"this most stubbornly human industry" | spooky kitchens #43

Happy weekend y’all,

First thing’s first: this one’s late because there’s more words in it. Get ready for a read — or at least, put your scanning eyes on.

As a quick reminder, all green text is linked.* (*not always to anything important)

So what’s happening in this EOY-flavored newsletter? (TL;DR)

• First, we consider the uncomfortable yet inevitable question of automation.

• Then, we look back at this year in metaverse, remember not-so-fondly the days of third-party menu scraping, and line up further questions for tomorrow’s restaurants.

automation is the next uncomfortable, yet inevitable, evolution for restaurants

“Machine-made biryani? How robotics and automation is taking over cloud kitchens in India” Sanghamitra Kar, Money Control.

(The above article is interesting, but it’s more of an introduction to the topic and I’m not going to talk about it specifically at all. Read at your leisure.)

So, a quick disclaimer to start here: I’ve been in conversation with an unnamed food robotics company about heading up PR for them. If it sounds like a strange fit, given the combined cynical and skeptical perspective of this newsletter towards just about everyone and everything — you’re right, it’s kind of a strange fit. But the more I spoke with them, the more I realized that “a strange fit” may be what I’m looking for.

I don’t like saying that anything is “inevitable” — I’m an anti-absolutist, a non-fatalist, a pro-”anything can happen & anything will happen” kind of person — but the robotic automation of ready-to-eat food production looks as inevitable as any tech-spurred economic development has ever looked. More inevitable even than third-party food delivery or ghost kitchens appeared to be, way in the back-when. That’s because there’s an element of necessity to automation. Famously, fewer people are working in foodservice now than at any other point in the last decade. Restaurants from mom-and-pops to McDonald’s are engaged in a years-long labor slump; one that is unlikely to be assuaged in the long run by stagflation, recession, or whatever mysterious brand of market turmoil appears to lay in wait in 2023. That labor problem has a host of potential solutions — not least among them a bitter truth, that the fundamental restaurant model that relies on paying minimum or sub-minimum wages and tips for the vast majority of staff has reached a breaking point and demands a comprehensive rethinking — but one of the readiest and raring-est solutions to go is robotics. Still, it can be a tough pill to swallow.

Big picture, I see automated kitchens similarly to how I see ghost kitchens; as an addition to the restaurant industry at large that doesn’t necessitate a large-scale subtraction of another part of the industry. The automated restaurant model can very well be just another horse in the stable, a new “nontraditional format” that restaurants can deploy when it makes sense to do so, but doesn’t supplant traditional restaurants. Still, the potential for automation to domino into a systemic subtraction — particularly the displacement of an enormous, essential workforce a la the American manufacturing industry — remains, dependent upon the nature of this evolution. Robotics startups and the foodservice businesses that eventually acquire and/or employ them should own their responsibility in shaping the future of the industry. If this product is to enter the market on a mass scale, then its makers must not only entertain, but actively engage with this uncomfortable conversation.

In the course of that conversation, the same questions will (and should) be asked of food robotics companies as were asked of ghost kitchens in their up-and-coming years: How do they compete with traditional restaurants? Will these labor-light (or labor-less) models cost people jobs, especially at large chains with equally large workforces? What does the responsible version of this evolution look like? And is that a version you can sell to both investors and the public?

That last question is part of what draws me to this corner of the restaurant tech industry. Because it’s all too easy to imagine a VC-flush robotics company coldly flooding the restaurant market with a cheap-enough and effective-enough product that not only fills jobs that need filling in today’s restaurant economy, but swallows jobs that people want or need in tomorrow’s. Little old naïve me has to believe there’s another way, if only to mitigate that bleak, inertia-driven outcome. I don’t know what that way looks like, but it exists, and the road to it begins with public discussion of this important, nuanced, and rapidly-approaching issue.

As for my own potential part in that discussion, well, this piece of writing would probably be considered by many (including a loud part of my own mind) to be ill-advised before the completion of an interview process. Heck, even after the completion of the process. However, I think (little old naïve me) they’ll understand that this is what I’m wrestling with in regards to robotics and automation, and that I’m excited about tackling those questions, whether with them or, separately, through this newsletter. Ultimately I think there’s obvious and enormous potential for the space — likewise, enormous risk in its implementation. Smart companies will account for both, crafting and deploying this model while never forgetting the personal impact it can have on this most stubbornly human industry.

01110011 01101001 01100100 01100101 01110011 (sides)

🙃 The metaverse began 2022 with a bang, and ended with, what else, a whimper (“Restaurant brands that entered the metaverse in 2022” Joanna Fantozzi, NRN). The first rise and fall of the metaverse hit hard and fast. Thanks to early leaks that Facebook would soon officially rebrand to “Meta,” airwaves at the end of 2021 were filled with the futuristic new buzzword “metaverse,” exposing the digital reality concept (with wildly varying degrees of understanding) to the public at large. In 2022, companies — including large restaurant chains — experimented within the limited Gen 1 worlds on offer: primarily Virtual Worlds (Meta), Roblox (mostly a game for kids up to about 12-15 years old), and Fortnite (another video game, with fewer meta-trappings but also a wider, cross-generational base). Hand-in-cyber-hand with NFTs and crypto, the tech and business communities frankly wouldn’t shut up about the metaverse, despite lackluster demos and limited-return marketing stunts.

Then, somewhere around midsummer 2022, the metaverse news mostly dried up. There were no more big Wendy’s or Chipotle activations, no more announcements of new metaverse-only restaurants or virtual brand chains. NFTs tanked and then crypto collapsed (several times) over a short period, in a juicy comeuppance that some sadists (me) are still savoring to this day.

The problems with the metaverse were always readily apparent. The biggest among them being that (A) the platforms were not (and are still not) remotely capable of achieving the promise of a shared, digital, commercial world; and (B) that the existing market of ready-and-willing metaverse consumers is extraordinarily small, and hindered for the foreseeable future by both tech access (Meta’s Virtual Worlds requires a VR headset that fewer than 1% of people in the US own) and by the gaming-centric nature of the platforms. The last point meaning: Roblox and Fortnite players are on Roblox and Fortnite first and foremost to play games, and only on occasion will purchase something, or attend a virtual concert, or check out Chipotle’s latest little stunt. Unless you’re offering players a new avatar skin (a digital outfit or body), you’re not making any money. And you can’t offer those directly, because only the game-makers can, in a microtransaction monopoly they won’t relinquish any time soon.

In short, the hype of the metaverse continues to precede the reality of the metaverse — at least, a metaverse that would be of any real use or interest to the broader public, including consumers, businesses, and restaurants. The concept won’t die; there will almost certainly be more much-vaunted but inevitably shallow attempts at new metaverses over the next year by wannabe Silicon luminaries desperately hoping to strike gold and capture the market early. But I don’t think we’ll see a “true” metaverse — one with broad access and wide appeal, with value to people beyond gamers and a consistent and engaged population — for at least another three to five years.

Until then, expect to see mostly fancier and fancier versions of empty virtual Wendy’s.

🌭 I'm sorry..."Frankly by Snap-o-razzo"??? (“C3 TURNS AN ONLINE SAUSAGE SHOP INTO A VIRTUAL RESTAURANT” Joe Guzkowski, Restaurant Business). C3’s latest and greatest brand is a sausage & hot dog joint called “Frankly by Snap-o-razzo.” The brand immediately made waves by being declared the funniest virtual restaurant name of the year (by me, now), and a serious contender for the all time title. There is nothing else notable about this concept.

🧹️ Third-party delivery providers are still cleaning up after their early battles (“Uber, Chicago reach $10 million settlement after an investigation into food delivery practices” Danielle McLean, Smart Cities Dive). Uber/Postmates paid out $10M to the city of Chicago in acknowledgement that they knowingly listed restaurants on their platform(s) without those restaurants’ permission — a once-common practice that some credit with fueling DoorDash’s rise to the top of the game in 2018 — in addition to a litany of other nefarious goings-on.

But hark, let us go back to 2018. In those days of yore (“Gather ‘round, children, gather ‘round, Old Man Delivery is telling his stories of the before-time again”), the delivery wars’ main fronts were geography — who was the top dog in each city, and which city was the next battleground — and offering — how much variety could your platform boast, and which local, regional, or national name brands were exclusive to you. Remember that this was before the pandemic, when most restaurants were ambivalent at best about third-party delivery, feeling little obligation to sign up; especially while there was widespread industry skepticism around the profitability of the channel for any type of restaurant. Delivery providers actually had to try to get restaurants to sign up. And when that failed over time, or was simply too slow for investors, they made a quick and dirty calculation and realized that the upside to rapidly capturing market share — specifically by scraping restaurant menus off the Internet and adding them to the marketplace without the restaurants’ permission — far outweighed the downsides of negative sentiment (already there) and potential lawsuit payouts that’d be years down the road, if ever. Plus, those legal battles would pit their teams of crack corporate lawyers against local coalitions of independent restaurants (unlikely, disorganized, and/or cash-strapped) or cities (cheap, understaffed, traditionally scared of tackling Big Business) and ultimately result in sums of chump change (say, $10M) compared to the revenue from market capture.

To boil down:

• Upside: Become the Uber for food.

• Downside: Toss a handful of coins to the crowd of whining restaurants after years of legal haranguing.

Pretty straightforward.

Eventually all major third-party delivery providers engaged in this practice of unpermitted listing — including Grubhub, who did not go quietly into that bad night though it was too little, too late — and did expand their marketplaces exponentially, and did rapidly capture market share, and did ultimately make enemies of many restaurants who, once they found themselves on all these platforms also discovered they had no easy way off them, thanks to shoddy-at-best customer service and constant re-enlistment (I should know, my family’s restaurant was one of them). Before the chorus of concerned voices could reach a peak though, the pandemic hit, and third-party delivery wasn’t a choice anymore.

That’s more-or-less why Uber’s paying $10M to the city of Chicago today. A pretty measly amount, compared to what was gained. Especially compared to the headache and heartache and confusion of a delivery driver walking up to the host stand at the front door with a prepaid-to-exact-change (with no tip) credit card and an order for six items that haven’t been offered at your restaurant for two years, causing the driver to call the customer and hand the phone over to you, the host, to please explain the current menu verbally while you’re also trying to clarify that, no, this is not a service the restaurant offers officially and that’s why the menu you saw was wrong, so sorry about this anyway; and 10 minutes later when the order is placed the driver now has to call up the delivery company to get the amount on their prepaid card changed (still no tip) to reflect the new order, and then the ticket’s into the kitchen but naturally it’s rush hour so the fire time is 30 minutes in a perfect world but realistically more like 40 which means the driver has to stand around or wait outside or try to squeeze another delivery into that time and of course they’ll do another delivery, who wouldn’t, but then they’re late getting back for the food at your restaurant so the food the customer finally gets at the end of this whole sh***y ordeal is lukewarm if not cold, and if you’re lucky they’ll blame the delivery company, but more often than not despite your best explanation it’s somehow the restaurant’s fault and they’re never coming or ordering again, and at the end of the day if you’re so, so lucky, this doesn’t happen again until the next night. Compared to that, multiplied by a city’s-worth of restaurants, yeah, I’d say $10M is measly.

Yet regardless of measliness or fairness, $10M is what they got. It’s just that, to me, restaurants don’t only deserve restitution. They deserve a little revenge. Like most revenge though, it’ll all but certainly remain a fantasy.

📟 The "restaurant of the future" is just a restaurant with a little more technology in it (“How restaurants should prepare for the on-demand digital economy’s peak”Joanna Fantozzi, NRN). This is a textbook year-end article; one that takes a broad perspective of how restaurants have integrated with technology over the last few tumultuous years and looks ahead at the next steps of that relationship, based on what consumers appear to want. I don’t agree with all the ideas leveled in the piece (namely one that suggests signage will become obsolete — trust me, as a person who ran signage for a very much digitally-optimized chain, people definitely still require big flashy letters blaring on the side of a building to tell them that they are 100% in the right place, regardless of whether the address matches the one on their phone) but it does contain a comprehensive list of questions restaurants will find themselves answering in the next year or two to come. From the proportion of dine-in to takeout, to the importance of mobile menus & ordering, to (hey!) the grand quandary that is the metaverse, restaurants big and small face a plethora of inbound catalysts against a backdrop of slightly more regular consumer behavior than we’ve seen since 2019 (meaning: not forced to takeout, not rushing back to dine-in, but a new balance). Let the techvolution(?) begin.

That’s spooky kitchens.

Boo ✌️,

Mitch

P.S. If you’re just jumping into ghost kitchens and want to learn more, check out my ghostly glossary and spooky kitchens ghost kitchen cheat sheet. They’re there to help make sense of this weird and wild west.

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