The technology sector across multiple industries is facing mass layoffs amid macroeconomic uncertainty – from the tech giants like Amazon, Google and Meta, down to unicorn startups. Now restaurant tech seems to be joining them. After several years of new foodservice tech startups popping up and nabbing big investor checks seemingly every other day, the industry is experiencing a slowdown.
In just like the last couple of weeks, both Olo and Grubhub announced layoffs. The string of layoffs actually began with Nextbite in May, which was then followed by the company selling off its technology arm Ordermark, and then-former competitor SBE CEO Sam Nazarian acquiring Nextbite.
Amid this flurry of activity, investors are wondering: has the food tech bubble finally burst? After all, out of the dozens and dozens of restaurant software startups out there, not all will make it in the long run.
Besides the food tech shakeup, this month Uber is trying out robot delivery (again), and voice AI and ChatGPT are being used in both new and familiar ways across the industry, from voice ordering to a ChatGPT-developed pizza recipe being sold by Jet’s Pizza.
Tech Tracker rounds up what’s happening in the technology sector of the restaurant industry, including news from restaurants, vendors, digital platforms, and third-party delivery companies. Here’s a breakdown of what you need to know and why:
Grubhub lays off 15% of its staff; Olo lays 11% of its staff
What goes up must come down. As tech companies bulked up their staffs during the virtual technology-heavy era of the pandemic, now they might be realizing that they need to shed some personnel for the long-term.
Grubhub, which announced that it would be laying off 15% of its staff (or 400 employees) earlier this week, cited high operating and staff costs as a major reason for the downsizing, even though the third-party delivery platform has grown since 2019. The company said it will be revealing a new growth plan soon.
“After much consideration and evaluation of our business, we have made the difficult decision to reduce Grubhub’s workforce by 15%, impacting approximately 400 of our corporate employees,” a Grubhub spokesperson said. “These changes will enable Grubhub to invest in the growth of our core business and better position the company for long-term success.”
Although Grubhub was one of the first third-party delivery platforms on the scene, the company has steadily been losing market share to competitors Uber Eats and DoorDash over the last few years. According to Bloomberg Second Measure, DoorDash now has almost two-thirds of the delivery market share, while Uber eats has 23% and Grubhub only has 9%, as of April 2023. Just Eat Takeaway, Grubhub’s parent company, even said in 2022 that the company was looking to sell off Grubhub, though there have been no updates to that possibility in more than a year.
But Grubhub isn’t the only one. Olo also announced this week that the restaurant tech company laid off 11% of its workforce or 81 people, as part of reorganization efforts following the acquisition of Wisely, in order to eliminate redundancies in the business.
“After thoughtful consideration, we are aligning our technology and product team structures around three customer-centric product suites: Order, Pay, and Engage,” Noah Glass said in an email to employees. “This restructuring should not be interpreted as a reflection of the work accomplished by the Business Units, but rather as a strategic evolution that ensures we are organized around our customers’ businesses and relentlessly focused on innovating for the restaurant industry.”
While this type of restructuring is not typically a sign that a company is in trouble, it is emblematic of the fact that we’re coming out of the tech hiring boom of the pandemic and growth in the food tech sector might be less rampant moving forward.
The voice ordering AI trend continues with Hopdoddy and Hampton Social
Hopdoddy is the latest restaurant chain to join the voice AI trend. The Austin-based burger brand will be working with Kea to implement voice AI ordering for to-go orders. To eliminate any technical difficulties, Hopdoddy said that the company will always have a human in the loop when a customer places an order with the Kea AI voice assistant.
“Our team members get stressed when they’re too busy to get to the phone, knowing that a guest needs us, so we wanted to make their lives easier,” Jennifer Faren, vice president of marketing at Hopdoddy said in a statement. “We’re excited to leverage a technology that improves both the guest and team member experience.”
Although voice AI has been one of the most popular technology trends in the restaurant industry over the last couple of years, most restaurants are using the tech capabilities to answer phones or to take orders in the drive-thru lane.
But one restaurant chain, Chicago-based Hampton Social, is using voice AI to run a rosé wine hotline powered by ChatGPT technology. This marketing gimmick is being utilized to promote the company’s National Rosé Month celebration. Customers can call the Rosé Chat Bot to answer questions about how to drink the pink-hued wine, pair it with food, or for tips on buying rosé or mixing cocktails made with the ingredient.
Speaking of using ChatGPT to generate creative marketing ploys, Michigan-based pizza chain Jet’s Pizza announced last week a new menu item that was created using ChatGPT. While Jet’s is not the first restaurant to use AI to create a menu item, it is one of the most high-profile, limited-service brands to do so.
Described by the company as a “fun experiment,” the AI-created pizza is dubbed the “Ranch Veggie Pizza” and is topped with ranch sauce, mozzarella, feta, mushrooms, onions, green peppers, black olives, and tomatoes. The pizza is only available now through July 10 as an LTO. Jet’s Pizza also uses voice ordering AI in its stores.
“We’re in the era of AI and Jet’s is continually exploring ways to utilize this technology. As many know, we use AI for ordering and now we used it as a fun experiment to see if it could come up with something we could add to our menu,” John Jetts, CEO and President of Jet’s America said in a statement. “The Ranch Veggie Pizza is a must-try and we are excited to see the reaction this pizza gives to our customers.”
Uber expands robot partnership
Uber eats just announced an expanded partnership with Serve Robotics that will put Serve sidewalk robots to work delivering Uber Eats orders. The partnership was expanded last month in Los Angeles to 2,000 delivery bots after a successful trial that began last year.
Customers in the Los Angeles area may see an option to choose to have their food delivered to them via robot on the Uber Eats app. If they choose this, they’ll be able to track the robot’s movements and can then use their app to open the robot’s cargo compartment and retrieve their food when it arrives.
This is not the first time Uber Eats (or other food delivery platforms for that matter) have tried out sidewalk robots to complete their orders. In May 2022, Uber first launched its pilot robot delivery program with Serve and then later that year, Uber expanded its partnership with Nuro, which makes autonomous delivery vehicles.
Right now, even though robot partnerships are expanding and becoming more prevalent, they are still usually confined to singular city pilot programs. That might change, however, given recently passed legislation in New York City that nearly triples the wage rates of app-based delivery workers. Apps might have to choose between raising the price of delivery (yet again) or employing robots to deliver food to hungry customers.
Contact Joanna Fantozzi at [email protected]