Ok, stick with me, this ride is a little wild.
In January, a virtual restaurant concept called @pizza launched exclusively on Uber Eats. It’s born of most major internet trends of the last five years: Crowdsourced restaurant recommendations; celebrity; influencers; social media; food delivery.
@pizza isn’t a brand new restaurant, it’s a brand new brand. It’s made up of 150 existing pizzerias across the country who have signed on to operate under the @pizza name exclusively for delivery on Uber Eats. And it’s expanding fast; in a couple weeks, the number of partner restaurants will stretch closer to 250. Participating restaurants don’t have to relinquish their own name, business, or delivery listing to become an @pizza restaurant. In fact, the name of each restaurant is displayed within its Uber Eats @pizza listing.
“This project, and this company started from [asking], okay, how do we really create a system that helps independents level the playing field,” said Lawrence Vavra, founder and CEO of @Restaurants, the company behind @pizza. (It’s also the company behind Pizzaoki, the virtual concept created years ago with DJ Steve Aoki.) Large restaurant chains have lots of leverage with big delivery companies, he said, which, in turn, can potentially harm small businesses who can’t access the same favorable terms. Uniting a lot of small restaurants under the umbrella of one large, national chain can create better economics for those independents, he said.
So… how are those economics? According to Vavra, participating pizzerias benefit thanks to marketing efforts and prime placement within the Uber Eats app. @pizza’s listing lives permanently in Eats’ “national brands” section alongside the likes of Burger King, Taco Bell, and Panda Express. Pizzerias don’t have to pay extra for the privilege, either. Vavra says that participating restaurants receive the same amount of money per order as they would for any Uber Eats order at their restaurant. So, while the money is the same, the restaurant reaches a potentially broader audience by masquerading as @pizza. (Vavra assumes that sales via the @pizza listings are incremental, though does say he doesn’t yet have the data to support that claim.) Pies arrive to customers in bright @pizza boxes, co-branded with the Uber Eats logo.
So far, this sounds similar to any other ghost kitchen operation: create a product that’s in demand, scale for more volume via clever marketing and branding, reach more guests. In fact, while I was checking some details in the @pizza listing in the Uber Eats app, I got distracted by an ad for a wing place I didn’t recognize and turns out it’s a Nextbite concept operating out of a casual bar/restaurant down the street — just in time for the Super Bowl. Cool, cool.
But there’s another level of intrigue at @pizza: unlike many virtual other brands, it takes more than an available kitchen and enough staff for a restaurant to be able to sign on. @pizza restaurants are curated — in partnership with FuckJerry, the Instagram account turned… I don’t even know, really? Media business? The virtual restaurant brand draws from the wisdom of the Instagram account @pizza, which has been curating vetted, quality pizzerias across the country for some time. (A QR code on each pizza box leads diners to the @pizza Instagram account. Is that a digital pizzeria flywheel?)
“We have our outreach team all over the place,” said Vavra. “From Instagram to Yelp. What’s crazy is that as we’ve been curating pizza places, we’ve probably curated about 3,500 food bloggers — people on Instagram who have food accounts ranging from 150,000 to 2,000 followers. So we’ll ask a lot of their opinions based on where they live. So we created this — not on purpose — crowdsource army of self-enthusiastic foodies. But then obviously we have our own editorial guys.”
The company also gets a lot of requests from businesses interested in participating, but does thoroughly vet each restaurant for inclusion. “We’re not big on overlap,” Vavra said. That means it’s unlikely that two pizzerias in the same neighborhood could both become @pizza partners, unless they somehow differentiate delivery zones. That also means depending on where you live in any given city or location, your @pizza experience might be slightly different than a friend’s across town. The point of the curation partnership is to make sure that no matter who’s providing the pizza it’s sure to be of reasonably high quality.
Each @pizza restaurant offers its own menu and is free to list signature items alongside the tried-and-true favorites that @pizza asks them to include. “There’s going to be some basic stuff on the menu that you have to have, just because that’s what the consumer wants,” Vavra said. “You can guess what those are.”
Vavra said response has been great so far, and the restaurant brand is only a couple of weeks old. The biggest hiccup has been the technical difficulties associated with a brand name that begins with the @ symbol, he said, triggering some search problems he says Uber’s engineering team is working to fix. “Our partners are loving it. Customers are liking it.”
So there you have it: @pizza, the new national, virtual brand that’s really a bunch of small, independent businesses operating under a larger umbrella entity on Uber Eats that’s editorially controlled in partnership with an extremely popular and influential Instagram account. Got it?
Uber Acquires Drizly
On Tuesday, Uber announced it will acquire Drizly, an on-demand alcohol delivery company, for $1.1 billion. The stock-plus-cash deal is expected to close by this summer. “Uber Eats has been an incredibly successful part of our platform before Covid hit us, but during this time our delivery business has been growing at extraordinary rates. We essentially want to double down,” Uber CEO Dara Khosrowshahi said on CNBC.
Drizly, meanwhile, has grown 300 percent in the last year and is available in 1,400 U.S. cities. (Interestingly, its website says it’s available in “180 markets” which I understand is different than individual cities, but always interested in this metric.) I’ve read approximately ten different but same analyses of the situation — the partnership will drive more businesses to Uber Eats, or more app downloads, or more users, or whatever. It probably will! This acquisition strategy coming from Uber is no surprise — its CEO led online travel agency Expedia for over a decade; Expedia was essentially defined by its successful acquisitions.
No, the most interesting thing about Drizly (to me!) comes from the first line of its terms of service: Drizly does not sell, offer to sell or solicit sales of alcohol: our Service enables you to search online for alcohol and other products available for sale by licensed alcohol retailers that use Drizly’s e-commerce service ("Retailers").
Hey that sounds familiar! It’s the same marketplace model that helped food delivery services grow, the same focus on last-mile logistics that has caused an arms race in third-party delivery that seems to really be coming down to Uber vs. DoorDash in a competition to see who can expand the fastest and the furthest while working toward profitability. (Late last month, Uber also announced a partnership in New York for pharmacy prescription delivery powered by Nimble, “a rapidly growing prescription delivery service in the U.S.”) This e-commerce + physical delivery model makes it super appealing for all sorts of businesses to sign onto a platform that promises to do it all.
This deal also comes at an interesting time for to-go alcohol as cities and states are relaxing liquor laws, largely thanks to the effects of Covid on their local economies. Takeout margaritas have been one of the few bright spots of the last year in my house and expectations around to-go alcohol are changing quickly. Could we reasonably hope to see alcoholic beverage delivery from local bars via Uber in the future? I guess it depends when it’s safe to leave the house again — and where you live.
Uber reports its fourth quarter and year end 2020 earnings on February 10. Last week in his newsletter, journalist Eric Newcomer reported that venture capitalist Bill Gurley, who led Benchmark Capital’s investment in Uber in the company’s early days and sat on Uber’s board under former CEO Travis Kalanick, said that the company’s spending billions of dollars on self-driving technology was a mistake; Uber should have spent it on food delivery instead. There’s a billion dollar course correction for you.
What else is happening?
The siren song of large delivery companies is hard to resist, and for good reason. They provide a service that many restaurants need right now, and plenty of restaurants are happy with their choice to sign on. Others would rather avoid companies like DoorDash and Uber Eats, and in 2021, it takes a lot of planning and execution to make that happen. I explore this in my latest piece for Eater (and, spoiler alert! One restaurant joins DoorDash anyway.)
Brightloom, a company that uses data to help predict customer behavior, announced $15 million in funding and officially launched its data-driven platform. The company had been operating quietly for some time after pivoting from Eatsa, a San Francisco-based restaurant tech company. Brightloom is helmed by Adam Brotman, a former Starbucks chief digital officer who is well-versed in the type of complex tech required to engage consumers. He also knows (presumably) that large companies like Starbucks have the money to spend on developing robust platforms — but that this sort of innovation and sophisticated tech doesn’t have to be limited to restaurant businesses with deep pockets.
I thought Twitch was maybe one platform I didn’t have to monitor for restaurant technology content. HA, wrong! Alinea co-owner and Tock CEO Nick Kokonas will cook with Alinea chef/owner Grant Achatz on Friday. This one promises to be no business talk, “just cooking.”
Meal kit provider Sunbasket will get into delivery. It’s becoming “a full-service food delivery company,” according to a release.
Zuul released ZuulOS, an operating platform for multi-brand ghost kitchens. It’s based on the tech used to run Zuul’s ghost kitchen operations, optimized to take orders for multiple brands and batch them for optimized preparation and eventual delivery. ZuulOS — like Zuul — is currently available only in New York City.
Grubhub announces earnings later today. The company, which will someday (soon?) be a part of UK-based Just Eat Takeaway when the deal closes, has been announcing its quarterly numbers via press release, not a conference call with investors. Today’s results, which include year end 2020 numbers, will come the same way.
I talk a lot about venture capital’s role in adjusting the way we eat thanks to huge investments in as-yet unprofitable third-party delivery companies. Here’s one example of what can happen to an actual restaurant when VC’s growth mindset comes for the business. On Marker: The shocking meltdown of Ample Hills — Brooklyn’s hottest ice cream company.