merger will be completed in the first half of this year. The deal was first announced in June 2020.
Mediterranean fast-casual chain Cava has raised a $190 million Series F round of funding. The company plans to use it to expand further, including a its CPG (that’s consumer packaged goods) line, but also more tech from its in-house engineering team. According to Bloomberg, the new investment values the company close to $1.3 billion, citing a source with knowledge on the matter.