First Free Story (1 of 3)Join Skift Pro
Editor’s Note: In September we announced that Skift was expanding into food and drink with the addition of the Chefs+Tech newsletter.
We see this as a natural expansion of the Skift umbrella, bringing the big-picture view on the future of dining out, being fanatically focused on the guest experience, and at the intersection of marketing and tech.
We publish C+T twice weekly.
Eat24’s Sale Could Signal Yelp’s Sharper Focus on In-Restaurant Experience
Ahead of its second quarter earnings report on Thursday, Yelp announced plans to sell its Eat24 delivery business to Grubhub for $288 million in cash. Yelp bought Eat24 in 2015 for $134 million, and currently integrates Eat24 into its restaurant listings. Instead, as part of a five-year deal, the ratings and review site will add links to order delivery via Grubhub into its platform. Grubhub recently announced similar arrangements with TripAdvisor and Groupon, effectively making Grubhub the internet’s “order delivery” button — at least on review and discovery sites. By integrating into Yelp’s listings, Grubhub will power more orders than ever.
Yelp is best known for its user reviews and rankings, but it also has other interests: Yelp Reservations (formerly SeatMe); Nowait, a tool that allows people to wait in line remotely at restaurants that don’t take reservations; Yelp Cash Back, a rewards program; and Yelp Wifi, offering free wifi to restaurant customers in exchange for providing their email address to the restaurant. Given these product offerings, Eat24 was the outlier as the only product that wasn’t supplementing or enhancing an in-restaurant experience. In an interview with Chefs+Tech last month, Yelp SVP of business development, Chad Richard, said, “Yelp has always been an amazing place to promote your restaurant, but it wasn’t really helping you run your restaurant. We have this ability to bring audiences to restaurants. How can we help consumers connect on that next level?” For Yelp, the next level appears to be what happens in the restaurant, not the delivery or takeout experience.
In a statement accompanying Thursday’s announcement, Yelp CEO Jeremy Stoppelman said, “Yelp and Grubhub benefit from greater scale and sharper operating focus.” Whether or not this sale signifies Yelp will focus on other parts of its business, the joint press release and announcement does signify that Yelp believes Grubhub rules delivery and logistics and Grubhub believes Yelp can’t be beat as a recommendation and discovery tool. In that way, the business models are moving away from everyone-do-everything to a few key players ruling each space. We’ll have to see what sharper operating focus means for Yelp’s growing business.
Of course, this is big news for Grubhub, too, which will absolutely take advantage of a Yelp audience. According to Richard, over a third of Eat24 orders come through Yelp’s restaurant listings, up from about 20 percent two years ago, he says.
Restaurants Tout Guest Experience in Second Quarter Earnings Reports
Smaller, independent restaurants may be more agile when it comes to adapting to consumer preferences and trends, but watching the large corporations strategize and make changes offers great insight into macro trends and the future. While it may take longer for the large companies to implement big changes into their business, these changes create far-reaching ripples that fundamentally affect the industry. Indications from second quarter earnings reports are that everyone is focused on the guest experience — in-store, mobile, and delivery included.
McDonald’s, for example, is touting the roll-out of its Experience of the Future, or EOTF, stores. The newly remodeled locations will “fundamentally change the way customers interact with our brand,” according to CEO Steve Easterbrook. “We are providing an experience that is more personal and less stressful, matching our best people with technology platforms like self-order kiosks, digital menu boards and table service. Changes in the layout of our dining rooms and service areas create better customer flow.” The company plans to open 2,500 EOTF stores in the U.S. this year.
Chipotle, fresh off of more news of illness at one of its locations in July, hired a chief restaurant officer in May to improve operations, and implemented a new measurement and bonus system for employees based on customer satisfaction. The restaurant is also test-driving new menu items at its new Chipotle Next Kitchen in New York, where it can judge public sentiment around the new items, but also the training required to get a new item on the menu. (It’s serving queso and frozen margaritas right now, btw.)
For Yum Brands, the Taco Bell + Lyft partnership is the obvious experience to tout, but the company remains focused on its promise to lift Pizza Hut from its slump. It’s pushing delivery and loyalty hard, making good on its promise to hire more drivers and improve the ordering and delivery experience — in fact, expect more national advertising push from Pizza Hut as Yum works to build awareness of new digital and delivery efforts.
Shake Shack, which has been a publicly traded company since early 2015, is an interesting example of a restaurant upstart. It started with many of the things that larger chains are chasing — fresh ingredients and loyal fans who are active on social media. According to CEO Randy Garutti, the chain will be investing “more heavily than ever in technology to drive the inline and online experience.” This includes targeted and personal offers through its app, and potentially more special offerings like the chain’s new hot chicken sandwich, which was available only through the app before its official release earlier this month. “[I]nline and online experience” is a great quote — I’m going to use that a lot.
And, FWIW, Cheesecake Factory is staying the course when it comes to opening in malls. “We still are attracting people to come to the malls. The mall owners want entertainment and they want restaurants and they want to bring bodies into their malls and we’re still a prime candidate for that,” according to David Overton, Cheesecake Factory’s CEO. Interesting strategy given all the change malls have seen and will continue to see — but someone has to stay, right?
AssAFood Delivery Service Integrations Show Travelers’ Interest
Delivery service integration: so hot right now. In May, TripAdvisor integrated Grubhub ordering into its restaurant pages in the U.S., and a recently announced partnership with London-Based Deliveroo to expand its delivery capacity globally. Skift has more details about the international expansion, including how it’s changing how hotels think about food and food delivery (For example, the Chicago Athletic Association Hotel offers in-room Shake Shack delivery within 15 minutes. I mean, who wants subpar room service when you can order a Shack burger?)
For restaurants that provide delivery, delivery service deals and integrations with sites like TripAdvisor open access to a wider audience of travelers, a market they may not have thought to previously address. This has lead to TripAdvisor specifically courting restaurants to build robust profile pages within its service.
Because these partnerships are still in early days, no one is sharing the rate of adoption or other numbers as evidence of success. But given these delivery services are continually integrated into listings sites, it must be working.