Next Generation Food Carts Hit City Streets

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With the increase in off-site digital orders, restaurants and coffee shops are rethinking their formats. Brands are experimenting with ghost kitchens, robotic kiosks, physical locations that do not feature a dining area, and other smaller-format models that meet the off-site needs of consumers without the high costs associated with operating. a traditional restaurant. With these changes in the industry, mobile locations such as street carts are expected to experience a resurgence, but the dominant street cart models cannot meet the digital needs of today’s consumers.

“Most of the street carts are propane powered so you don’t really have enough horsepower to run a heavy duty espresso machine and point of sale system and take online orders and whatever. you would expect from a restaurant today ” Vinay Menda, co-founder of small-format specialty coffee company Blank Street, told PYMNTS in an interview. “Most of the street vendors are offline… our carts are essentially the same experience you would have in a retail store, but in a cart. “

He added that with routers in its electronic carts, the coffeehouse company is able to integrate with mobile loyalty programs to accept a range of payment types and fulfill digital delivery orders. Blank Street recently raised $ 25 million as part of its Series A funding round, which the company intends to use in part to expand its digital capabilities, with mobile sales currently accounting for 20% of transactions.

There is certainly room to grow, according to data from PYMNTS. Research from the Restaurant Readiness Index, created in collaboration with Paytronix, reveals that for QSRs, digital orders currently account for an average of 47% of all transactions – and even for table-service restaurants, they represent 32%.

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Contagion Basket

These cart locations are created in partnership with EV Foods, a company that creates battery carts like the ones on Blank Street, as well as larger electric trucks. Menda predicts that by powering street carts with electric vehicle (EV) technology, it will become possible for more street carts to emerge, taking advantage of the relative ease of use of a battery-powered vehicle compared to a propane vehicle.

“It should make life easier for these vendors and allow more vendors to be on the streets,” he predicted.

Additionally, he argued that the street cart model is a sustainable one, noting that throughout their history, they have served an important function: enabling recent immigrants and others tasked with starting a business to leave. zero to earn income without the high real estate costs typically associated with opening a restaurant.

For now, the technology that powers the Blank Street carts is still prohibitively expensive for most small business owners looking to commission a cart, but Menda said the price has already halved over the past three years. to last four years.

“I am really delighted that the cost of battery technology continues to drop,” he said. “If the cost of our battery cart ends up being the same as the propane cart, every supplier will want to use it. “

Many technologies make light work

In today’s tough job market, with most restaurants struggling to pay workers wages competitive enough to keep stores full, Blank Street carts and other small-format models are helping the chain reduce costs and take orders more efficiently, while allowing the chain to offer low enough prices to attract consumers.

“You see models similar to our business in Asia, where the concept is to optimize the size of real estate and use technology to improve the ordering experience to reduce the price of goods,” he said. said, adding that the mobile advance ordering option “maximizes the number of people you need in the store.”

For now, according to the Restaurant Readiness Index, advance mobile purchases like these still represent a fairly small share of total QSR activity (just 17%). Still, the Index notes that restaurants that offer the option of ordering using a mobile app consistently outperform those that don’t, with 92% of top performers accepting mobile orders compared to just 31% of bottom performers. .

pickup picks up

While those pickup orders may now represent only a small portion of total orders, Menda believes that figure will increase as the channel gains share of the delivery. “I think the delivery has been a good thing and a bad thing for the restaurant industry,” he noted.

Menda argued that despite all the benefits offered by delivery, attracting customers who would not be willing to come to the store, the cost of the model for restaurants makes it difficult to sustain long-term sustainability, while consumers are being pushed back. strained by the fees that the royalties on the channels. Additionally, he noted that the percentage of pickup orders has increased even for aggregators such as DoorDash who have built their customer base through the strength of their delivery business.

“I think there is going to be a renaissance in the pickup truck model,” he said. “It’s a bit like what you’ve seen happening in Asia, where mobile penetration is very high. I think people are willing to go that extra step to get to a place to pick up an item because they know it’s better for the restaurant… it’s also a lot cheaper than delivery… pickup is there. next frontier.

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