Welcome to the first edition of The Weekly Rush, where we cover notable happenings in the industry. This week's coverage includes fast food ordering technology, updates on the meatless-protein market, and global developments in delivery.
Technology adds Personalization to the Experience of Ordering Fast Food
- Earlier this year, McDonald’s acquired machine learning company Dynamic Yield for $300 million. In the next two weeks, the fast-food chain will roll out new Dynamic Menus across 8,000 U.S. locations.
- The first drive-through only KFC in the world will cater to customers who prefer to order meals via mobile app.
- Chipotle began testing AI-powered voice assistants for phone orders in early 2018 and is expanding to 1,800 locations this year. The fast-casual restaurant plans to implement the voice system to all U.S. locations by the end of the year.
McDonald’s is more known for Happy Meals and Big Macs than Big Data, but the fast-food empire took a huge dive into machine learning in March by acquiring a machine learning company for $300 million. For McDonald’s, the near future involves Dynamic menus that will pull data insights to provide a more personalized customer service experience, all while ordering from your car. The menus will use algorithms to crunch data like the weather, time of day, wait time, and historical sales data to do things like suggest a hashbrown with your Egg McMuffin, much like a server could if you were sitting at their table.
The acquisition of Dynamic Yield highlights a larger theme of the fast food industry: Chains are moving toward robust technology adoption in all aspects of the restaurant experience. And the importance of personalization in the fast-food industry is a huge factor for developing and acquiring new tech.
Chipotle's AI-powered voice assistant also makes suggestions to customer's orders and is able to learn new combinations with each transaction. For Chipotle, the adoption of this voice assistant is all about convenience for customers and labor management.
New tech adoption can be seen all over the world for fast food chains. In Australia, KFC is set to open its first-ever drive-through only location. This test is geared toward the rapidly growing delivery sector and popularity of mobile ordering.
“Click and collect is just becoming such a natural part of everyday life, and people are much more comfortable purchasing on a mobile phone now than ever before,” said Kirsti Woolrych, KFC chief marketing officer, to news.com.au.
Plant-Based Protein Companies Continue to Grow
- Dunkin’ is expanding its meat-substitute options in Manhattan with a Beyond Meat sausage breakfast sandwich. The chain began experimenting with vegetarian sandwich options earlier this summer with Morningstar Farms, although that test was much smaller.
- Impossible Foods announced that it is no longer experiencing a product shortage, but it may still take a while for customers to see the Impossible Burger back on local menus.
- Impossible Foods plans to launch the Impossible Burger in select retail stores in September.
The world of alternative protein is quickly gaining momentum. What started off as personal sustainability effort has become a global initiative as restaurant chains like Burger King and McDonalds add plant-based meat options to their burger menus.
The top competitors in the plant-based meat game are Beyond Meat and Impossible Foods. Impossible Foods raised $300 million in capital in May while Beyond Meat went public with the biggest IPO since 2008 (but mixed quarterly results led to a stock dive).
Impossible Foods has scored numerous large-scale deals including Burger King, White Castle, and Qdoba. But until now, the company had been unable to sell the product in grocery retail stores because of a key ingredient that had yet to be approved by the FDA.
On Thursday, the FDA concluded soy leghemoglobin, the protein-based color additive in Impossible Burgers, was safe. Impossible Foods plans to have this product on grocery store shelves by September.
This approval means that Impossible Foods will now be able to compete in stores with its chief rival, Beyond Meat.
- After an outpouring of criticism regarding their tipping policy, DoorDash announced a change to stop subsidizing delivery workers’ base pay with customer tips.
Amazon.com, Inc is planning a foray into the burgeoning online food delivery business in India this year in a move that could raise competition in an increasingly crowded market.
Starbucks Coffee Co. will expand its delivery, Starbucks Delivers, throughout the U.S. in early 2020 through an agreement with Uber Eats.
Despite a decrease in profits due to competitors, Grubhub is signing up more restaurants than ever.
Restaurant companies continue to expand their digital offerings to make delivery and off-premise ordering easier for customers to keep sales flowing. While delivery remains largely incremental, it continues to produce a higher average check.
In the gig economy, drivers and delivery workers sometimes get the short end of the stick. People who deliver food Uber Eats, Instacart, and Grubhub collect tips on top of a minimum payment, it was discovered that DoorDash was using tip money to pay their workers — instead of the tips coming in on top of the minimum payment — resulting in less pay for contractors and less of an expense for DoorDash.
DoorDash CEO Tony Xu announced the changes to the tipping policy via Twitter on Tuesday night: “We thought we were doing the right thing by making Dashers whole when a customer left no tip. What we missed was that some customers who *did* tip would feel like their tip did not matter.”
According to Vox, Amazon Inc. may have also been guilty of using tip money to pay drivers. While this is up for debate, Amazon exited the U.S. food delivery space (Amazon Restaurants) in June of this year, but is growing its delivery presence in India.
Starbucks Coffee Co. is also expanding its delivery presence through Uber Eats. The company believes that delivery is a long-term growth opportunity because customers are increasingly relying on convenience when ordering food. Through this partnership, Starbucks is leveraging one of the largest global delivery services to collaborate on innovation and tech integration.
Another large delivery service that has been in the news as of late is Grubhub. The company's profits were down $1.3 million in the second quarter. With 125,000 partners in the U.S. and London, the company cites entering smaller markets, not recent bad publicity or lack of customers, for the dip in profitability.
Why It's Important to You
- The fast-food industry is focusing on personalization through tech — you can too, just on a smaller scale. Restaurants that focus on improving the customer experience are more likely to see an increase in sales. Choosing to integrate new ordering and payment technology will not only improve the customer’s experience but will positively impact the company in more ways than one.
- For restaurants looking to restock their Impossible Burger supply, the wait might be a while. Continue to use alternatives, and read this blog for more ideas on how to creatively handle the shortage. It's possible that we'll see an increased interest in the burger now that all its ingredients are FDA-approved, but it's also possible that when customers are eventually able to buy the product in store, they will be less likely to order it out.
- The statement Starbucks made is true: Delivery is a long-term growth opportunity because customers are increasingly relying on convenience when ordering food. When it comes to choosing how to incorporate delivery into your restaurant operations, restaurateurs have two options: build your own delivery component or sign up with a third-party delivery vendor to facilitate all aspects of order-delivery in your restaurant.