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The reviews company is turning into a restaurant company
Yelp has some new offerings for restaurants' front-of-house operations
Yelp wants to deepen its connection to restaurant businesses. Restaurants already make up a sizable portion of Yelp’s listings, and the company has long sold these businesses on its various products. Now it has another thing to sell — a new front-of-house product dubbed Guest Manager that takes Yelp’s existing tech — like reservations and waitlists — and combines it with new integrations for online ordering, delivery, and loyalty.
Yelp’s announcement is indicative of a few restaurant industry tech trends. There’s the consolidation angle: new functionality and integrations put Yelp’s offering sort-of among the do-it-all restaurant software companies like Toast (Yelp is not a point of sale, though it does integrate with them). A new integration with Olo, the b2b online ordering giant that’s been around longer than the iPhone, offers streamlined order management; a Punchh integration offers top-notch loyalty. (Punchh itself was recently acquired by Par, a POS company, m&a, baby.)
Then there’s the meet-diners-anywhere trend. If Covid taught the industry anything, it’s that guests can, and will, interact with a restaurant in plenty of different ways. A dine-in customer can be a takeout customer can be a delivery customer, and managing all of these customer profiles with disparate systems might lead to three different views of the same person. Tech is solving this because the way restaurants function is different now than it was just 18 months ago. (In marketing speak, this is the “omnichannel approach.”)
As with many things in the convenience era, Yelp is free for consumers to use. It makes its money through advertising and products it sells to the businesses that it lets consumers review on its platform. But it also converts consumers to users of its products, like Yelp’s reservations and waitlist services.
But also! Finally, virtual restaurants on Yelp
I think I first asked a Yelp representative about a ghost kitchen designation last winter — that is, whether or not the company explicitly supported ghost kitchens. It’s taken a while, but now it does. Restaurants can self-select the “virtual restaurant” label to help reduce the confusion that’s potentially associated with a virtual kitchen’s physical address. Is it a parking lot trailer? The kitchen at a Buca di Beppo? A warehouse?
I’m very interested to see which virtual brands and restaurants readily designate themselves as such. A representative for Yelp told me that, at launch, there will be 3,000 virtual restaurant listings. Three thousand.
Big delivery’s race to back ultrafast grocery
If the sheer volume of news about ultrafast grocery leaves your head spinning, you’re not alone. The market, which has taken off like a rocket ship in popularity and actual dollars involved since the pandemic, is crowded with heavy-hitters armed with massively valuable but still exceptionally young companies. I don’t write about this space much, except when it overlaps with restaurant delivery. And, according to recent news and rumors, this is one of those times.
The space is replete with cash, and, of course, plenty of the sort of drama that comes from slinging hundreds of millions — if not billions — of dollars around in a fast-growing industry. A recent Financial Times piece outlines some of the chaos of on-demand grocery funding over the summer. Specifically, the piece highlights an almost-deal gone bad. DoorDash, which has long been looking to expand outside of the U.S., was rumored to be investing a large chunk of cash in Gorillas, a Germany-based fast grocery delivery service launched in May 2020. But the deal broke down (FT says that DoorDash wanted too much control as part of its terms), and Gorillas as a new restaurant delivery backer: Germany’s Delivery Hero, rumored to be leading a $950 million series C fundraising round that values Gorillas at $3 billion.
DoorDash didn’t bow out though. The company has long looked to expand in Europe, and a large stake in a company operating successfully in the area is a great entry point. So, instead of Gorillas, DoorDash is investing $400 million in Flink, a close Gorillas rival. But before this, Gorillas and Flink, also based in Germany, had discussed merging. Gopuff, the U.S.-based ultrafast delivery service, also reportedly tried to get in on the dealmaking.
Whew. Per the FT:
“One investor in the sector described the action as ‘like a movie,’ while another veteran tech executive, now working with one of the delivery apps, said he had ‘never seen such a wild party.’”
The party’s not over for these companies who continue to see their value rise as the companies behind them expand. Companies like DoorDas that have built their business on restaurant delivery, are smart to diversify in order to expand. With ultrafast grocery delivery growing so, um, fast, they’d stand to lose a lot of ground by sitting this shindig out.
What else is happening?
NYC passes bills to protect delivery workers. The new bills, the first of their kind in a major U.S. city, set minimum pay and provide worker protections, allowing NYC’s more than 80,000 delivery workers to use restaurant bathrooms and determine the maximum distance they are willing to travel. The legislation also forces the apps to disclose their gratuity policies and prohibits them from charging workers for insulated food bags. While the bills were written with input from Los Deliveristas Unidos, a predominantly immigrant collective of app delivery workers, advocates say they still fall short.
OpenTable wants to help restaurants find staff. The reservation platform is teaming up with job site Indeed to address the staffing shortage plaguing the industry with a month-long initiative that provides restaurants with online tools to help find and interview potential employees. A separate portal will target and prep workers who are looking for restaurant jobs.
LevelUp is sunsetting its mobile app. The company that used QR codes for years before Covid made QR codes trendy won’t have a standalone app after tomorrow. (The app allowed diners to accumulate rewards and pay at certain restaurants.) Eventually, Grubhub acquired LevelUp for almost $400 million in cash, using the app’s technology to build white-label apps for restaurant brands looking to run loyalty campaigns. *That* functionality is still around. In an email to some existing LevelUp app users, Grubhub offered a free six-month subscription to Grubhub+, its monthly membership program offering free delivery from certain restaurants.
Speaking of monthly membership programs, Uber Eats has a new partner for its unlimited plan. Hulu subscribers now get six free months of Eats Pass, Uber’s own monthly subscription service. It’s a simple strategy that’s likely to work — make it easy and free for consumers to get hooked on free delivery, then sell them free delivery after they’re hooked. Uber’s CEO Dara Khosrowshahi said recently that 25 percent of Eats volume comes from pass members, and members transact more than non-members. On the restaurant side, then, Uber (or DoorDash or any big delivery company with a solid subscription base) can offer these highly engaged guests to restaurants for a premium. Uber, for example, doesn’t allow restaurants in its “lite” plan to offer benefits to passholders. (Others do this, too!)
If you’re not quite over Toast’s big IPO last week, here’s further reading. I really enjoyed this Napkin Math post that does a great job of summarizing Toast’s business and potential future.
Grubhub announces grant program for LGBT restaurant owners. The delivery company is partnering with the National LGBT Chamber of Commerce to distribute $2 million in grants — which will range from $5,000 to $100,000 each — to LGBTQ+-owned and allied restaurants who suffered financially due to Covid-19. Thirty percent of funds will be set aside for restaurants owned by people of color and transgender and gender non-conforming people.
382.39 seconds. That’s the average amount of time it takes to order at a drive-thru in 2021, up nearly 26 seconds year-over-year from 2020.