Wonder buys an apron, How Amazon's anti-trust suit affects restaurants and a $24M Blackbird Boost.
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 last week’s hot news stories - subscribe today to The Digital Restaurant and register at www.deliveringthedigitalrestaurant.com for more bonus content.
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Related Article: A Resy Founder Expands His Loyalty Program for Restaurants
Wonder buys an Apron How Amazon's antitrust lawsuit affects restaurants. And a 24 million Blackbird Boost -that's all ahead on this week's Digital Restaurant.
The digital restaurant works like this. We're gonna ask each other five questions about headlines that affect the worlds of restaurants, technology, and off-premise, that in some way tie back to our book series, Delivering the Digital Restaurant. Are you ready? Let's go.
Good morning, Meredith. How you doing today? I'm very good. How are you, Carl? I'm feeling great. You know what? You, you noticing what I'm wearing? You see? See, I've got some swag on me here. Mr. Alexander gave some WowBao stuff. I've got a little squidgy Bao bun and some look. I've got a little this, I've got my Wow bao drink.
It's great. Uh, the guys, oh my goodness. I was, I was over in, uh, Chicago last week speaking to their team, and so I feel like I've been kitted out and I think this is now our chance to encourage everyone to send us swag, you know, let's give Danny Klein a run for his money. What do you think?
My dog would look very cute at in a Bao Halloween costume.
I'm just putting it out there, Geoff Alexander. Okay, very good. Well, we've got a busy week this week. Lots of things going on. You've got the first question, so let's bring that up. Wonder has acquired Blue April for just over a hundred million dollars. Are you excited about this one? I think it is such a brilliant move by Wonder.
You know, we've talked previously on the podcast about the real asset that Wonder has created, which is this incredible commissary that can put out high volumes of par cooked food. From top chefs, from amazing local restaurants where they have got the rights to the recipes and they can just put out tons and tons of volume of really good food.
And so the question when you have such a beautiful asset is: how do you get as many points of distribution as possible, right? And they first tried with the trucks, cooking on trucks, turned out to not be a thing, and so then they went to what they call the HDRs or high density restaurants. Those are the ones that they're opening up throughout New York, and we're definitely starting to see a bunch of those happen but how do you go faster and wow, what a way to go faster. You buy a pre-existing business who already has a bunch of households signed up and you just . Send your food out instead of their food. So it'll be really interesting to see how the Blue Apron consumers, react to the new product line that's made available to them by Wonder, how quickly they take up on it, if they have high levels of repeat.
, I think it is a brilliant, brilliant move. They of course got it for a song relative to how it IPO'd , so I'm very excited for them. I think it will turn out to be a good thing. Now, so having said that, these meal delivery services have not exactly worked, which is why Blue Apron was available for a song, and it will be interesting to see if having this differentiated product that Wonder has available makes them a much better consumer proposition.
Next question is for you Carl. A company called Blackbird acquired $24 million in a Series A funding round. That's a pretty good Series A. So tell us what people love about them. Yeah, it's quite a groundbreaking development, to be honest, in the restaurant tech space. Because Blackbird Labs -it's a high tech loyalty startup and it's got a pretty impressive founder Ben Leventhal, who is of Resy and Eater fame - he's successfully raised this $24 million. So it's always a bit of a surprise, I think in 2023 when we see these types of investment deals.
So we should dig into exploring what is it that these guys are seeing as something to be excited about. So it's not just another loyalty program, they, they're employing cutting edge technology to help independent restaurants collect data about their customers. Which again, you might say, well, isn't that what most loyalty programs do?
Well, this is a little different because it's connecting blockchain technology and actually has its own digital currency, something called $FLY. And when the customer visits a Blackbird enabled restaurant, they basically simply tap their phone to an NFC reader
and as a result of that, they start earning benefits and perks. And this could range from anything from free drinks to special off menu items, and maybe even the ability to text the, the restaurant in real time. But here's the kicker, both customers and restaurants earn that digital currency. It's not just the customer.
Uh, so it can be used to purchase rewards or even incentivize data sharing. So imagine a mutually beneficial ecosystem where customers are encouraged to share their data across multiple restaurants, thereby earning triple the amount of this $FLY currency. So it's not just a a loyalty program, it's like a data sharing platform as well. It's currently operational in 22 restaurants. 60 more have signed up and a lot of them are in the kind of trendy spots in New York, and I think they've got other markets in LA, and the Bay Area. But it's interesting for me how loyalty programs are starting to branch out of the traditional mechanisms that we've been used to in the past.
You know, this isn't about just rewarding repeat business, it's actually about creating a network of data sharing. And, and I think as we advocated for in The Path to Digital Maturity [Book], when you approach the concept of loyalty, not just about a means to recognize and support your most loyal customers, but also to acquire data and to encourage increased purchase rate for every customer segment that is signed up.
I think that is something to be excited about. I mean, Ben says "loyalty and connectivity are the next frontier", and basically with this $24 million, I think he's gonna be supercharging his way to get into that.
Okay. Well, before we go on to the third question, Meredith, I, I'm gonna have to put out my usual request because we're waiting for some folks that haven't given us a five star review or perhaps not even [00:06:00] subscribed to the Digital Restaurant - it's really important for us on the podcast here to see what you guys think of the podcast that we covering, the stories that matter to you most.
What things would you like us to cover? Put that down in a review, give us a five star, and if you haven't subscribed, -please do so it's important for us to be able to ensure that we are getting access to all the right folks out there, and you listening are definitely the right folks. Okay, third question this week, Amazon, this doesn't sound like the most exciting one, Meredith, but you, you're gonna tie it together for us because there's an antitrust lawsuit that they're involved in and you think this can have big implications for restaurants.
Tell us more. I mean, I thought it was so exciting. So I guess that tells you how much of a nerd I am relative to what you've got gone going on over there. As soon as I saw this headline, I was like, oh my gosh, this is like potentially life-changing for restaurants.
Uh, I know that there was a lot of news this spring when the letters from DoorDash started coming out, telling people that they needed to price at parity in store or that potentially the, algorithm might deprioritize them. Note the passive voice there. The algorithm will do it. Not, not DoorDash, right? And then subsequently, I don't even know how many restaurants I've heard say, oh, I've heard that if you, if you do self delivery, it will deprioritize you on that marketplace. Nobody even knows, right?
They say this in this like hush whisper, like, I've heard this is true, but nobody's really sure. Well, what the FTC is suing Amazon for is those two things. Fascinating, right? So, in the article from the Wall Street Journal, it says, the Federal agency and the States alleged that Amazon violated antitrust laws by using anti discounting measures that punish merchants for offering lower prices elsewhere.
So, Sound familiar? Mm-hmm. , the government also said sellers on Amazon were compelled to use its logistics service if they wanted their goods to appear in Amazon Prime. The subscription program whose perks include faster shipping times. Such quote unquote, tying the complaint says, illegally restricts seller's choices and reduces product selection available to Amazon's rivals.
So this case is all about how Amazon works with their merchants. In the case of DoorDash or Uber, that would be how those marketplaces work with the restaurants. Right? And those are the exact same two things that we've been hearing about in the restaurant industry. So early days, they've just filed the lawsuit.
We don't know how it's gonna turn out, but I will be watching this one with intense curiosity because I do think it's very exciting because it will tell us a lot about what DoorDash and Uber are able to do with restaurants going forward. You've convinced me. I agree. I see why we've now got it on the podcast.
This makes so much sense. You are very smart and I always tell this to you so well done you.
Okay? And, and now, DoorDash Carl, DoorDash is incentivizing guests to dine out. That's a surprise, aren't they about delivery? Well, it's another experiment. I think it's fair to say. It's a feature called Dine out, and it's currently under some small scale testings as DoorDash tend to do. But who knows, it could be something that becomes bigger.
It's very different to their traditional delivery centric model because they're incentivizing customers to actually dine in at certain restaurants. So customers who check in at eligible restaurants through the DoorDash app can therefore earn DoorDash credits. The company hasn't disclosed which restaurants or users are currently eligible for this.
So, um, I don't where it's happening in this test, but they haven't talked about the size of the discounts but supposedly they can be quite significant. And there was a user that reported receiving a $20 in credit for doing this in the Bay Area. So at least we know there are some tests happening in the Bay Area.
Um, how does this differ from traditional loyalty programs or even DoorDash's own dash pass model? Well, we know the traditional loyalty programs often focus on repeat visits and long-term engagement, offering points, rewards, as we were talking about before. But this dine out feature is providing immediate gratification through these credits, right?
So directly encouraging in-person dining experiences. And I think as a result of that, they're again trying to connect the customer to think "When you think of food, think of DoorDash. When you think of eating in any occasion, whether it be when you're at home or in the office, or perhaps when you're going out, think of DoorDash."
It could be a multifaceted approach as well, , with their restaurant partners because not only does it give customers more reasons to use the DoorDash app. It also provides restaurants with another avenue to attract patrons, right?
So the check in function be a, could be a goldmine of data for them if they share the data -but one way or another, DoorDash are finding more and more ways to be able to engage with their customers and the restaurant partners to be able to drive more revenue.
Okay, last up this week. The annual QSR drive-thru report came out. I know we always look at this with some interest and of course your old company, Taco Bell, were in the news having got another win. But you, uh, dug into this and have a few insights to share. Indeed, I, I do love a good report full of data.
It's excellent. They survey a whole bunch of consumers about their experience in drive thru across many, many different brands every year and are able to talk about what the experience of being in a drive-thru is like, which I think is fantastic.
So they focus in on the things that matter most in drive thru. So what I wanna talk about in particular are speed and accuracy. The headlines that I have seen have talked about, oh, Taco Bell, having the fastest service time, three years in a row , huge improvement in fastest total time. That page that you're on there right now shows in 2021.
Taco Bell is at number five in 2022, they were at number two and in 2023, Taco Bell coming in at number one. That is fantastic, but let's flip forward a few pages, Carl. I've got my, I've got my marching orders here. I know what you, alright, now we're looking at accuracy. Taco Bell is, almost nowhere to be seen.
Yeah, they were number, number two and 21. But as their speed improved, their accuracy apparently relative to the other folks in the study got worse. They're no longer in the top five on order accuracy, which kind of leads you to believe that there's a little bit of a trade off between speed and accuracy and, you know, kind of intuitively makes sense that the faster I try to do something, the more mistakes I'm gonna make.
I know that's personally true for me. So I'm guessing it's true for a lot of people, but some very interesting things in this report because it delved deep into innovation locations and in particular talked about the innovation locations of McDonald's and Taco Bell and for both McDonald's and Taco Bell their innovation locations dramatically improve times, right? And a full minute and Taco Bell, it's almost like astounding. Two minutes and 31 seconds. That is a really fast location and I would like to be a consumer going through that drive-thru. So let's see what happened. Accuracy. Again, at those innovation locations, what we see is that for McDonald's, you saw that same.
We were able to get faster, but accuracy got worse. For Taco Bell, they went from 85% accuracy in the brand overall. So the rest of the restaurant fleet. But at the innovation locations, it actually got better, 88% accurate. And now, I don't know, I mean, I haven't worked in Taco Bell in many years, so I can't tell you exactly why this is happening.
But as I look at pictures of that Defy building, which is the innovation location that they went to, There's some really interesting things going on there. One is that they've got the channels separated out. So from a just pure process perspective, it's less confusing. Um, but then number two, you know, we've seen, uh, pictures of people holding up their phones to scan in their order for their mobile pickup.
And so there's just, there's less chance for a human to be translating that data from one spot to another and make a mistake. It's happening automatically through, um, through digital transition. I think if I were to guess that they are innovating a lot on the technology side so that they can improve both speed and accuracy at the same time, and I'm excited to see in next year's study now if they're able to roll some of those learnings out from the innovation location to the rest of the fleet.
The scaling of these things also is a challenge though, right? It's then a case of being able to take those results and Absolutely, especially if it turns out that the entire answer is in Taco Bell. They have four drive thru lines, but they're not gonna be able to roll that out across the rest of the fleet.
But if, if it's really the technology that's making those improvements, then that'll be exciting to see them build a case and roll it out.
Well, look, uh, that's it for this week's Digital Restaurant. Uh, would love to get your take as to what you think is behind Taco Bell's success there.
And do you think Blackbird are onto something with their new loyalty program and what they're gonna use their $24 million to support with their growth? Lots of things happening in this space. Uh, but as ever, please leave your comments below. Let us know what you'd like us to cover on a future edition. But until next time, thanks for listening.
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