The Direct to Consumer Boom in Food Tech

Article courtesy of The Spoon here

We’re running out of synonyms.

Since the pandemic hit in earnest, we’ve written about surges, spikes, booms, waves, deluges and just about every other artful synonym we can think of for “big increase” in a particular trend.

The latest [insert unused vivid descriptor here] is companies creating their own direct-to-consumer sales channels. Beyond Meat became the latest D2C entrant this morning by announcing its new e-commerce site through which it can sell its plant-based beef and sausage products.

Beyond’s D2C play comes just months after its rival, Impossible Foods launched its own D2C channel. But it’s not just plant-based meats that are going the D2C route. Companies across the food tech world are following suit. In the past six months:

  • Pepsico launched its own D2C site to sell snacks.

  • Barn2Door raised $6 million to help farmers sell their food direct to consumers.

  • Restaurant food suppliers Cheetah, DineMarket, Pepper, and Choco all pivoted to sell directly to consumers.

  • Chipotle launched a D2C service connecting its consumers with its farm suppliers.

  • Vertical farm company Fifth Season started selling greens direct to consumers (in Pittsburgh)

That list doesn’t even include all of the small CPG startups that are selling their unique snacks and such via their own websites.

There has been so much activity that we had not one, but two different deep dive conversations about launching D2C brands during this pandemic on our Spoon Plus service.

While the pandemic didn’t create all this D2C activity, it assuredly accelerated it. With restaurants shut down and people stuck at home, there has been record amounts of online grocery shopping. So people are getting used to the idea of buying food online, and there is a new market suddenly available to brands now.

But in addition to more money, going direct to consumers means that brands can own that relationship. With those relationships comes all kinds of customer data that opens up new insights and opportunities (to, you know, sell more stuff).

The big challenge for companies going direct, however, will be educating those customers about new D2C sales channels. Sure, people are forming new habits around grocery e-commerce, but they are still shopping with established retailers like Walmart and Amazon. Companies will need to provide some kind of additional value for direct purchasing to incentivize consumers to make that switch.

Now that more brands than ever are building out direct sales channels, we’ll have to see if a surge, spike, boom, wave, or deluge of consumer sales follows.

Contactless Restaurant Tech Reinvention Is Already Here

Direct-to-consumer isn’t the only food tech trend getting a boost from the pandemic. In the restaurant biz, the emergence and stupidly fast ascension of so-called contactless technologies is the big story.

At this point, most front-of-house-focused restaurant tech companies now offer some form of contactless tech for the dining room. Companies include Sevenrooms, Presto, Zuppler, Bbot, PayJunction, and many, many others. The typical software package includes digital menu capabilities and features that let customers order and pay for meals from their own mobile devices. The majority of these offerings utilize QR codes strategically placed on tabletops and signage to facilitate this contactless service.

This sudden switch — from a server writing your order on a notepad to keying in menu items yourself — happened at lightning speed as a way to reopen dining rooms quickly and safely after pandemic-induced shelter-in-place mandates. But just as quickly, we’ve now reached a point where it’s quite frankly hard to tell one solution from the next, and the pressure to iterate is already upon us.

Enter Order for Me, a Los Angeles-based company that has added some bells and whistles to the contactless tech stack. Most notably, these are the ability to keep a virtual tab open throughout the meal and, most important, the ability to split a check between multiple diners. Paytronix has a smilier setup, and it’s pretty much a foregone conclusion others will follow. Open tabs beget impulse purchases, like dessert, which beget higher tickets. In contrast, having to create a new transaction for every new cocktail or slice of cake requires just enough effort on the part of consumers to dissuade many from making those purchases. Plus, a single tab that can be split multiple ways is just easier. To use another buzzword, it’s more frictionless.

Good restaurant tech should in essence digitally recreate (or better yet, improve) the dining room/drive-thru/takeout experience we all knew prior to the pandemic. So while virtual tabs and splitting the bill are small developments, they underscore the point that tech’s first and most important job in the restaurant biz right now is to serve up familiar processes in digital format and work as seamlessly as possible for all parties involved.