October 2, 2019

 Google Hits, Google Misses

Arguably, Google’s success in the restaurant industry came later than one would expect from the hugely successful internet company. Google has dabbled in business for a while, mostly with ratings and reviews. There was also that Zagat misfire — the search giant purchased Zagat in 2011 for $151 million, and then sold it to review site The Infatuation in 2018 for an undisclosed amount that is probably not $151 million.

Now, though, Google’s moving quickly, using its own products from Maps to Android to make inroads in the restaurant business. Consumer and industry sentiment, though, hasn’t exactly been positive.

Most recent case in point: Google Assistant’s relatively new ability to call a restaurant to request a reservation. Google’s own help post on the topic states the following: “You can have the Google Assistant make restaurant reservations for you. If an online booking service isn’t available, the Google Assistant will call the restaurant for you and request a reservation.”

Tock founder and chief technical officer Brian Fitzpatrick (notably, an ex-Google employee) took to Twitter to explain the problems with the feature. He’s coming at it from the perspective of a tech-forward entrepreneur, pointing out some serious flaws. For example:

“Every moment you’re forcing a restaurant staffer to be on the phone talking to a robot when this can damned well be handled online one way or another is not only a waste of that employee’s time, but money out of the pocket of the restaurant.”

A restaurant chooses the way that it accepts customers via reservations, and it’s entirely their prerogative. Sure, one could make an argument that not accepting digital reservations or, further, not accepting reservations at all, is potentially detrimental to a restaurant’s business model. But, “one” is not the restaurant’s owner, and free, easily bookable reservations aren’t a consumer’s right. By making it easier for Google Android users to not talk to a person, ever, the company is making it very challenging for restaurants to control their own flow and guest experiences. (Also worth noting a different Twitter thread from earlier in September detailing a fundamental failure of Google Assistant to actually make a reservation.)

Here’s a stat that’s quickly becoming an Expedite favorite: over half of searches on Google don’t end in a click to another site. Google is getting good at anticipating what users are looking for and adding tools to capture the clicks that would have otherwise gone elsewhere. In this case, reservations. Except instead of accommodating the avenues restaurants choose, it goes around them under the guise of convenience for the end user. For an industry that’s historically run on tiny margins, success or failure can be determined by customer experience. When a tech giant — one that’s already conditioned consumers to adjust their behavior in an increasingly digital world — steps in and takes over, dictating the way a restaurant interacts with its own customers, it could quite literally be playing with a real person’s livelihood.

Ghosted

When you’re the founder of Uber, the world pays attention to what you do or say, but this is a particularly interesting restaurants+technology story for a few reasons. Last week, The Information ran a piece about Uber founder Travis Kalanick’s newest endeavor, CloudKitchens. According to the piece’s headline, he wants the new company to “make dine-in restaurants and grocery stores obsolete.”

Sensational headline? Maybe, but it’s believable strategy from the person who brought us Uber’s disruptive growth-at-all-costs mentality. And what have we learned from this? Market disruption can cause actual chaos. In a recent interview, Uber CEO Dara Khosrowshahi told Christiane Amanpour, “That started, I think, from a good place. But i think it went too far, and the challenger became powerful and with power came the belief that you’re always right.” He continued, “I don’t want to beat around the bush. We went too far.”

What does this have to do with restaurant technology? Kalanick’s new company, CloudKitchens, has so far operated pretty secretively. According to The Information, though, he’s hired engineers from Tesla and SpaceX to work on the project (plus Uber, Apple, Snap, Google, and Amazon, according to recruitment emails. (SpaceX? Why? Truly, why? I’m not the only one asking.)

It appears Kalanick is going for industry disruption and restaurant customer data (good luck with that!) seemingly wrapped up in a cheeky-but-irreverent package. As noted in the piece, one of the restaurant brands currently operating out of the CloudKitchens space is F#ck Gluten, which has been saved over 200 times by Postmates users in LA and has 89 ratings and reviews on Grubhub.

From where I sit in San Francisco, this strategy is familiar and unsurprising for a tech company. But maybe… maybe, thanks to some recent high-profile misses in the tech-adjacent public market, investors, leaders, and customers are looking for responsible business models that don’t completely railroad workers or “contractors.” And hopefully they don’t steamroll local businesses like restaurants in the process.

Speaking of…
Last week, Uber unveiled changes to its mobile app, which has traditionally kept its ridesharing and food delivery experiences apart. It also has an exclusive delivery partnership with Sweetgreen, and a new ghost kitchen restaurant (remember when we called these “pop-ups”) with celebrity chef Rachael Ray. For further proof of the-times-they-are-a-changin’, Ray’s ghost restaurant announcement, meant to coincide with a new cookbook launch, comes amid news that the print magazine carrying her name will scale down from publishing 10 times per year to a newsstand-only print quarterly.

What else is happening?

DoorDash announced a huge data breach. It happened back in May (!) and affected nearly 5 million customers, merchants, and delivery workers who signed up on the platform before April 5, 2018.

Small business owners are upset about Square’s recent rate change, claiming it will cost some businesses 50 percent more for credit card processing. There’s a change.org petition.

I’m moderating a discussion at the Smart Kitchen Summit in Seattle next week. The theme is the future of restaurants, and I’ll be talking everything future-looking, from robotics to the pace of change in legacy businesses. Let me know if you’ll be there! Details and tickets here.