MONDAY MINUTE: July 18, 2022

Vertiports, Rest Tech Layoffs and Amazon back in the Restaurant Game? ll 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. Layoffs affecting the Restaurant Tech World


Related news articles:

Insider:

Nextbite:

ChowNow

Chowbotics


2. Grubhub and Amazon


3. Food inflation prices: Food at Home vs. Away from Home


4. Vertiports and the world of Drone Delivery Infrastructure


5. WowBao and Vending Machines


Transcript:

Carl: Vertiports, restaurant tech layoffs, and is Amazon getting back in the restaurant game? That's all ahead on this week's Monday Minute


Monday minute works like this. We've selected five headlines on things 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!


Well, as if it hasn't been a hard enough year already - layoffs seemed to have been a big topic in the news over the last week in particular Meredith- tell us about what's been going on.


Meredith: There's been a lot of layoffs happening in the restaurant tech world. I'm sure that everyone saw Nancy Luna's article about Sunday and then Nextbite... Chow Now has laid some people off. Gettir is laying off a bunch of their workforce. DoorDash shut down Chowbotics, which was a [00:01:00] robotics company that they purchased last year. It just feels like they're coming at us one after another and are a little bit everywhere.

I think it's natural for folks to raise the question. Well, why, why is this happening? Why are all these companies laying people off? And to feel a little bit worried about the future of the digital restaurant. The first thing I would say about it is we are still at the very front end of restaurant digitization. There's much more to come. And the layoffs are much more emblematic of what's going on in the broader economy and particularly in the financial markets.

And the reason I say that is if you look across industry verticals in technology, not just specifically with restaurants, there's layoffs going on everywhere. Crunchbase put out an article where they had analyzed all this layoff news saying that 143 US tech companies have laid off more than 24,000 people so far this year. That's through June. So, we're really talking about something that is affecting all of [00:02:00] technology, not just specifically restaurant technology. So point the first.

And then when you peel back the onion about what's going on with these companies, they're trying to do two things. They're trying to extend their runway if the financial markets stay unstable. So having a lower burn rate makes that easier to do, having fewer employees easier to have a lower burn rate. But then number two, they're really pivoting to position their businesses to focus on the core. So if you remember back to the Reef layoffs that happened gosh, a month ago, now when they made their announcement, they said, they're going to focus on core geographies and they're going to stop some product expansions that really got them into entirely new non-restaurant verticals.

And what they're saying there is, Hey, if we focus on the core thing that we're really competent at where our secret sauce is, which is restaurant technology, restaurant ghost kitchens. That's where we're much more likely to get to a profitable place sooner than if we're trying to, you know, innovate in 12 directions at [00:03:00] once.

And you'll see a very common theme among all of these announcements. You know, Sunday said the same thing. They're going to trim back some of their geographies, focus on some of their core technology. So you will see that fairly repeatedly.

So point the second. It is not that these companies are not doing well or they're not continuing to grow. They actually are. Many of them are enjoying very similar levels of growth as what they did last year when they were fueled by all that pandemic fire. But they're just really trying to focus that growth in a way that's much more likely to lead to profitability, which is what the markets are rewarding right now.


Carl: I think it won't be too long before great talent gets snapped up by other great organizations as well. And of course, keep in touch with us if we can help you in any way through either Learn. Delivery or our newsletter, but good luck to all those people affected.

And hopefully we won't be seeing too many more of these in the, the months come.


Meredith: All right, Carl we've got GrubHub and Amazon Prime coming together in a deal. Tell us about this.


Carl: Interesting deal. This one, [00:04:00] Meredith. Is this the last hurrah for Grubhub in the US to make a stand? Is this Amazon coming back into the fray after the failure of Amazon Restaurants?

We'll see. I mean, the deal is this Amazon Prime members are getting GrubHub + for free for a year, which is free deliveries through the GrubHub platform. And when you, you look at the amount of Amazon Prime members that are in the US, there's 150 million of them. So this has the potential to be a major shot in the arm of new customers for GrubHub.

Who've had a few rough years, I think, against the onslaught of DoorDash and Uber Eats. Now Amazon of course also benefit. They get 2% options in JustEat takeaway shares and the potential for that to grow to as much as 15% - it's in the form of warrants and pending the success of their partnership.


And when this news came out on July 6th, the, the JustEat stock jumped 20%, would you believe? Having said that I checked it before we went live on air and it's at its lowest point in five years right now. So, what CEO Adam Dewitt said is that he doesn't expect any earnings or cash flow benefit to come through this year.

It's probably gonna happen next year. But, you know, look, this [00:05:00] seems a win for, for both parties. As far as I'm concerned, it doesn't seem to be, stopping, GrubHub from being put up for sale. It certainly can't hurt them and their eventual valuation of course. And from Amazon's perspective, I'm curious to see what lengths data sharing may exist between them.


Are we gonna see any logistics utilization opportunities that may service both parties. Time will tell. Last thing I'll say is this, when Prime went up $20 this year, it's now $139 a year for customers. It went up $20. And so, the last time that happened was in 2018, I think back then it was $99.


And of course it launched in 2005 at $79. So when we look at GrubHub+, when we look at DashPass, when we look at Uber One's equivalent of the subscription program, where deliveries are free, I'm gonna bet my last dollar that we're gonna see some decent hikes in those costs in the years ahead for consumers.


For now we saw this week, DoorDash increase the minimum order levels, $12 for food, $25 for groceries because the economics don't work at those low basket levels. And so I think the subscription [00:06:00] economy remains alive and well Meredith.


Okay, our third question this week: we've been talking about inflation, it seems, in many of our Monday Minute articles, but some more data came out especially around food at home, food away from home. Tell us about what's going on with food inflation.


Meredith: I thought this was very interesting from the perspective of someone who used to run pricing at Taco Bell. So we would always think about our competition as we raised our prices if and when we needed to do so. But competition defined extremely broadly --not just as the other Mexican restaurants out there or the other restaurants out there. But in fact, the other ways that consumers can eat. Typically what you find in the restaurant industry is that if you increase your prices faster than grocery increases theirs, then consumers will flip back from eating at restaurants to eating at grocery.

Meaning instead of going out for lunch, they're going to take a brown bag sandwich. What the, couple of articles that we have in the notes highlighted is that inflation at grocery over the last year has [00:07:00] actually been higher than inflation at restaurant, which I found very surprising because you're right, we've been talking so much about restaurant inflation that in my mind it was this huge, big number that was pretty daunting and scary. But to find out that groceries have actually gone up even more at least puts restaurants in the context of it's still being a pretty good deal relative to the other choices consumers have.


Now, of course, too much inflation is bad, no matter where it is, for the consumer, but the fact that the other choices they have are also going up and in fact, going up more makes me feel a little bit better about what restaurants have had to pass through in this year.


Carl: I think consumers are reacting in choosing to go more towards pickup as opposed to delivery.

Right? So they've seen the cost through that way. And they're saying, look, I'm gonna accommodate it by taking the time out to be able to go and pick up my orders. We've seen a huge growth in pick-up this year for sure.


Meredith: Next article back to drones. Carl, I know you love your drones. Okay. So drones, very cool. Making a lot of traction, a lot of progress, but there's going to need to be some more [00:08:00] infrastructure. Article came out this week, talking about what kind of infrastructure we might need, and they introduced a new term that I have never heard before. So tell us about that.


Carl: Yes. Nick Upton from Food on Demand put out this article, talking to the importance of drone delivery infrastructure, and that gave some air time and we thought it'd be worthwhile talking about it as well, because everyone talks about drones and you see all the videos, but no one talks about the dull stuff about, well, how do you actually really help these drones get out of a restaurant and actually get in front of a consumer as well beyond just seeing it drop from 50 feet in the air .


He highlights a company called Drone Industry Systems that are trying to address the, the necessary infrastructure changes to really enable drone delivery at scale. Now they don't have anything available yet. All right. So again, bit, bit like the pipe dream thing we were talking about before, this is one of those things where they're working on their MVP right now, according to their, their website, but they are already taking pre-orders for something called a smart mailbox, landing pad.


Their CEO, Mike DiCosola is looking at the rooftop [00:09:00] as a way to address drone delivery. He says there's a lot of wasted space up there on the, on the roof. And it could be an important mode for drone delivery, but also drone dispatch. And that's where this term Vertiport comes from, which I kinda like, I think we could hashtag that one a bit.

They can also address things like the sensors, right? To understand the weather communications, LIDAR, and can really exist on a roof, much like airports have weather stations on the, the air control towers and things like that. And a restaurants roof could now act in a similar fashion


to advise on whether the weather is good enough to complete a delivery or not, which we know, weather and drones have a, a strong correlation to each other. Similarly, maybe houses will start to have landing pads built into the roof. There was one image. I'll bring it up here so that everyone can see sea of, of what that could look like.

I It doesn't look particularly secure if you ask me , but it gives you an idea of, of what people are thinking of. Enabling those kind of food packages to be delivered. Now, I think probably what we'll see is more like some form of chute being developed into people's houses so that it actually can be channeled down into the house and easily available.

But they're also developing [00:10:00] smart doorbells to enable customers to be aware as to when the drone arrives. So interesting stuff, changes to a restaurant roof, a customer's roof, weather stations, it all sounds like a lot of money a long period of time I think before we get the FDA approval to actually say, yes, this is the way we're gonna go forward.

you know, 20 years ago you wouldn't have seen the same amount of solar panels on people's roofs as you do today. So anything's possible with the right incentives in place. Okay. Last question. Wow Bao our friends over at Wow Bao, have had an interesting press release this week about their entrance into the vending machine market.

Tell us about that one.


Meredith: I love this. Now WowBao, as you may know, is a virtual restaurant company. They do have a few brick and mortars in Chicago, but they've rolled out nationally extremely quickly by making their product available to other restaurants to add into their kitchen and sell a WowBao product, essentially out the back door.

And they do this in part via equipment and then a really well developed supply chain of the bao themselves, [00:11:00] getting to the restaurant. Now, once you have that cooking methodology nailed and you have that supply chain nailed. The next logical question is how else can you combine these two assets? And the answer is vending machines.

So I am really excited to see one in person soon and be able to order my bao fresh made right there on the spot.


Carl: You are a sucker when it comes to vending machines, I've seen,


Meredith: I love vending machines,


Carl: sprinkles cupcakes from a vending machine.


Meredith: I mean, really anything, anything that isn't a candy bar.

I am like, "wow, that's in a vending machine!" And I, I will buy it. It's true.


Carl: Absolutely. Well, we'll, we'll look forward to seeing that sometimes soon you'll have to record it for everyone to see and we'll put it out on social. Okay, everyone. Thank you as always for listening to us, hopefully you found this week's edition of interest and value.

Please leave your comments below. Any questions, anything you'd like us to cover on a future edition, please. Of course email us, but until next time, thanks for watching.

The Monday Minute is available for you to follow and subscribe wherever you listen to your [00:12:00] podcast. Watch us on YouTube and follow us on all our social media channels. Thanks for listening.


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