May 30, 2017

Restaurants - Evolution of Delivery, Cost-Saving Innovation Key Themes at 2017 NRA Show

By Justin Pillette

Rising labor costs, food safety and growing demand for delivery service were key concerns for restaurant operators attending the NRA Show May 20-23, and technology-based solutions attracted heavy interest.

Attendance was good at the 2017 National Restaurant Association (NRA) Hotel-Motel Show in Chicago during May 20-23; crowds were particularly heavy at vendor booths and educational sessions offering technology-based solutions to address ongoing concerns over rising labor costs, food safety and delivery.

At one well-attended educational session, “The Challenges and Opportunities of an On-Demand Delivery Business,” Cicely Simpson, EVP of Government Affairs & Policy at the NRA, and Anna Tauzin with the Texas Restaurant Association, outlined some of the key concerns operators have with third-party delivery services, including a lack of clear standards for third-party operators, delivery without permission and how to deal with the “bad actors.” An example was given of “delivery without permission,” in which a customer with severe food allergies was hospitalized after getting an order delivered from a third-party delivery service that did not have all the options on their site that the restaurant had on their own online menu.

Although the large, well-established operators, such as GrubHub Inc. (whose large booth was positioned prominently in the tech pavilion) and DoorDash Inc. were not cited as "bad actors," some operators in attendance voiced concerns with the high commissions and wide range of commissions charged by the large third-party delivery operators. However, alternatives to the large providers are arising for restaurant operators concerned about costs. Bringg, which provides last-mile delivery logistics for restaurants, including Panera Bread Co., is one.

GrubHub Booth - NRA Show 2017

OTR Global photo

Another key concern for operators was intellectual property and data, and how much -- if any -- access to a restaurants point-of-sale system should be shared with a third-party service (similar to concerns expressed by a manager at The Cheesecake Factory Inc. in OTR Global’s May 25 snapshot).

The speakers also discussed rising opportunities driven by increased demand for delivery, noting the success of delivery-only operators, such as Green Summit Group LLC, which operates multiple “restaurants” from the same kitchens in New York City with relatively little overhead. A recent press release noted continued strong growth for the company.

Eat Club Inc., which offers a “virtual cafeteria” delivering individually selected lunches to offices, and, offering a similar service, also were cited as examples of exciting new companies taking advantage of growing demand for delivery.

Robotic Delivery – Ground and Air
Also discussed during the session was the growing use of robots and drones for delivery via ground and air to overcome the cost-benefit barriers for traditional delivery operations to deliver to rural and suburban locations. TeleRetail Corp. robots are designed to cover long distances (up to 50 miles), serving rural and suburban markets. Starship Technologies funded by Daimler AG, and Marble are other examples of ground-based robotic delivery.

In the drone space, Flirtey Technology Pty. Ltd. was mentioned as working with Domino’s Pizza Inc. and Seven & I Holding Co. Ltd.’s (3382 JP) 7-Eleven, while Inc. is expected by most to become the dominant presence in drone delivery during the coming years.

Government regulation remains the key question/hurdle for everyone, Ms. Simpson said.

Automation: Robots Preparing Meals
In a session titled “Robots in Food Service: Possibilities and Challenges,” Chowbotics CEO and founder Deepak Sekar used Chowbotics’ salad-making robot as an example of how restaurant operators could reduce their customers’ exposure to food-borne illness, increase ingredient selection and ability for customization, and reduce labor and operating costs. 

One of the investors in Chowbotics, who also advises the team, is a franchise owner of 15 McDonald’s Corp. stores, where “Sally” the salad robot has driven an increase of approximately 10% in salad sales, according to Mr. Sekar.

Mr. Sekar expects a migration of robotics from food-service to home use, similar to the migration of computers from corporate IT departments to home desktops. Right now robots are getting smaller but they’re still expensive. In five to 10 years, Mr. Sekar expects them to be available for home use for around $100. “They’ll cost about the same as your other kitchen appliances,” he said.

Tangible Benefits from Equipment Innovation
A source with The Middleby Corp. said although robotics are a very important area to be investing in and watching, the cost-plus-size-plus-function equation continues to limit real-world applications for large robots that handle multiple tasks in the restaurant industry. For now, restaurant operators are getting the biggest bang for their buck with innovative, efficient equipment that helps them lower costs while offering a better end product, such as the Middleby CTX Wow2 infrared conveyor oven (broiling at 1,000 degrees but using significantly less amperage than standard models) and its TurboChef Ventless Double Batch impinger oven (using two independently controlled cooking cavities with a split-screen, WiFi connected capacitive touch controller). Both ovens won Kitchen Innovations awards and were featured in the Kitchen Innovations pavilion during the show.

A source familiar with the ovens suggested Panera may be evaluating the new TurboChef Double Batch, which could improve quality and throughput for the chain. “The TurboChef is much bigger. You can only do two paninis at a time in the [AB] Electrolux [grill], and it flattens the sandwiches. You can do six or eight at a time [three or four per cavity] in the TurboChef, and it cooks the sandwiches much better. It uses air that swirls around at 65 mph, so everything gets hot – the cheese gets almost crispy – but the bread remains light and crunchy,” the source said.

“Early Early-Adopter” Phase for Cloud-Based POS Technology
In a Tech Talk sponsored by Par Technology Corp., which developed the first standalone POS terminal for McDonald’s in 1978, Par’s Chief Strategy Officer Paul Rubin walked a packed audience through the various stages in the evolution of point-of-sale (POS) technology. Rubin discussed the migration from electronic cash registers, to DOS-based terminals, to Windows to the cloud -- and the advantages for restaurants of moving to cloud-based POS, which he described as still in the “early early-adopter” phase with less than 10% of restaurants using the technology today.

Advantages include:

  • No single point of failure
  • Reduced support costs
  • The platform as a service (PaaS) -- facilitating elasticity and highly scalable
  • Works with third-party services, such as delivery, without allowing on-premise POS access
  • Easy integration of digital payment and loyalty programs
  • Subscription service vs. large upfront costs

Questions from restaurant operators following the presentation centered on privacy and the stability of a system dependent on internet connectivity. On the issue of privacy (who owns and has access to the data), Mr. Rubin said it varies by provider. Mr. Rubin also noted cloud-based systems use a hybrid-hosted architecture that can run with or without internet access. Some functionality -- such as mobile orders and loyalty redemption -- shuts down by design with loss of connectivity, but memory is available to continually operate and save transaction and other data for many years without internet connectivity.

WHAT: NRA Show 2017
WHEN: May 20-23, 2017
WHERE: Chicago, IL
WHO: The largest, most important trade show of the year for restaurant operators, suppliers and distributors, with more than 65,000 visitors and 2,000 exhibitors