What is the anti-Grubhub?
What's working for restaurant tech startups right now? Declaring what they're NOT.
Last week, a company called Lunchbox unveiled a new website: notgrubhub.org. A rep for the company described the site over email as “a non-profit site helping Americans order from and directly support over 100,000 establishments across the country.”
Lunchbox positions itself as anti-big delivery, as many smaller restaurant tech companies have done, especially during the pandemic. Smartly so, because sentiment has never really been lower — or, at least, more publicly low. In the last week, there have been at least four major articles about this, including a 6,500-word feature in The Economist. Lunchbox provides a wide variety of services to restaurants — websites, direct ordering, help with the creation and function of ghost kitchens.
I used LinkedIn to ask Lunchbox’s exuberant founder and CEO, Nabeel Alamgir, if he’d received a cease and desist order from Grubhub over the site’s title yet. He hasn’t. Ever the skeptic, I have a hard time believing that’s not the goal of a flashy marketing campaign, though according to Alamgir’s second response to me he has “no goals! Just increase consumer awareness! #godswork”
If you’re into the idea of notgrubhub.org without the associated competitive drama, there’s a nearly identical version available at helpmainstreet.com, which Lunchbox helped create shortly after the March shutdown orders.
This feels a lot like the time Tock CEO Nick Kokonas received and posted a cease and desist order from OpenTable’s lawyers for creating OpenTableSaurus.com. The whole thing was good for a laugh all around. The year was 2017 and the pandemic was certainly far from anyone’s radar. Tock has since grown into a continually successful business with a growing list of customers. It hasn’t stopped positioning itself as the anti-OpenTable, though Kokonas’s jabs are more likely discovered on Twitter than via lengthy legal communication. OpenTable has also been paying attention — it’s experimented with ticketing, Tock’s initial premise, and has finally revised its pricing structure to be more in line with upstarts in the industry.
Similarly, large delivery companies have adjusted offerings to mitigate the damage public scrutiny has done to their reputations. They call this “giving restaurants more control” or something similar. In the interview I wrote about last week, Uber’s CEO said, “Increasingly we’re building tools for these restaurants, where they can essentially build up their own websites. We offer them an Uber Eats microsite completely for free, so that they have the tools to bring their business direct.” And, “We have pivoted more of our technical spend to actually help restaurant owners in terms of their IT and building out the functionality so that they independently can attract business, they can form a relationship with you. They can get their email, et cetera and they can reach out to customers directly.”
Right now, it feels like positioning yourself against the incumbent is the best way to grow. Investors have recently given the company $20 million to build its tech platform for restaurants. (I’ve not personally viewed Lunchbox’s pitch deck, but have seen a few slides of value from the company thanks to a couple of interviews with Alamgir. I’m confident the investor version contains a lot more than Lunchbox’s position opposing large third-party companies.)
Lunchbox’s endgame could be going big with a new model, or it could be selling its useful tech to a large restaurant group or restaurant tech company via acquisition. There’s lots of room for improvement in the space and also for rethinking the status quo. Lunchbox’s CEO is a former chief marketing officer, which means he understands the importance of data to a restaurant business. This automatically vaults Lunchbox into a position of power and influence as it builds a company to help restaurants market themselves apart from third parties. (I just mistyped that phrase as “third pirates” and maybe we should keep it?!)
So, back to that website: a search function that highlights restaurants that accept direct orders is great. This one’s not perfect, a search in my San Francisco neighborhood yielded three listings for the same restaurant (that only takes phone-in orders), two listings for another (that also only takes phone-in orders) and a listing for a recently closed business. But it’s something! And it’s enough (ahem) to get some attention and publicity, too.
How one startup CEO wants to change casual dining in America
Bbot, an online ordering platform for restaurants, just raised another $4 million in seed funding, bringing its total to $7.3 million. Bbot CEO Steven Simoni says that the company has found its sweet spot and now needs the cash to hone its product offering with an end to the Covid pandemic on the horizon.
“Our market segment is that casual dining environment in the post-Covid world when the vaccine is more widely distributed,” he said in an interview. He sees a new restaurant type emerging: a chill, casual environment where people can order food and drinks on their phone. Think: the sort of place you could cozy up for an entire afternoon, lounge at a table in the sun, drink a few beers, enjoy snacks, maybe a burger.
Bbot plans to launch a new feature this year with the goal of adding tech into casual restaurant settings. Imagine a spot where you can order on your phone, he says, but also a server can place an order. His goal — and measure of success — is lofty. “If we can do that and we can change casual dining in America, I’ll think we’ve done a great job. If that doesn’t change the culture, then we’ve done a bad job and we should fold up shop. But I believe now that this is going to change in America. We’re pioneering that change, and I want every casual spot to be like that.”
After product development comes expansion, and likely another round of fundraising to support that growth, Simoni said.
Lots of coverage of the third party delivery business and its effects on restaurants this week:
In the Economist: Gulp! The secret economics of food delivery
You have to sign up with email to read this long, detailed, historical account of restaurant food delivery, but it’s a doozy.
In Eater: Who’s paying for the delivery wars?
A good, if quick, look at the economics behind the rise of third party delivery and the pros, cons, and regulations that have affected the business this year.
And two industry op-eds, one from Chicago chef-owner Phillip Foss:
With delivery apps, the balance scale is severely tipped against restaurants (Delivery services are “ruining restaurants,” the subhed reads.)
...and another on the national site: The true cost of convenience by Deepti Sharma, a New York-based startup founder with considerable experience in the space.
DoorDash’s “city fees” made it to CNN. The $1 to $2 charges are levied in cities that have instituted fee caps on delivery services.
What else is happening?
Uber laid off 180 Postmates employees last week, according to Mike Isaac in the New York Times. Postmates CEO Bastian Lehmann has also left the company, but will work as a consultant as necessary, he said.
Yelp released its 2020 economic report, and instead of chronicling business closures as it did in the early months of the pandemic, it’s focusing on openings and reopenings. According to Yelp’s data, new openings reached close to 2019 levels in the last three months of the year — down just 4 percent. For certain types of businesses including food trucks and bakeries, openings were up. According to Yelp’s data, 68,975 restaurants opened in 2020; according to a National Restaurant Association survey, 110,000 restaurants closed permanently or long-term since the pandemic hit. Worth noting that the methodologies of these reports are different so there’s no perfect way to compare these numbers. The NRA’s data includes restaurants that are completely closed currently, but may reopen in the future. Still, while openings may be on pace to recover, it’s worth recognizing how much the industry has lost.
Doordash has a Super Bowl ad, its first. It features actor and rapper Daveed Diggs and a handful of Sesame Street muppets. And it’s actually promoting all the other things you can get on DoorDash besides restaurant food: milk, cookies, shampoo, and more. DoorDash announced it would donate $1 from every order placed on Super Bowl Sunday (February 7) and the following Monday to Sesame Workshop. (I’m a Kansas Citian by marriage, go Chiefs!)
A startup called Club Feast raised a $3.5 million seed round of funding for its meal delivery platform. Diners sign up for a weekly meal plan and place orders at least 24 hours ahead of time. The company works with restaurants to identify meals that can be offered for just $5.99. Delivery costs $2 and there’s an additional $1 fee for single meal orders. (Sorry, singles! You get peace, quiet, a bed to yourself and also more expensive food delivery.) TechCrunch has the full story.
A fun light read if you have a WSJ subscription: When online shoppers accidentally order too much. (I know someone who was accidentally sent an alarmingly high number of canned, frozen oysters through no fault of their own.)
I love this type of coverage because it breaks down, number by number, exactly how tough it is to operate a restaurant. On Eater: How much this Detroit restaurant spent pivoting during the Covid-19 Crisis. This week, my hometown of San Francisco announced it would allow outdoor dining to begin on Thursday. (We’re in the middle of a week of rain produced by what they’re calling an “atmospheric river.”) But also tucked into this order: the mandate that tables must be spaced six feet apart under all circumstances. Previous guidance that allowed plexiglass barriers in lieu of distance no longer applies. Based on my very informal survey of restaurant parklets I can see on my bike ride from my house to the park, a lot of restaurants are going to lose considerable table space because of this rule.
Expedite is produced by Kristen Hawley in San Francisco. Thanks for reading!