News brief: OpenTable / dynamic pricing / stock-boosting steak
News brief: OpenTable / dynamic pricing / stock-boosting steak
Stories too interesting to ignore but too short for a full newsletter
Today: three completely unrelated but newsworthy stories.
1. “OpenTable does not pay restaurants to join its platform.” — CEO Debby Soo to me this week.
Ok!
Let me explain how we got here: I accidentally stepped in it during a conversation with Tock CEO Matt Tucker a few weeks ago. Tucker, appearing on my podcast The Simmer, passionately explained the evolving dynamic in reservations services and how far platforms will go to recruit the best restaurants. Like his predecessor, former Tock CEO Nick Kokonas, Tucker was happy to take a big swing at OpenTable, Tock’s biggest competitor.
This week, in an appearance that was fortuitously scheduled in April, OpenTable CEO Debby Soo clarified her company’s position. OpenTable doesn’t pay restaurants to join the platform, she said, and she can’t comment on the practices of the company’s partners, including Visa. (You should listen for all the details.)
The Simmer is the friendly conversational podcast I share with my friend Brandon Barton, who happens to be the CEO of Bite, a kiosk company. Trust me, the last thing I expected to do during this side project was stir up some kind of reservations controversy — but is aggressively pursuing restaurant customers even controversial? I’m glad we’re having this conversation!
Brandon, Debby and I talk through all of this and more on this week’s edition of the podcast. It’s a good one.
2. The dynamic pricing downside:
Juicer, a company once well-known for advocating for dynamic pricing, is no longer offering its restaurant customers dynamic pricing — in part thanks to the term’s negative connotation.
Earlier this year, Wendy’s CEO maybe-accidentally shared that the chain would maybe, someday, deploy dynamic pricing. What followed were two storylines: the big headline which read something like, ‘Wendy’s will use surge pricing at its restaurants,’ and the more nuanced but extremely passionate conversations on the merits of the practice and the terminology that happened in smaller industry circles (mostly on LinkedIn, honestly). Wendy’s eventually walked back its CEO’s statement, assuring diners it wouldn’t implement any sort of demand-based or variable pricing.
Juicer CEO Ashwin Kamlani was a strong voice in those in-the-weeds conversations, advocating for the power of dynamic pricing on third-party delivery services. But now the one-time advocate says Juicer is pivoting away from dynamic pricing in favor of a broader revenue management product for restaurants.
Why? Well, in part thanks to the Wendy’s gaffe, which Kamlani said spooked other restaurants and kept them from experimenting with the idea. (He also told me all of Juicer’s restaurant customers saw positive results adding dynamic pricing to third-party delivery services, and that no diners complained about it.)
Kamlani is still a dynamic pricing advocate, even if he doesn’t think variable prices need to show up in restaurants the same way they do in other places, like hotels and airlines. And Juicer will incorporate certain techniques, like dynamic offers, into its broader product.
“But there’s no need to call it ‘dynamic pricing’ which stirs up so much fear,” he said.
3. Steak is the future of fast casual.
If we must compare, Cava, that the fast-growing fast casual Mediterranean concept is probably the new' Chipotle. Forbes says that based on its rising stock price, each Cava store location is worth $41 million. Divided the same way, a Chipotle location is worth $21 million and each Sweetgreen, $18 million. What do those chains have in common? Well, for one, they make a fuss about their high-quality steak.
Cava added grilled steak to its menu in early June, and it seriously outperformed the company’s expectations. “Since the national rollout, sales have been significantly higher than we saw in our seven-month market test,” Cava CEO Brett Schulman said on a call with analysts and investors. Cava’s stock rose over 20 percent on the young chain’s earnings report last week, thanks also to same-store sales, up 14 percent. (The stock is down a bit today after several executives disclosed their own multimillion-dollar stock sales.)
At Sweetgreen, which introduced caramelized garlic steak to its menu in May, CEO Jonathan Neman said that dinner represents 40 percent of the chain’s sales, in part, thanks to steak. (This figure is a 3 point expansion over last year.) And at Chipotle, which has steak on its menu year-round, the more choice cut of carne asada shows up seasonally, making for an annual marketing push that seems to deliver every year.
(Moo.)
Some fun links:
NYC-based restaurant critic Ryan Sutton explains his rendez-vous with the so-called ‘thirsty’ Yelp-powered reservations site for dumpling delight Din Tai Fung in New York. “Hospitality shouldn’t feel like a trip to the DMV,” he writes. —
Go deep — like, really deep — behind the scenes of Hyphen, the Chipotle-backed restaurant robotics company that’s raised $58 million (and counting). Chipotle is still testing the bot that can build burrito bowls, but Hyphen has apparently delivered 50 modules (one makeline is made up of several modules) to some as-yet-unnamed customers. It’s actively raising a Series B round. —
A former sous chef at Frog Club did a Reddit AMA a couple weeks ago. H/t to Helen Rosner at the New Yorker for posting this on the socials; I’ve been trying to find a way to work it into Expedite coverage but really, you should just read it with an understanding of the current reservations
helllandscape and some dubious notions around the type of exclusivity that is pre-screening potential diners over email. — r/FoodNYCWow, am I too honest? According to survey data from a fraud-prevention company called Sift, 42 percent of Gen Zers and nearly a quarter of millennials admitted to requesting a refund for an online purchase even though they received the item. This data doesn’t seem to be restaurant-specific, but apparently delivery fraud is common enough for DoorDash to introduce an extra step requiring frequent refund-requesters (and others in “certain situations” that seem purposely unclear) to show their courier a PIN number in order to receive their food. — Restaurant Business