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The Infatuation finds a buyer. It's a bank.
The transaction "could be the weirdest and smartest deal of the year."
Last week, restaurant review and events site The Infatuation announced an acquisition by JPMorgan Chase— the bank. Per the Wall Street Journal:
Banks don’t usually buy media companies. But JPMorgan has made a push to attract big spenders who like to travel and dine out, particularly through credit-card rewards.
The logical parallel here — one that I am not the first to draw — is the Amex-Resy deal of 2019. Resy offers a service to restaurants, reservations and table management. But it also has a robust content and events business, and American Express cardholders enjoy priority access to much of it.
Expect similar moves from The Infatuation’s new parent, the banking powerhouse behind the ridiculously popular Chase Sapphire credit card. Per the WSJ coverage, JPMorgan will give some customers special access to Infatuation events and experiences, and even certain content on its website.
A couple months into the pandemic, I wrote a piece about credit card points for Eater. (It’s one of my favorite headlines: “What’s even the point of credit card points now?”) As in: when the perks relate to travel and dining, what happens when you can’t travel or dine? As one expert I interviewed said, banks are in the business of getting you, the consumer, to spend money using their credit card. Throughout the pandemic, perks adjusted to account for our shift away from airplane flights toward groceries and takeout. Now the banks are continuing to address these verticals. Plus, it’s easy to sell a potential cardholder on exclusive content and access when the content and access is something they know to be good. The Infatuation’s strong consumer branding and loyal social following will only be a benefit here.
Insider’s coverage called the deal “the weirdest and smartest of the year,” pointing to JPMorgan’s enhanced ability to build consumer brands and make its products stand out. Perks and access! One analyst in the piece did caution, though, that the return on investment for such an acquisition is tough to measure. But it’ll definitely make them look good.
Of course, no one is talking terms or cash. “The Infatuation doesn’t disclose its finances, including whether it is profitable,” according to the WSJ.
Grubhub, DoorDash, and Uber Eats sue NYC
In a predictable move, Grubhub, DoorDash, and Uber Eats filed a lawsuit against the city of New York over its new law permanently capping commissions restaurants pay for their services. DoorDash and Uber Eats have already sued San Francisco in similar fashion. Both lawsuits call the caps unconstitutional, and delivery company leaders have echoed the sentiment everywhere from tweets to calls with investors.
One New York lawmaker and chairman of the city’s Small Business Committee told the Wall Street Journal that the law is meant to make the system more fair — presumably for restaurants.
By now, we know what comes from the other side: The companies argue that price controls will hurt restaurants. That’s because consumers will need to pay more for food via fees levied by delivery companies to make up the difference. Higher fees for consumers lead to reduced business for restaurants, they say.
Some jurisdictions aren’t happy about increased consumer fees, either. Chicago is suing DoorDash over a number of alleged deceptive business practices including its $1.50 “Chicago fee.” The suit alleges the charge, which comes from DoorDash, misleads consumers by implying it was charged by the local government.
Delivery companies have hedged against this by introducing new pricing models offering varying levels of service for varying commission levels. Uber Eats is the latest to (finally) announce its tiered pricing structure at a predictable 15, 25, and 30 percent commission levels, the same offered by its competition. So far, commission fee caps, both temporary and permanent, hover around 15 to 20 percent, with certain carve-outs for marketing expenses. Tiered pricing functions similarly — the 15 percent option is a true basic service across delivery platforms.
Tiered pricing may not be a direct response to the threat of more permanent fee caps, but they are in line with the real value proposition delivery services sell: incremental guests. That is, companies like Uber Eats bring restaurants customers they wouldn’t have otherwise captured. Is this still true, nearly a decade into a robust, consumer-facing business? After several months of implementing its tiered commissions plan, DoorDash said recently most restaurants who opted into a new plan chose one of the two higher-priced options.
What else is happening?
An excellent piece from The Verge / New York Magazine centers delivery workers’ stories as large apps continue to upend delivery in New York. It’s worth a read even for those of us outside the city, if only to understand how much technology and convenience and venture capital investment have changed a decades-old delivery landscape in the most densely populated city in the country.
Revolt of the Delivery Workers — The Verge
Resy and Clear have a partnership now. Who knew the airport identity service meant to speed you through TSA checkpoints would become a restaurant tech company? Resy announced a partnership with the identity verification company to give its partner restaurants free access to Health Pass by Clear. The tool helps employers — in this case a restaurant that also uses Resy — screen staff for vaccination and other health and safety protocols.
Restaurateur Danny Meyer invested in Clear via his private equity firm, Enlightened Hospitality Investments, earlier this year. His Union Square Hospitality Group restaurants started using the pass to screen employees last winter, per my own coverage for Food & Wine months ago.
It’s different from the guest-facing, yet-to-be-revealed OpenTable/Clear integration, which uses Clear to verify vaccination status within the app. But Resy is recommending guests use Clear’s digital vaccine card as a way to share vaccination status at restaurants, per a company spokesperson.
A taco a day keeps the … consumer base strong? Taco Bell is the latest chain to try out a subscription service in an effort to build customer loyalty and increase spending. For between $5 and $10 per month, subscribers receive a Taco Lover’s Pass, redeemable for a free taco daily (options include: crunchy tacos, Doritos Locos tacos and spicy potato tacos, among others). Subscriptions are becoming typical QSR strategy at this point: Burger King launched a similar service in 2019, which it discontinued after several months. But Panera has seen great success from its subscription plan, launched last year. It increased visits by 70 percent during its pilot phase. During parent company Yum Brand’s most recent earnings call, CEO David Gibbs said Taco Bell’s rewards program saw a 35 percent increase in spending from active loyalty members (and that’s before free tacos). The Taco Lover’s Pass is available through Taco Bell’s app, limited to select locations in Tucson, Ariz., for now.
Uber drivers are deemed employees by a court in the Netherlands. A court in Amsterdam has handed another blow to Uber’s business model, ruling that 4,000 Uber drivers are employees of the company and should be given benefits similar to taxi drivers.
GoPuff launched a prescription delivery service. The speedy delivery startup, which finds itself in an increasingly competitive field, launched a prescription delivery pilot program in select areas. Users will be able to obtain prescriptions for products like birth control, acne medication and erectile-dysfunction medication through digital health startup Wheel. (On a personal note, my dog was sprayed by a skunk late last Thursday night and GoPuff’s 18-minute delivery of five pints of vinegar saved my sanity and probably my home. Ultimate use case.)
Toast eyes a $16 billion valuation in its upcoming IPO. The decade-old restaurant tech company was last valued at $4.9 billion in early 2020, but received a major boost from the pandemic, during which it shifted focus to delivery networks and contactless payment to meet consumer needs. Toast plans to sell 21.7 million shares in the offering, priced between $30.00 and $33.00 per share.