A Hollywood Story

Domino’s was, by many metrics, the most impressive restaurant chain in the 2010s, earning itself the title of the country’s largest pizza chain in terms of sales after surpassing Pizza Hut.

The company also earned itself a new categorization, at least to some industry watchers: a technology company.

 

After reformulating its pizza at the turn of the decade, Domino’s kept its newfound momentum by investing heavily in technology, becoming one the most digitally savvy companies, both inside and outside of the restaurant business. Then, we got to argue whether a restaurant could really be a ‘tech-first’ company, whatever that meant.

 

This idea of tech-first restaurants persisted because, in addition to Domino’s, it was around this time that we were starting to see a new breed of restaurants utilizing technology in seemingly futuristic ways. For example, there was Zume Pizza, founded in 2015. The concept had highly advanced food trucks that used artificial intelligence to tell robots the exact moment they should place par-baked pizzas in the ovens, so they would finish right as the delivery driver arrived at the destination. There was also Spyce Kitchen, a concept founded by MIT alumni in mid-2018. The concept’s back-of-house operations were highly automated, with robots preparing the brand’s signature bowls.

 

In late 2018, Zume Pizza raised $375 million, and Spyce Kitchen raised $21 million when it had one location.

A few years later, Zume Pizza repositioned itself as more a restaurant delivery logistics company. Then in early 2020, the company laid off a good portion of its staff as it shuttered its pizza business to focus more on packaging.

Meanwhile, Spyce Kitchen temporarily closed all locations to tweak the concept.

Industry on-lookers had watched with a mix of awe and hesitancy. On one hand, these concepts were new, exciting and potentially revolutionary. But on another, we had already seen the challenges tech-savvy restaurants face when expanding. A prominent example being Eatsa, a high-profile concept from San Francisco, which was founded in 2015. Front-of-house operations were automated; consumers would order from kiosks and their meals would be delivered through digital cubbies. You didn’t need to interact with an employee if you didn’t want to. In a way, it was a modern automat, made possible by new technology.

This service format was embraced in tech-savvy San Francisco. The brand then quickly jumped to Washington, D.C. and New York City. Those locations didn’t last long and had closed by late 2017. It appeared to send a message on automation and technology in restaurants. Perhaps consumers still wanted some interaction with staff. Perhaps ground-breaking technology wasn’t as strong of a consumer draw as we thought. Perhaps the technology was still a game-changer, but the menu wasn’t resonating. Maybe consumers weren’t yet ready for this type of technology.

Or, maybe the brand jumped too far in selecting its next markets.

Whatever the message was, people questioned how technology would further change the dining experience. It certainly would, regardless of challenges like these.

Eatsa would eventually reposition to become a modern point-of-sale system centered around its digital cubbies. Not long after that, they had their first noteworthy client: Wow Bao, a Chicago-based chain that was continually pushing the envelope with technology and, more broadly, new ways to connect with customers.

I personally spent time working at Wow Bao in 2014 and was impressed by the numerous business channels that engaged guests in different ways, from brick-and-mortar stores to pop-up tents at events like Lollapalooza to a food truck, each elevated by the use of technology.

Included in Wow Bao’s channels was a delivery business.  At this time, third-party delivery – a trend that would soon define the rest of the decade – wasn’t quite yet a thing. DoorDash and UberEats were just getting off the ground, both far from the revolutionary businesses they would become. Nevertheless, Wow Bao was seemingly a step ahead.

In the coming years, Wow Bao’s emphasis on delivery and digital ordering channels only grew stronger, with the company eventually becoming available through multiple online ordering platforms.

Many other restaurants brought this same approach, making themselves available through apps like DoorDash, Uber Eats, Grub Hub and more. But then came a problem: restaurants would need different hardware to support these different channels.

“Each one of these online ordering companies was designed independently as if the other platforms didn’t exist. But we kept taking on this new piece of hardware and new training, and slowly but surely delivery ended becoming over 30% of our revenue by around 2016 and we were completely blown away by that number.”

-Alex Canter, A Hollywood Story

So, in 2017, another restaurant tech company was founded, though it wasn’t launched in Silicon Valley office or by a group of VC-backed engineers. Instead, Ordermark was founded in a booth at Canter’s Deli, then an 86-year-old restaurant in Los Angeles.

About a decade prior, Canter’s Deli, a fixture of not just LA’s dining scene but the city itself, was worried about making it through the Great Recession. Traffic had plummeted, and the industry looked to be changing. So, the family ownership decided to get into online ordering. This eventually became a headfirst dive into the digital world as sales continued to improve whenever the company added another online ordering option.

“Every time we signed up for a new one, we realized we were bringing incremental revenue into the business…Each of these online ordering companies has their own customers.”

-Alex Canter, A Hollywood Story

After making their restaurant available through multiple online ordering platforms, the Canter family found themselves with a lot of new equipment to manage this part of their business: laptops, tablets and even a fax machine.

Ordermark was their way to simplify that by bringing orders through one system.

“None of these systems talked to each other, so the reports were not all aggregated together, it was hard to know how many orders per day we were even selling in the first place. Really, I think the biggest challenges was actually the menu itself. Whenever we would have to 86 an item or pause service, we’d have to do that across 14 different online ordering services…Ultimately, a team of us put our heads together and said, what if there was one system that brought in all these orders, one place where you could go to make menu changes and push it back out to all the online ordering services, and that was really the initial idea around getting a unified system like an Ordermark.”

-Alex Canter, A Hollywood Story

Co-founder Alex Canter wouldn’t stop there. The growth of third-party delivery had presented another opportunity: virtual brands that operated from existing kitchens but only fulfilled online orders. For instance, the Canter family thought up a grilled cheese virtual brand to drive sales for a high-margin item through third-party delivery apps.

 

Canter’s Deli’s emphasis on technology, and the fact that a tech company was literally founded within its walls, certainly gives the concept the necessary elements of a tech-first restaurant. But perhaps we should be careful when using that term. After all, technology is just a part of the equation, and while technology is certainly becoming more important, restaurants still make their money by selling food.

“No matter how much technology you’re implementing or whatever your strategy is, first and foremost the food has to be amazing. If the food is not good, it doesn’t matter how much technology you throw at it.”

-Alex Canter, A Hollywood Story

For more on the history of Canter’s Deli, Ordermark and Nextbite, check out our podcast episodes with Alex Canter. 

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