MONDAY MINUTE: August 15, 2022

Doordash into virtual brands, 7-Eleven acquires Skipcart and Wendy's slows Reef expansion. All these headlines and more represent our thoughts and views on the world of restaurants, technology and off premise food in our round up of the last week’s hot news stories - subscribe today to the Monday Minute and register at www.learn.delivery for more bonus content.



Articles mentioned in the video:


1. Doordash getting into the Virtual Brand game

2. 7-Eleven competing with Doordash after Skipcart acquisition

3. Online Grocery Sales jump 17% in July

4. Wendy's slows their growth plans with Reef

5. MenuSifu secures $20M in funding


TRANSCRIPT

Carl: DoorDash getting into the virtual brand space, 7 Eleven competing with DoorDash and what's going on with Wendy's and Reef? That's all ahead on this week's Monday Minute.


Monday Minute works like this. We're going to ask each other about headlines that have caught our attention about something that's been going on in the world of restaurants, off premise and technology that in some way, relate back to our book, Delivering the Digital Restaurant. Are you ready? Let's go.


All right, Meredith. Well, let's get into this one straight away. DoorDash, are getting into the virtual brand space. What's happening

here?


Meredith: DoorDash quietly put up two posts on their blog. In the month of July related to virtual brands. One about licensing your brand to become a virtual brand that they put then into host kitchens or other restaurants on their platform.


And another one at story about a restaurant who acted as a host kitchen and added a virtual brand to their lineup. And it looks like DoorDash is at least testing if not getting into becoming a virtual brand provider. So what's interesting about this here is of course Uber's been doing this for a long time. We talked about it in the book, Delivering the Digital Restaurant and when was that? Two years ago, two and a half years ago that we wrote that? So it's, it's not new. And of course, Nextbite, Virtual Dining Concepts and Franklin Junction have been doing this a while. But DoorDash has all of the assets in the world that you would need to make this happen. They've already got consumers, they've already got restaurants signed up, they have a whole bunch of data telling them what unmet search needs are and where things are likely to be successful. They know who's doing really well on the platform as a restaurant brand that maybe just needs to be in more places. They know which restaurants on the platform maybe have some capacity.

So it makes sense that they would try to utilize all those assets in order to [00:02:00] launch a new business and get even more out of them. However, as we know virtual brands are harder than they look. You've got to figure out how to get the host kitchen to execute well on whatever concept it is that you put out there. So we'll see how they go about doing that and whether or not this is something that they roll more broadly.


Carl: Interesting. Watch that one.


Meredith: In the meantime, it seems like 7 Eleven is now competing with DoorDash. You're our convenience store guy. Tell us what this means.


Carl: Well, 7 Eleven, as we know, already have a partnership with DoorDash in the sense that when people are ordering their food, they're also able to add items from convenience stores and 7-Eleven is probably one of the biggest players in this space.

Of course, they're the largest C store operator in the US as well. But there were reports this week that they have acquired a company called Skipcart. Now SkipCart is a company that. 2.3 million drivers across the US, a 98% coverage of the US. And [00:03:00] they are offering on demand deliveries.


And it makes sense, 7-Eleven are treating delivery very, very seriously.

And now with this added component of being able to have the logistics aspect of Skipcart, it makes a lot of sense. Now, I don't think this is going to stop the DoorDash partnership with 7-Eleven. I think that still makes sense for the DoorDash customer that wants some add-on item that perhaps a restaurant can't deliver.


But of course, when you add on an item from a DoorDash restaurant order, You're adding some time into this. And so now if I want to have my Gatorades given to me within 15, 20 minutes,


which is when you need Gatorade, I mean, you want it right away or

not at all. I agree. For sure. Or, like emergency diapers and stuff like that, that's the kind of stuff where you really do need to be able to get something a little bit faster and they'll be able to utilize their fleet in that regard.


So. I think what we're going to find just more broadly, not just in the C store space, is restaurants starting to explore logistic fleet options beyond just that, which comes from the 3rd party marketplaces and 7- Eleven are getting ahead [00:04:00] of the game on this one.


Okay. Let's go a little bit macro for a moment.

Grocery grocery online sales were up 17% in July, which is a bit of brighter news I suspect for the online food delivery world. That's had a, a little bit of a tough time of late. Tell us what's going on here.


Meredith: Yeah. So you remember that online grocery sales were flat to declining in the beginning part of this year and I think what was happening was a whole bunch of people used it during COVID. And as we got back to quote unquote, normal people stopped using it. And now the summer as we've had a rise in COVID incidents, again, people are being a bit more careful, maybe not going to the grocery stores often... using delivery.


And I've said it before. I will say it again. The more this uncertainty and like strange pandemic world goes on. The more these behaviors become ingrained in us. And we start to use them more consistently. I know I myself used more grocery delivery and restaurant delivery during the month of July when COVID got my [00:05:00] family.

And I think as these things happen, not only does it ingrain that behavior. Sales go up in these different types of, whether it's grocery delivery or Amazon Fresh or restaurant delivery, whatever it might be. And as those networks get better utilized, the cost of delivery comes down. So all of this uncertainty is helping build this industry to become number one, a sustainable consumer behavior, and then number two a more affordable approach to doing things.


While I don't love the COVID numbers going up, it is I think good for the consumer restaurant tech space to experience more growth and more usage


Carl: Yes. And hopefully Monkey Pox doesn't do anything to our food numbers either. Right.


Meredith: Why did you even bring that up?


Carl: I don't know. It's just the, it's the latest one.


Meredith: Not good. Okay. So, the next one's for you, Carl. So you remember Wendy's and Reef had this giant co-announcement together of all these ghost kitchens they were going to roll out across the us. And it sounds [00:06:00] like they're pulling back on that. So tell us a bit about that.


Carl: I'm a big fan of the Austin Powers movies. Do you remember like that $1 million and all this? Well, I think when we reflect back on, when was it? August last year. Reef and Wendy's came out with this plan to say they were going to open up 700 Reef vessels with the Wendy's brand by the end of 2025. Now there's a change in that particular message.


It was only actually in March where they were planning to open 150 to 200 units this year alone. And now they're saying it's going to be more likely to be about 100 to 150 by the end of 20 25. So, clearly something has happened here. There's a number of reasons I think behind it, you have to peel the onion a little bit here just to be able to understand perhaps what's going on, but Gunther Plosch the, the CFO of Wendy's has given a few indications as to why. He suggested that Reef's strategy change in having multiple brands operating out of their vessels is a cause of concern to them. And I can understand that, we, we experience a bit of that with Kitchen United [00:07:00] as well. And look, the reality is any of these big established brands are going to be concerned about having their brand co-mingled with


other brands. There's a whole range of operational complexities that come as a result of that. But ultimately, Reef where they of course are taking the responsibility of producing the food as well. It adds even more complexity into the mix. So I can understand the position from, from Wendy's on that angle.


The other side of this is that the performance of the US business hasn't been performing as well as what we've seen in the UK and in Canada, where they've been able to get AUV's in the range of half a million to a million dollars, which is, pretty good numbers, I'd say. And so maybe there's a factor of choosing the right locations. Was 700, the right number?


Maybe they just need to focus in on more densely populated areas and really establish some great business model success through the US locations. And of course, we've got to bear in mind that Reef is going through a lot of changes as well, both in terms of executives, but they're dealing with issues of being sued by vendors like JLL.


They've got issues around the permitting of certain locations. So I think Reef is having a bit of a reset. They're trying to figure out as many ghost kitchen models are how to really optimize their presence. But I think given the fact that this is working in places like Canada and the UK, gives the Wendy's Reef partnership


some hope of been able to figure it out in the US, but perhaps at a slightly slower pace.

Mm-hmm indeed.


Okay. Last question this week, Meredith, MenuSifu I think that's how you say it has secured $20 million worth of funding. First of all, who are they and why is this relevant

for everyone?


Meredith: Yeah congratulations to MenuSifu for closing a round in such a difficult environment. And the first thing that I think is great is: companies are still getting funded. Great companies who know what they're doing still getting funded. So it's, it's not all doom and gloom out there. You guys, you can make this happen. We believe in you. All these restaurant tech companies, you've got awesome traction and ways to go.

And frankly, I'm gonna get sidetracked here a minute. Carl, like. You just joined a startup.


Carl: I did.


Meredith: And they're so lucky to have you at Juicer. And I think that [00:09:00] that tells us there's a lot more innovation to be had in this space, but MenuSifu, what do they do?

They are a POS company that is rather niche. So they are focused on Asian concepts and in particular Chinese food concepts. And I think what that tells me is that there's an opportunity for tech companies to help restaurants better onboard and use the technology and get out of it, all the amazing things that these technologies have been designed to do.


So while we talk a lot about Toast and Square, and even the old mainline POS companies that have a huge amount of market share. Maybe they aren't the best tool for the job for a group of people who maybe speak a different language or who have a slightly different menu that needs to be organized differently.


You know, I was talking also last week to a company called Benchmark60, who specializes in helping restaurants understand all the data that's being spit out of their labor scheduling tools. When you see something like that, [00:10:00] again, I think it tells you, there is a lot of innovation, a lot of amazing things happening in restaurant tech, but there's also a lot of opportunity to help teach restaurants, how to use all this great stuff.


Carl: All right. Well, thanks everyone. As always for listening. We'd always love to get your comments on what you love, what you don't like and any questions that you might have for us here. And maybe any articles that you'd like us to feature on a future edition of the Monday minute, but until next time, thanks for listening.

And we'll speak to you again soon.



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