Chuck E. Cheese provides a glimpse into the future of restaurants
Mr. Cheese decided to make a little extra cheddar by selling pizza on food delivery apps.
Tuesday, June 8th, 2020
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Just like small businesses, Chuck E. Cheese is looking to find a way to make it through the Covid-19 Pandemic. While social distancing and essential business regulations restrict its locations from opening, Mr. Cheese decided to make a little extra cheddar by selling pizza on food delivery apps.
The catch: Chuck E. Cheese recognized they’re not exactly known for making quality pizza so they listed on Grubhub as “Pasqually's Pizza & Wings.”
Pasqually’s and Chuck E. Cheese on Grubhub.
Source: Anonymous Reddit user.
Despite the name change, it’s still the same food.
Deceptive Brands & Shared Kitchens
While this may seem like a strange and deceptive business practice, it’s actually more widespread than you may guess.
According to Business Insider, Just Salad delivers under a subbrand called Health Tribe to target an audience with dietary restrictions and Applebee’s often delivers under the subbrand Neighborhood Wings by Applebee's.
Odd’s are, practices like these and more will become even more common in the future. The restaurant business is tough, margins on meals are low and fixed costs like rent and insurance can be a burden each month. Restaurants are usually constrained by the number of tables they can fit and how quickly they can turn those tables
Delivery apps change the table capacity constraint, by offering a way for restaurants to reach a larger audience. Domino’s, for example, totally revamped its business to focus on online ordering, delivery and pickup. That’s why you may see new Domino’s locations without seating. These locations are small, meaning lower rent and fixed costs and higher profit margins. The results have been strong as Domino’s stock price has outperformed Apple, Amazon, and Google in the last decade.
Delivery apps such as Grubhub, UberEats, and DoorDash make it easy for restaurants to not only make money from an additional sales channel, but also test different brands and recipes. The flexibility makes restaurant kitchens more valuable.
There are big bets on delivery as a primary distribution model for restaurants. CloudKitchens, a startup led by ex-Uber cofounder and CEO Travis Kalanick, allows independent restaurants and chains to rent commercial kitchens for delivery only. The rent is short term, giving greater flexibility to restaurants. Kalanick invested $150 million of his own capital and raised another $400 million from the Saudi Arabian Sovereign Wealth Fund betting restaurants will choose an asset-light and data-driven delivery model.
The cloud kitchen model allows restaurants to pop up for only a short period and test different brands and menus from the same location. A Chuck E. Cheese restaurant in the middle of the Covid-19 pandemic is functionally equivalent to a cloud kitchen. Both are just spaces to prepare food, but branding and menus items can change while delivery apps help them make money.
Responding to Evolving Consumer Trends and Declining Consumer Patience
Upscale salad chain Sweetgreen provides another example of changing restaurant distribution models. Leadership is focused on optimizing customer experience by changing its store layouts and distribution methods to provide the most convenient experience possible.
In 2018, Sweetgreen launched Outpost, which makes salads in large, centralized kitchens and delivers orders to stands in offices and other central locations. Customers can order their lunch in the morning and pick it up in the lobby of their office building. While we’ll have to see if this model survives remote work trends, it’s another step towards a restaurant experience that prioritizes expedited distribution over in-store customer experience.
On NPR’s How I Built This, Sweetgreen CEO Nicolas Jammet explained how customer expectations are evolving:
“When Sweetgreen first opened, our customers told us, ‘Wow, how convenient I have place that I can walk to that’s two blocks away, wait in line for only 15 minutes, and get a healthy bowl.’ Fast-forward five years, they’re like, ‘I have to walk two blocks and wait 15 minutes to get a healthy bowl?’”
While the exact solutions and ideal customers experience is unclear, logistics, online ordering, and data will likely define the future of restaurants-- including how customers interact with brands and visit (or don’t visit) restaurant locations.
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