The restaurant technology revolution that wasn't

Rethinking success in restaurant tech for a changed world

Streamlining, optimizing, removing friction — all the buzzwords and phrases that investors and technologists love to trot out when promoting their products and services. It’s how technology works, finding creative and brand new solutions for problems. That’s great! But what are we optimizing for, anyway? 

This is maybe a strange thing for someone who makes a living writing about restaurant technology to ask. But as we get deeper into a world where tech has changed restaurants forever, it’s an important one. 

In a recent call with investors, Chipotle CEO Brian Niccol talked about “throughput,” or, how many burritos and bowls the company’s workers could churn out in any given time period. It’s a metric of success in the chain restaurant world, where analysts measure things like same store sales and average check size to understand a company’s health. It’s how Wall Street works — and now, it’s also how successful restaurants are expected to work. 

There’s trouble in that translation, though. What works for Big Restaurant doesn’t always fly on Main Street. When a well-known, longtime, and successful New York City restaurateur laid bare the costs of creating one menu item, a sandwich, a top industry analyst called the math “fuzzy” and the money misallocated (or maybe it just takes kitchen staff too long to construct the sandwich, he wrote.)

Conversely, stories of restaurants that scale and optimize are met with interest from investors hungry for returns: PF Chang’s, California Pizza Kitchen, Portillos, Sweetgreen have all indicated their intent to become public companies soon. With the right math comes the money, apparently. 

And it’s similar in restaurant technology, where a company’s success can be made or broken by an investor bet. If success in the startup world means creating a product that nets the biggest and fastest  return on investment, then all this optimizing is for tech’s bottom line, not a restaurant’s success.

These lines are further blurred by consumer messaging. A recent piece in Eater San Francisco asked, “What’s the most ethical food delivery app?” Apparently, readers want to know how they can enjoy the convenience (and, um, big financial subsidies) of popular delivery apps without the guilt of knowing the restaurant is paying a hefty price to sign on. But no matter how many times the spin tells you otherwise, an order on DoorDash enriches DoorDash. This is, of course, just the nature of capitalism and consumerism, but the last decade of highly subsidized consumer convenience technology has made us expect that somehow, things can come to us quickly at a very low cost. 

For more proof, look where the money in food tech is going now. “Rapid grocery delivery is the next step in the wave of venture capital-subsidized luxury,” reads a line in a recent New York Times piece about the industry. Venture capitalists have invested $14 billion in online grocery delivery since the beginning of 2020. Companies are racing to scale and capture market share, often at the expense of profit. (Sound familiar?) One early investor in a rapid grocery startup that promises delivery in 10 minutes told the Times that, “raising money is the easiest part of the business.” Okay, so, what does that mean for the future of food in America?

At the crux — and I’m guilty of this — it’s time to stop thinking about investment in a restaurant technology company as a blessing of a good business. A good business, that is, as defined by its ability to bolster the injured restaurant industry and, ultimately, succeed. (Maybe my mistake for defining “good business” that way? Perhaps this is why I pen an indie newsletter.) 

If we’re measuring success by burrito churn or delivery speed, then, sure, buckle up and get ready to optimize. But if success is to be measured by delight, happiness, enjoyment, healthy local businesses, well-cared-for workers, and responsible consumption, then I’d say it’s time to rethink the strategies we reward. 

(Adam Reiner of Restaurant Manifesto wrote a good piece about this phenomenon, which he dubs America’s chain restaurant problem. His take has a different angle than mine, but definitely influenced the above. Worth a read!) 

The QR code backlash has arrived

That was fast! The New York Times is ushering in the backlash at the sort of in-restaurant ordering technologies that helped the industry operate during nearly a year-and-a-half of unprecedented business challenges due to a once-in-a-century respiratory pandemic. 

QR code menus quickly became the norm during the pandemic — half of all full service restaurants in the U.S. have added them. And Covid or no Covid, it appears they are here to stay. These seemingly benign squares gained popularity by allowing touchless transactions — but that’s not all. As discussed several times in this newsletter, QR codes allow businesses to use tools for tracking and analytics, which can help them build a database of customer information that can be used to create personalized offers. This used to be viewed as a good thing. Personalization! Removing friction!

Except now this concerns privacy experts. “People don’t understand that when you use a QR code, it inserts the entire apparatus of online tracking between you and your meal,” Jay Stanley, a senior policy analyst at the American Civil Liberties Union, told the New York Times. “Suddenly your offline activity of sitting down for a meal has become part of the online advertising empire.”

What else is happening?

Bbot raised $15 million. The online ordering and payments provider for restaurants  was founded in 2017, but got a boost during the pandemic when its platform allowed restaurants to quickly adapt to industry changes, like contactless ordering and payments. In the last year it added more than 700 customers and saw 700% year-over-year growth. Bbot’s CEO said it will use its new injection of cash to stay ahead of current trends, like food halls and virtual brands. It also plans to open its platform to developers who want to build extensions and apps on its ordering and payment platform. 

Slice hired a chief financial officer. Jayant Mittal, the former director of worldwide corporate development at Amazon, will help lead Slice into its next stage of growth as it nears more than $1 billion in pizza sales. The platform for independent pizzerias has raised a total of $125 million in six funding rounds. Jayant formerly represented Amazon's interest as a board member for Deliveroo after the ecommerce and logistics giant invested a significant sum in the European delivery company. 

Gopuff’s flush in cash. The ultra-fast grocery delivery service, which operates in 550 cities across the U.S., is raising an additional $1 billion in funding after raising $1.5 billion in March. If this next funding round closes, Gopuff will have a $15 billion post-money valuation. It has raised far more than its competitors; Gorillas comes closest with $335 million. 

The robots keep coming. Pizza brands are interested in Picnic, an automated pizza-making robot. That’s according to the company’s CEO, who touts the company’s tech as “contactless pizza preparation” — a nod to the absence of human touch in the era of Covid. 

Speaking of, DoorDash is reportedly testing two of its own brands of salad and grain bowl concepts made by Sally, the robot from Chowbotics, a company DoorDash acquired last winter. That is: DoorDash has its own line of dishes available to order via DoorDash that are made by a robot that DoorDash owns. 

Danielle Hyams contributed words and research to this edition of Expedite.