Mars, Incorporated is set to expand its snacking portfolio by acquiring Kellanova for $35.9 billion.
Kellanova, which was formed last year after Kellogg’s spun off its global snacking and plant-based food business, offers brands including Pringles, Cheez-It, Pop-Tarts, Rice Krispies Treats, NutriGrain and RXBAR, as well as including Kellogg’s (international), Eggo and MorningStar Farms. In 2023, Kellanova logged net sales of more than $13 billion, with a presence in 180 markets and approximately 23,000 employees.
Kellanova’s portfolio complements the existing Mars portfolio, which includes billion-dollar snacking and confectionery brands such as Snickers, M&M’S, Twix, Dove and Extra, as well as KIND and Nature’s Bakery. Mars also has 10 pet care brands with over $1 billion in sales. With more than 150,000 associates across its petcare, snacking and food businesses, Mars had 2023 net sales of more than $50 billion.
“In welcoming Kellanova’s portfolio of growing global brands, we have a substantial opportunity for Mars to further develop a sustainable snacking business that is fit for the future,” says Poul Weihrauch, CEO and office of the president, Mars, Incorporated. “We will honor the heritage and innovation behind Kellanova’s incredible snacking and food brands while combining our respective strengths to deliver more choice and innovation to consumers and customers. We have tremendous respect for the storied legacy that Kellanova has built and look forward to welcoming the Kellanova team.”
Upon completion of the transaction, Kellanova will become part of Mars Snacking, led by Global President Andrew Clarke and headquartered in Chicago. Mars intends to apply its brand-building approach to further nurture and grow Kellanova’s brands, including accelerating innovation to meet evolving consumer tastes and preferences, investing locally to expand reach and introducing more better-for-you nutrition options to meet evolving consumer needs.
Under the terms of the agreement, Mars will acquire all outstanding equity of Kellanova for $83.50 per share in cash. All of Kellanova’s brands, assets and operations, including its snacking brands, portfolio of international cereal and noodles, North American plant-based foods and frozen breakfast are included in the transaction.
Mars intends to fully finance the acquisition through a combination of cash-on-hand and new debt, for which commitments have been secured.
The agreement has been unanimously approved by Kellanova’s Board of Directors. The transaction is subject to Kellanova shareholder approval and other customary closing conditions, including regulatory approvals, and is expected to close within the first half of 2025. The transaction agreement permits Kellanova to declare and pay quarterly dividends consistent with historical practice prior to the closing of the transaction.
The W.K. Kellogg Foundation Trust and the Gund Family have entered into agreements in which they have committed to vote shares representing 20.7% of Kellanova’s common stock, as of Aug. 9, in favor of the transaction.
After closing, Battle Creek, Mich. will remain a core location for the combined organization.
“This is a truly historic combination with a compelling cultural and strategic fit,” says Kellanova CEO Steve Cahillane. “Kellanova has been on a transformation journey to become the world’s best snacking company, and this opportunity to join Mars enables us to accelerate the realization of our full potential and our vision. The transaction maximizes shareholder value through an all-cash transaction at an attractive purchase price and creates new and exciting opportunities for our employees, customers and suppliers. We are excited for Kellanova’s next chapter as part of Mars, which will bring together both companies’ world-class talent and capabilities and our shared commitment to helping our communities thrive. With a proven track record of successfully and sustainably nurturing and growing acquired businesses, we are confident Mars is a natural home for the Kellanova brands and employees.”
US pollock suppliers are pushing for higher prices for pin-bone out (PBO) fillets for B season, with European buyers resistant, sources told Undercurrent News […]
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Canola firmed 2 percent, rapeseed 1pc and the offshore wheat markets eased by similar amounts.
International
Black Sea market analyst SovEcon estimates Russian wheat exports for the 2024-25 season at 48.8Mt, down from 52.4Mt the previous year. In the first two months of the new season, Russia is expected to export 8.2Mt of wheat, down from 9.8Mt a year earlier, reflecting decreased exporter margins and relatively low demand.
Ukraine’s grain exports in first two months of the 2024-25 marketing year are estimated at 6Mt, compared to 3.6Mt in the same period last year. The volume includes 2.8Mt of wheat, 2.2Mt of corn and 1Mt of barley.
The Buenos Aires Grains Exchange has pegged Argentina’s 2024-25 corn crop area at 6.3mha, down 17pc compared to the previous year as pest and weather concerns impact planting decisions. Many growers are wary after the impact of the costly leafhopper plague last season.
China, reportedly, has initiated an anti-subsidy investigation into dairy imports from the EU. The investigation will include several dairy products, including fresh and processed cheese, and will review 20 EU subsidy programs, particularly those under the Common Agricultural Policy and specific to Italy and Finland’s dairy sectors. This move is seen as a response to the EU’s recent decision to expand tariffs on Chinese-made electric vehicles.
Algeria has issued international tenders to purchase up to 120kt of feed corn, 40kt of soymeal and 35kt of feed barley.
Tunisia’s state grains agency reportedly purchased 75kt of soft wheat in a tender that closed yesterday, at US$243-246/t.
US private exporters reported sales 132kt of soybeans to China and 121kt to unknown destinations during the 2024-25 marketing year.
Australia
Yesterday’s bids in the west were largely unchanged for new crop canola steady at A$755/t. New crop cereals were marginally softer with wheat at $357/t and barley $315/t.
The east coast markets felt the weight of sellers and a lack of fresh demand yesterday. Values dipped a further $5/t and are now at 5-year decile 4 values. Grower tonnes continue to trickle out but the trade has been feeding the offer side in bigger volumes. With a warmer week ahead of us, it will put some pressure back onto the Riverina and Victorian crops lacking adequate moisture.
This week’s line ups data shows 1.93Mt of total grain on the stem, marginally higher than last week, including 1.04Mt of wheat, 261kt of barley, 392kt of canola (+100kt), and 234kt of sorghum. Average wait times are low, reflecting low vessel numbers, with 5 vessels loading and 2 anchored.
In an exciting continuation of their partnership with the Minnesota Pork Board, Olympic silver-medal winning synchronized diving duo Kassidy Cook and Sarah Bacon will be making a special appearance at the Minnesota State Fair. This one-day-only event is set to take place on Sunday, August 25th, where fairgoers will have the unique opportunity to meet these accomplished athletes, see their Paris 2024 silver medals up close, and learn about the nutritional benefits of pork.
Event Highlights
The Minnesota Pork Board’s “Olympic Zone” tent, located at the corner of Wright Avenue and Underwood Street at the Minnesota State Fairgrounds, will be the hub of activity from 9:00 a.m. to 9:00 p.m. The athletes themselves will be in attendance from 1:00 p.m. to 5:00 p.m., offering a rare chance for fans to engage with them directly.
Attendees can look forward to a variety of interactive activities, including a children’s fitness station, a pork nutrition table, and a photo booth where visitors can snap pictures with the Olympic medalists. In addition, exclusive ‘Cook ‘n Bacon’ themed t-shirts will be available for purchase. All proceeds from these shirts will be donated to Second Harvest Heartland, a local food bank, furthering Minnesota pig farmers’ commitment to supporting people and communities.
Promoting Pork and Community Engagement
This event not only serves as a celebration of Cook and Bacon’s Olympic achievements but also as a platform to raise awareness about the benefits of pork as a lean and nutritious protein. The Minnesota Pork Board’s collaboration with these athletes aligns with their mission to showcase the care that Minnesota pig farmers have for pigs, people, and the planet.
Cook and Bacon’s silver-medal winning performance in synchronized diving at the Paris Olympics on July 27th has made waves across the country. Now back in the United States, the duo is continuing their support for pork by appearing at the Great Minnesota Get Together. Bacon, a University of Minnesota alumna, and Cook, who has called Minnesota home while training with Bacon, have a unique connection to the state, making this partnership with the Minnesota Pork Board especially meaningful.
Don’t miss this incredible opportunity to meet Kassidy Cook and Sarah Bacon, learn about pork nutrition, and support a great cause, all while enjoying the fun and festivities of the Minnesota State Fair.
Event Details:
Date: Sunday, August 25
Time: Tent open from 9:00 a.m. to 9:00 p.m.; Athletes in attendance from 1:00 p.m. to 5:00 p.m.
Location: Minnesota Pork Board’s “Olympic Zone” tent, Minnesota State Fairgrounds (corner of Wright Avenue and Underwood Street)
Join us at the Minnesota State Fair for a day of celebration, nutrition, and community engagement with two of the nation’s top athletes!
Today marks World Plant Milk Day, when plant-based alternatives to dairy milk are celebrated, and consumers are encouraged to explore and embrace plant-based options. Recent data highlights the significant regional differences in the consumption and revenue of plant-based milk alternatives. Asia has emerged as the clear global leader in this market, with substantial contributions from countries like China, Japan, and South Korea.
As the plant-based milk industry continues to expand, the global market is expected to reach $51.87 billion by 2032, according to The Brainy Insights. The market’s growth is likely to be driven by increasing awareness of the environmental impact of dairy production, rising rates of lactose intolerance, and the continuing popularity of vegan diets.
Regional leaders
According to Statista’s Market Insights, Asia led the global plant-based milk market in 2023, generating an estimated $13.4 billion in revenue. China dominated the region with $9.5 billion, followed by Japan at $1.8 billion, and South Korea and India each contributing around $0.4 billion.
North America, driven by the United States, generated $3.6 billion, significantly trailing Asia. Europe ranked third with $3.9 billion, with Germany, the UK, and Spain as key contributors.
South America and Africa reported lower revenues of $0.7 billion and $0.2 billion, respectively. Despite these figures, the global plant-based milk market is projected to exceed $35 billion in the next four years. Due to its population size, Asia is expected to maintain its lead, but Europe and North America are likely to experience more substantial growth in per capita revenue.
The popularity of specific plant-based milk varieties varies by region. In China, soy milk is the most consumed alternative, driven by a long tradition of soy use and availability. In contrast, almond milk dominates the US market, while oat milk is particularly favored in Sweden, where it is a staple product of the local brand Oatly.
A Statista Consumer Insights survey conducted in 52 countries found that India had the highest percentage of regular dairy-substitute consumers at 32%, followed by Thailand and the United Arab Emirates, each with 29%. The global average was 20%, with Japan and Serbia at the lower end with 11% each.
Despite the growing presence of plant-based milk alternatives, they still represent a smaller market share compared to traditional dairy products. In the US, for instance, sales of refrigerated dairy milk generated approximately $14.1 billion in 2023, while plant-based milk alternatives contributed only $2.5 billion, according to Circana’s 2024 Dairy and Plant-Based Trends & Expectations report.
According to data from another Statista’s Consumer Insights survey, while plant-based milk consumers remain a minority among US adults, those who have recently tried these alternatives show a strong likelihood of becoming repeat consumers. The survey data indicate that brand loyalty within this segment is significant.
Silk, a leading plant milk brand in North America, emerged as the most popular choice among respondents, with over one-third reporting they had consumed it within the past year. Of those, 86 percent expressed an intention to continue drinking the brand’s products. However, this data was gathered before the recent listeria outbreak linked to Silk’s Canadian lines, which has, unfortunately, likely affected public perception of its plant-based milks.
Similarly, 30 percent of respondents tried Blue Diamond’s Almond Breeze, another prominent player in the US market, with 84 percent indicating a likelihood of future consumption. Interestingly, while Oatly enjoys widespread popularity in Europe, only 10 percent of US respondents tried the oat milk brand.
What drives consumer preferences?
The survey also explored the factors US consumers prioritize when selecting a plant milk brand. The most commonly cited aspects were high value, honesty, trustworthiness, authenticity, and reliability.
Further research on US consumer preferences for plant-based milk noted that “Animal welfare, dairy preference, environmental concerns, and plant-based milk enthusiasm are significant predictors for willingness to try plant-based milk alternatives. Dairy preferences, environmental concerns, and plant-based milk enthusiasm predict the word-of-mouth factors. Overall, plant-based milk enthusiasm is the strongest driver for both consumer behaviors.”
The Biden administration now plans to support targets to reduce plastic production in upcoming negotiations for an international plastics treaty, marking a notable shift from its position in four rounds of prior talks.
Additionally, the administration is now open to negotiating a potential list of chemicals to phase out as well as criteria for developing a potential list of problematic or avoidable plastic products. The administration’s overall shift, first reported by Reuters, was confirmed by a State Department spokesperson.
The fifth round of treaty negotiations via an Intergovernmental Negotiating Committee will take place in Busan, South Korea, later this year.
The United Nations-convened process to negotiate a global plastic treaty among hundreds of countries has been complex, with four INC meetings since 2022 and few tangible outcomes. This shift by the U.S., ahead of what is expected to be the final session, is viewed as a notable development.
It comes shortly after the Biden administration released a report recommending efforts to reduce single-use plastic in federal operations by 2035 and calling for a “goal to reduce the global production and consumption of virgin plastics.”
Previously, the U.S. had been more aligned with countries such as China and Saudi Arabia that did not support language calling for reduced plastic production. Instead, those countries are more focused on downstream areas such as mitigating plastic pollution and enhancing recycling systems. This was at odds with more than 60 countries that formed a “high ambition” coalition, co-chaired by Norway and Rwanda.
Ahead of INC-5, some of these countries aligned with outside groups (including the Ellen MacArthur Foundation and WWF) to directly support reducing “production of primary plastic polymers.” While the U.S. hasn’t formally supported this declaration, known as the “Bridge to Busan,” multiple sources say the Biden administration’s new position is consistent with that language.
“I think this shift could be a game changer for the whole plastic treaty negotiation,” said John Hocevar, campaign director for Greenpeace USA Oceans. “The shift in U.S. position will make it more difficult for the blocking countries to continue to oppose meaningful action, and it will embolden other countries to take more ambitious approaches.”
The American Chemistry Council had a different reaction.
“This is a lose-lose situation,” said CEO Chris Jahn in a statement. “American jobs will be at risk of being outsourced. The cost of goods is likely to rise globally, impacting those least able to afford it. And the U.S. negotiators’ influence at the next round of negotiations will be significantly diminished since other countries know such drastic positions are unlikely to secure the 67 votes needed in the Senate to join the agreement.”
ACC went on to say if the Biden administration wants to meet its environmental goals then “the world will need to rely on plastic more, not less.” The Plastics Industry Association raised similar concerns.
“The plastic industry is the seventh largest manufacturing industry in the United States and employs one million people. With this decision, the White House has turned its back on Americans whose livelihoods depend on our industry, as well as on manufacturers in all sectors that rely on plastic materials,” said CEO Matt Seaholm in a statement that also questioned Senate approval.
Environmental groups say it’s premature to raise concerns about if or how Senate approval would be required until a treaty is complete and this fall’s election outcome is known. They also note that international companies could still be affected if other major countries approved the treaty.
The ongoing treaty process has also elicited views from packaging manufacturers and CPGs, with many endorsing a Business Coalition for a Global Plastics Treaty that was convened by EMF and WWF. That coalition didn’t have a reaction to this week’s news, but WWF heralded the shift.
“We know that the U.S. is the largest producer of plastic and has a major role to play in ending the plastic pollution crisis,” said Erin Simon, vice president and head of plastic waste and business at WWF. “We are excited to hear that the U.S. government is supportive of exploring some of the fastest paths to an ambitious global treaty, including targets that reduce plastic production and alignment with the rest of the world on phasing out harmful chemicals and products.”
The Innovation Alliance for a Global Plastics Treaty, which includes smaller packaging startups, also said it “welcomes the developments” and said that this gave “fresh momentum” toward their goals.
“Global targets are not just aspirational benchmarks; to achieve them we require innovation — targets are a catalyst for existing solutions in alternative materials, circular economy, and reuse-refill sectors,” said a spokesperson via email.
This week’s news still leaves many questions about how the U.S. will advocate for these policies.
“The U.S. is known for a very thoughtful and independent approach to these negotiations, so I think we’ll all be waiting to see what comes next,” said Anja Brandon, associate director of plastics policy at the Ocean Conservancy. “Do they put out any position statements ahead of INC-5, do they share anything with the secretariat?”
Groups such as Greenpeace have previously called for a 75% cut to global plastic production by 2040. Figuring out how to measure that will be a key point of discussion.
Brandon said measurement will be complex, but cited the Paris climate agreement’s 1.5 degree C target as an example. She noted that reporting requirements under the growing number of extended producer responsibility laws are a step in this direction and said multiple approaches could work.
“I think getting to a place where every country has more transparent and detailed information about plastics and packaging in general would be incredibly helpful toward achieving the goal of this treaty,” she said.
Negotiating criteria or specifics for a possible list of harmful chemicals is similarly complex as many thousands are currently in use. Hocevar said his group doesn’t yet have a specific position on which chemicals could go on the list, but cited concerns about health effects from certain plastics and said “transparency is a vital first step” in terms of what this could mean for the supply chain.
Figuring out criteria for a potential list of problematic or banned plastic products is also considered difficult, including questions about whether countries would come up with their own lists. The International Council of Chemical Associations has previously said it does not support the treaty including a specific list of banned products and would prefer to see a more nuanced country-level approach that also considers other options.
In 2023, WWF released a report suggesting certain items that could go on such a list as part of a treaty. The U.S. Plastics Pact, part of a global network, also published a list of items its activators pledged to phase out. It also called out chemicals such as types of PFAS, polyvinyl chloride, polystyrene and others.
CHATTANOOGA, TENN. — The death of a Pilgrim’s Pride employee from the Chattanooga, Tenn., plant on July 8 is currently under investigation by the Tennessee Occupational Safety and Health Administration (TOSHA).
According to Chris Cannon, chief communications officer at TOSHA, all the information gathered so far indicates the worker died from non-work-related issues.
Cannon noted that TOSHA has not yet visited the facility for an on-site investigation and will not if the death is determined to be non-work-related. The investigation remains ongoing.
“A Pilgrim’s Chattanooga team member passed away yesterday morning from what appears to be natural causes,” said a Pilgrim’s Pride spokesperson. “We’re deeply saddened by this loss, and we extend our sympathies to the team member’s family and friends.”
Third-party restaurant delivery is a major consumer innovation that links ordering through marketplaces to fulfillment by gig drivers managed by marketplace algorithms. It began in fits and starts — mostly just ordering marketplaces, with restaurants left to figure out fulfillment on their own. Third-party restaurant delivery accelerated when DoorDash linked the front and back ends together, effectively surrounding the restaurant in what initially appeared to be services the restaurant could not do on its own.
Third-party delivery has, in many ways, been a boon to all involved. Although not all delivery sales are incremental to on-premises sales, restaurants have generated incremental sales. Consumers have greater choice and convenience in procuring prepared meals. Millions of couriers collect extra income from The Gig ATM, effectively monetizing their auto assets by delivering restaurant food. The marketplaces make it easy for restaurants to get online, make it easy for consumers to order from a wide choice of restaurants, and make it easy for workers to find gigs. These platforms have successfully brought together three different stakeholders in a way unlikely to have occurred without them.
While the primary allure to all of these stakeholders is “easy to,” that upfront ease obscures downstream friction resulting from third-party platforms. Assuming that restaurants have figured out how to price for marketplace commissions and that delivery consumers have determined that paying higher prices for convenience is worth it, five major problems have emerged for restaurants now that third-party platforms are ubiquitous.
Challenge #1: Overwhelmed Kitchens
The idea of incremental sales is alluring. All restaurateurs know that transactions are the lifeblood of each restaurant location. More transactions are almost always better — except when they all occur at the exact same time.
As delivery has become a more ingrained behavior, it has become clear that most delivery orders occur simultaneously with most on-premises orders. This has left restaurants in the unusual position of having their kitchens controlled entirely by another business — the third-party marketplaces.
Consumers choose what to order based more on the menu than anything else. If you are a brunch place, expect morning orders to peak at the same time as your dine-in traffic. If you are a lunch place, expect lunchtime orders to peak at the same time as your dine-in traffic. If you are a dinner place, expect evening orders to peak at the same time as your dine-in.
Challenge #2: Food Waiting for Driver Arrival
“Get ahead of the wave” has been said in most kitchens. “Always be baking” is another similar phrase often used in pizza restaurants. The idea is that you know the peak is coming, so line staff should do whatever they can to get ahead. This might mean prepping ingredients, cooking 100 burgers knowing that someone will order them, or dropping in fries even if there are no orders on the KDS.
What this mindset has come to mean in terms of delivery is that if a delivery order comes in and there is capacity to make it, then make it. Make it without knowing where the driver is or when they will arrive. Make the difficult or capacity-constrained items first, even if they will degrade while the team pulls together the other items. Just make it.
While this mindset, in theory, increases capacity utilization by freeing up the team to make another order later, it often results in food sitting and waiting for the driver’s arrival. Nothing good happens to food while it sits, no matter how good the packaging is. And the more food sits, the more shelves are necessary. And the more shelves a restaurant is filled with, the more it looks like an e-commerce fulfillment center and not a pleasant dining experience. The more e-commerce fulfillment takes over, the more correct order-to-driver matching becomes a problem.
Challenge #3: Restaurants Crowded with Non-Customers
Restaurants with more than 20% of their sales coming from delivery put their assets and teams under significant stress. With one in five parties present merely to collect an order on behalf of someone else, that means one in five parking spots are not directly generating revenue, one in five cars in the lot are blocking parking for on-premises guests, and one in five people trying to talk to the hostess merely want to collect the right bag.
Regardless of the professionalism, or lack thereof, of any given courier, these additional people can crowd the restaurant, again at peak time, causing both asset and front-of-house staff to work harder than the model was designed to do. This problem is exacerbated by the lack of coordination between courier arrival and food prep. While many restaurants try to “get ahead” of delivery orders, the courier often arrives before the food is finished. This wait time — frustrating to restaurants, couriers, and consumers alike — reduces parking spot turnover and furthers crowds in on-premise pickup areas.
Challenge #4: Chargebacks and Fraud
Recent surveys of restaurant owners have found that a shocking 3-4% of delivery sales are charged back to the restaurant. When delivery makes up 30% of sales, this can translate to more than a point of sales missing from the restaurant. Worse, the food has likely gone out the door. When food and paper costs are 30% of sales, restaurants could lose a half margin point just to chargebacks.
Perhaps the restaurant made a mistake, perhaps the courier consumed the food, or perhaps the delivery guest committed fraud by reporting an item or order missing that was, in fact, received. In most cases, it is impossible to say where the problem occurred. But marketplaces generally put the liability on the restaurant: guilty until proven innocent.
Delivery is not necessarily more prone to errors or fraud than is dine-in. The fragmented system just makes it harder to detect and correct errors and fraud. Where did the problem occur? Who is responsible? How can the problem be remedied? Can it be remedied?
While the guest relations and profit problems associated with chargebacks and fraud are obvious, the operational costs are less obvious. Owners, managers, and finance departments across the country incur these costs by investigating and disputing each individual chargeback.
Challenge #5: Lack of Guest Relationship
The last problem may be the most nefarious because its impacts are difficult to immediately quantify. Restaurants have lost their relationship with their guests and, with it, their ability to engage in hospitality.
Many restaurants lament the lack of guest data coming through third-party channels. Who is ordering? How often do they order? What do they order? While this lack of data seriously affects feedback loops and a restaurant’s ability to remarket to the guest, it isn’t really that different from recent history.
As little as 10 years ago, few restaurants knew the answers to these questions at scale. When sales were down at a major national brand, the Consumer Insights department deployed massive surveys to determine why- no behavioral data told the restaurant whether the problem lay in frequency or penetration. Were fewer customers coming in? Or were the same customers coming in, just less often? No one knew for sure. And yes, having this data is better than not having this data, but something else has been lost as a third party has been inserted between the guest and the restaurant.
The real problem for the restaurant is its complete inability to engage with the end consumer. The restaurant has no control over who represents its brand or how its brand is represented through couriers. The restaurant has no control over batching several deliveries into a single run. The restaurant has no control over fixing an issue when it arises.
Couriers are people. And like all people, some are more professional, and some are less. A specific restaurant may have a standard in mind for their employee brand representatives, but with a third-party system, there is no way to enforce this standard. The restaurant gets what it gets, in accordance with the invisible hand of the algorithm.
Some couriers engage in “self-batching,” combining orders from different restaurants to different destinations by using multiple phones to simultaneously deliver for multiple platforms. These couriers can increase their earnings by taking two orders from similar parts of town. Anyone who has ordered from a marketplace and watched their courier’s car stop at one or two other places of business, then one or two other places of consumption, knows how maddening this is. Delivery times run longer, food degrades further, and the consumer regrets the tip they placed at order, which no longer seems justified.
In response to this behavior, third-party platforms did not see a problem that needed to be eliminated. Instead, the marketplaces saw an opportunity to capitalize on. Third-party platforms now algorithmically batch orders. While this may be marginally better than the judgment of a courier running multiple phones, it’s still not great. Even well-batched orders will be slightly delayed, resulting in degradation in food.
As YouTube influencer Mrwhosetheboss pointed out in his recent video “The Internet Is Starting to Break: Here’s Why,” platforms use this degradation in service to not only enrich themselves (two delivery and service fees for one delivery) but also to create tiers of service for which they can further upcharge consumers. Don’t want to wait on the risk that the platform batches your order with one from across town? Pay an extra $2.99 for expedited service.
And where is the restaurant in all of this? Odds are the consumer will receive their order of cold, old food and blame the restaurant. Every front-of-house employee is trained in guest winback in case something goes wrong in a transaction. But how can a restaurant employee win back a guest who is unknown to the restaurant and complains to a third party? Worse, what if the complaint is a low star rating and an essay about the quality of the food on the platform, when that quality issue was created by the platform itself?
Getting Rid of Third-Party Complications
Over the last 10 years, a huge amount of innovation has gone into the consumer-facing front end of these challenges. If only we could get consumers to order directly from the restaurant, the thinking goes, all of these problems would go away. First-party online ordering systems have improved dramatically over the last 10 years, with many systems rivaling the frictionless ease of ordering through a marketplace.
Changing consumer behavior is harder than it seems, and merely offering consumers the ability to order directly from a restaurant has not always resulted in consumers ordering directly. Enter loyalty programs. Loyalty programs purport to give consumers enough value from ordering directly that they are more likely to do so. Loyalty programs have likewise come a long way, now offering consumers benefits beyond mere discounts and collecting behavioral data while they do so.
But still, the third-party marketplaces persist. As long as they offer restaurants access to consumers they might not otherwise get, consumers convenience that takes memorized passwords and credit card numbers to replicate, and drivers the ability to earn money flexibly that they might not otherwise make, the third parties will continue to be a part of running restaurants.
Solutions to Date Are a Start, but Inherently Reactive
Every Venture Capitalist loves a good problem statement. A great product becomes irresistible to its target market because it solves a genuine problem, a pain point. And the interesting thing about restaurant food delivery in 2024 is that it creates SO. MANY. PROBLEMS. These problems create rich soil for technological innovations to grow in.
Any restaurateur engaged in delivery receives many emails, phone calls, and visits each day from well-meaning sales reps of startups offering point solutions to each of these many problems. The solutions are amazing.
And dizzying. There are cameras and scales to reduce chargebacks. There are shelves, lockers, and packaging to deal with food waiting for drivers. There is throttling software and dynamic pricing to eliminate super-peaky demand. There are tools to select delivery fulfillment companies, geofence the restaurant, automate chargeback dispute resolution, and automatically ensure a restaurant’s online store on the marketplace is up.
Getting to Root Cause Prevents Problems by Solving from First Principles
But what if none of these tools were necessary? What if the solution to the problem is not having the problem in the first place? Is there a way to give consumers what they want, without creating a disjointed system that results in so many problems?
Designing from first principles means stepping back to determine what we are trying to achieve (great food delivered cost-effectively to a consumer). Instead of adding incremental solutions to an existing model, first-principles design solves for the objective, not the problems, by creating a well-coordinated, purpose-built system specifically for that objective.
The magic of a well-coordinated system is that everybody wins. With increased efficiency, the restaurant, the driver, and the consumer are all better off. While a well-coordinated system may take more effort upfront to set up, it is easier and more profitable once it is in place.
Does this, therefore, enable new entrants to the restaurant industry to have an advantage over current incumbents? Maybe. If we ask the executives of top restaurant chains what they would change about their operating system, many would likely touch on specific functions that need improvement. We would argue that it’s not the functionality that should be considered initially but the mindset of those shaping the operating system that needs to change. A new entrant can design from a blank sheet. An incumbent must build on what is already generating revenue, so it is understandably not easy.
Perhaps it should not surprise us that many incumbents are designing stand-alone digital kitchens and their respective operating systems, intending only to service off-premise orders. As we discuss in the final chapters of Delivering the Digital Restaurant: The Path to Digital Maturity, restaurant owners will reach a fork in the road on how they decide to handle the challenges of food delivery. Some may be tempted to lean deeper into experiential dining and forgo the incrementality of delivery. Others may need to develop stand-alone units with systems to optimize their delivery experience – something we believe can only be achieved through a vertically integrated tech stack.
If you are tired of your guests complaining about your delivered food being old, cold, or missing….
If you are tired of a crowded parking lot and bags of food lined up where guests should be….
If you are tired of sorting through chargebacks to determine what is your restaurant’s fault….
If you are tired of your staff not being sure which order to prioritize during peak….
Maybe it’s time to look at how your multi-channel restaurant needs a fresh perspective. One that doesn’t attempt to solve the problems that come from delivery but instead tries to do delivery well. Something that gives your guests as good an experience through delivery as they may have sitting inside your restaurant itself.
As we have written in “Delivering the Digital Restaurant: Your Roadmap to the Future of Food” in “Chapter 5: Why Pizza Works,” there is a way to deliver without all the headaches. Pizza has known and achieved this for years. Control your destiny, control your delivery. By vertically integrating order, production, and fulfillment, your restaurant can prevent the problems that come with third-party involvement.
About the Authors
Meredith Sandland and Carl Orsbourn are co-authors of “Delivering the Digital Restaurant: Your Roadmap to the Future of Food” and “Delivering the Digital Restaurant: The Path to Digital Maturity.” After each spent 20-plus years in corporate strategy and retail food, Meredith and Carl concluded that food in America was changing. They left their corporate jobs in search of innovation that would transform the restaurant industry. Ghost kitchens, virtual brands, digital marketing, the gig economy and lean operations are at the heart of the future they envision. Meredith is the CEO of Empower Delivery, software that powers delivery-centric kitchens. Carl is the co-founder of Juicer and an advisor to restaurant groups and technology solutions. Subscribe to their newsletter and podcast at deliveringthedigitalrestaurant.com.
Fine wine-lovers, look away. In a video posted to its Instagram account on Saturday, Spanish nightclub Chingon Nights showed off its alleged €120,000 sangria made with about 10 bottles of Petrus. Yes, that Petrus, the 100-point Bordeaux that regularly sells for over $5,000 a bottle and can reach $20,000 or more depending on the vintage.
The video, captioned “La Sangria Mas Cara del Mundo” (“The Most Expensive Sangria in the World”) could make any seasoned wine collector weep. While some enthusiasts might wait their whole lives to try a sip of this coveted liquid, the nightclub powers through what seems to be 10 full bottles of Petrus, adding them to a giant punch bowl with fruit slices and orange juice.
It looks like Chignon Nights, which according to its Instagram page has locations in Madrid, Ibiza, Marbella, and Barcelona, is no stranger to blowing through luxury wines and spirits in the name of a good time. Other videos on its page showcase guests spraying or even dumping bottles of Champagne on the dance floor. But while we might be used to seeing Champagne get thrown around in celebrations, the total disregard for Petrus just hits harder.
Commenters on the video agreed, with some users dropping an earnest: “Oh, no you didn’t really do that.” Others criticized the debauchery, with posts like “Stupidity at its finest, if you got the money for that, please enjoy the wine correctly and enjoy every rare wine you can get.” Others insisted that the Petrus bottles were fakes, and we’re really hoping that’s the case.
All we can wish is that no real Petrus was harmed in the making of this film.
