Restaurateurs And Delivery Apps Clash In Fight To Survive
As delivery becomes critical to the struggling restaurant industry, restaurateurs and regulators are scrutinizing high delivery fees. Major cities like New York, Chicago, Los Angeles, San Francisco, and Seattle put a cap on delivery app fees until lockdowns were lifted. Now that states are reopening but restaurants are still operating at reduced capacity, delivery fees are taking a big chunk of their bottom line. In Columbus Ohio, Pierogi Mountain’s owner Matt Majesky primarily used Grubhub until he calculated that Grubhub was collecting more than 40 percent of his average order. Grubhub spokesman Peter Land said Mr. Majesky’s fees were higher than usual because Majesky agreed to take part in marketing programs that increased the restaurant’s visibility on the app. In Denver, owner of Freshcraft restaurant Erik Riggs sued Grubhub for creating a website for his restaurant without consent and labeling the restaurant as closed on the site or “not taking online orders” when this was not true.
Grubhub has since removed the language about similar restaurants “not taking online orders,” but these deceptive practices sting at a time when analysts predict that 85% of independent restaurants will ultimately close as a result of pandemic lockdowns. At the end of May, restaurant spending fell by about 35% from a year earlier, while delivery service revenue rose by nearly 140%, according to data from M Science. For most restaurants, the fixed costs of labor, food, and rent swallow about 90% of total revenues. With that business model, many restaurateurs say that delivery service fees of 20 to 30% on each order are simply unsustainable. Even with fee caps, a recent survey of San Francisco restaurateurs found that 62% percent were losing money on delivery and takeout.
New York City Establishes $3 Million Fund For Small Restaurants
To help restaurants recovering from the pandemic, New York City announced a new program that will give $3 million to 100 small restaurants in 27 neighborhoods, including Bed-Stuy, East Harlem, Mott Haven, Jamaica, and Stapleton on Staten Island. Eligible restaurants can get up to $30,000 specifically for helping with payroll costs. Restaurants that take advantage of the funds are required to pay workers a minimum of $20 per hour before tips until the end the program. Restaurants must also provide workers with longterm financial support and offer free meals to members of the community suffering disproportionately from COVID-19 such as high-risk seniors and low-wage essential workers.
Eligible restaurants will not have immediate access to the funds, as restaurants must pay employee wages up front then file documentation of wage payments for reimbursement. NYC’s Human Resources Administration is overseeing the program and will provide up to 25% of the total funds awarded up front to eligible restaurants. The program will favor restaurants that can “commit to ‘high-road’ employer practices” after the program ends, including race and gender equity initiatives at every level of employment and paying every employee the minimum wage of $15 an hour before tips within five years of the restaurant’s reopening.
Starbucks Closes 400 Stores, Amps Up Contactless Transactions
Over the next 18 months, Starbucks plans to close 400 locations and ramp up its contactless services, including curbside pickup, drive-thru, and mobile ordering. The move comes as COVID-19 influences consumer behavior and buying decisions. “As we navigate through the COVID-19 crisis, we are accelerating our store transformation plans to address the realities of the current situation, while still providing a safe, familiar and convenient experience for our customers,” said Starbucks CEO Kevin Johnson. .
Black Sheep COVID-19 Playbook Guides Restaurant Reopenings Worldwide
Black Sheep Restaurants, a hospitality group operating 25 restaurants throughout Hong Kong, developed a “COVID-19 playbook” early on in the coronavirus crisis. The group had survived other viral epidemics, and the 17-page guide was intended to be shared internally only. But management later decided to make the playbook available online for the benefit of other restaurateurs. With guidance on everything from masks and temperature checks to dealing with unruly customers, the playbook has been embraced by restaurateurs around the world seeking to safely reopen their businesses. Restaurants consulting the Black Sheep playbook include Eleven Madison Park in New York City, TIRPSE in Tokyo, Room 4 Dessert in Bali, and Chefs Warehouse and Cookery School in Cape Town, Africa.
High-End Restaurant Delivery From Ghost Kitchens May Be Here To Stay
Krispy Rice is just one of many new fine-dining restaurant concepts with no actual dining room. The bento box delivery service comes from SBE, the hospitality company behind California’s popular Katsuya sushi restaurants as well as Bazaar by José Andrés, Umami Burger, and others. Here’s how it works: when a customer places an order at Krispy Rice, the order is sent to the ghost kitchen nearest their location, then the meal is prepared and delivered. A series of ghost kitchens fulfilling Krispy Rice orders broadens the restaurant’s delivery area, reduces delivery times, and keeps the food fresher, helping to solve the problem of plated restaurant dishes not traveling well.
Beautiful and functional packaging is key, and the concept has been catching on. Consumers have come to rely on restaurant delivery, and many are willing to pay a premium for high-quality, expertly plated meals delivered to their homes. Even Uber founder Travis Kalanick is getting into the game. Since leaving Uber, Kalanick has been opening CloudKitchens in major metropolitan areas to serve as ghost kitchens for restaurant brands. SBE is also poised to rapidly grow its ghost kitchen footprint, as the company is nearly half-owned by Accor, the world’s biggest hotel chain. After successful trials in Los Angeles, SBE plans to expand into New York and other cities. “We’re looking at 34 to 35 locations by the end of the year and each of those locations brings five brands to the table,” says Martin Heierling, SBE’s chief culinary officer.
Robots Offer Helping Hand At Dutch Restaurant
After seeing robotic waiters in China last fall, Shaosong Hu adopted the idea for his Dutch restaurant, the Royal Palace. Hu says that the robots will help ease service for both staff and customers at his pan-Asian restaurant locations throughout the Netherlands. The red and white robots will serve food and drinks and return used plates and glassware to the kitchen.
Dutch restaurants have been closed for more than two months and, as of Monday, reopened restaurants are limited to a maximum of 30 customers. As he reopens, Hu says the robots will help maintain new social distancing rules and help curb the spread of COVID-19. When asked about whether the robots were stealing human jobs, Hu responded that the robots are not replacing humans. On the contrary, the robots will help free the Royal Palace staff from mundane tasks, he explained, so that the staff is able to give customers even more personal attention.
PPP Flexibility Act Goes Into Effect, Aiding Restaurant Industry
President Trump has signed the Paycheck Protection Program Flexibility Act, a boon for America’s struggling independent restaurants and small businesses. The Paycheck Protection Program was first signed into law in March, but the $2.2 trillion coronavirus relief packaged had allowed businesses only eight weeks to spend federal loans. The new bill extends that time to 24 weeks, aiding independent restaurants, many of which have only just begun to resume limited dine-in service. Originally, PPP also required that businesses spend 75% of loans on payroll and 25% on non-payroll costs, but the new act change eases those numbers to 60% and 40%, respectively.
Both the National Restaurant Association and the Independent Restaurant Coalition have been lobbying for these changes for weeks. The travel industry will also benefit from the changes, says Tori Emerson Barnes, executive vice president of public affairs and policy for the U.S. Travel Association. Travel businesses have continued to incur expenses with nearly no revenue due to lockdowns and social distancing requirements. Barnes even called for PPP to extend eligibility to non-profit and quasi-governmental entities.
Restaurant Sales Show Signs Of Gradual Recovery
The week ending April 12 marked the restaurant industry’s lowest point during the coronavirus lockdown with a year-over-year drop of 41% in overall sales. But six weeks later, the week ending May 24 saw only an 18% drop in sales, according to market research company NPD Group. About 320,000 U.S. restaurants are now permitted to resume on-premise dining, according to NPD, and sales have slowly begun to climb.
Drive-thru lanes, which usually account for about 70% of restaurant chain transactions, saw the earliest sales increases. Fast-food restaurants started seeing positive same-store sales growth around mid-May, according to Black Box Intelligence reports. Full-service restaurants, however, have taken longer to recover. The week ending April 12 saw a 79% decrease in full-service sales compared to last year, the lowest point during lockdown. As of the week ending May 24, transactions were down only 42%, a more gradual recovery. As states around the country continue to phase in dining-room service, analysts expect all restaurant sales to continue to rise.
Owner of Popular YaYa’s BBQ Killed By Louisville Riot Police
Last Sunday night during police brutality protests in Louisville, Kentucky, the fifty-three year old owner of YaYa’s BBQ, David McAtee, was shot and killed by local police. In a statement, Police Chief Steve Conrad said someone shot at officers, and officers “returned fire.” The identity of the suspect or anyone who returned fire has yet to be confirmed. While video evidence appears to show that McAtee discharged a weapon, it is unclear whether he shot at officers.
YaYa’s BBQ is located across the street from Dino’s Food Mart, where a large crowed had gathered on the evening of the shooting. McAtee had said he was planning to one day build a restaurant after buying the lot near Dino’s at 26th Street and Broadway. McAtee’s mother and nephew told reporters of the local newspaper, The Courier-Journal, that McAtee regularly fed police for free and donated food to organizations in the neighborhood. Louisville Metro Council President, David James, said McAtee was a personal friend, someone who knew what was going on in the neighborhood, and often gave free food to people in need. McAtee’s death has been troubling for a community still protesting the killing of Breonna Taylor, a young black emergency medical technician killed in her Louisville home by white police officers.
James Beard Foundation Announces 2020 Media Award Winners
The James Beard Foundation announced its 2020 Media Award winners online this year. Although the annual in-person gala was cancelled due to COVID-19, the Foundation recognizes the positive impact that the James Beard Foundation Awards can have on the careers of winners in the book publishing, broadcast media, and journalism. Among this year’s highlights, Josh Niland’s book The Whole Fish Cookbook: New Ways to Cook, Eat and Think won both Book of the Year and in the Restaurant and Professional category. In broadcast media, chef Roy Choi won Outstanding Personality/Host for his socially conscious video series Broken Bread, and Pati Jinich won in the Television Show in Studio or Fixed Location category for the second year in a row with her TV series Pati’s Mexican Table – A Local’s Tour of Culiacán.
