The Future of Restaurants
European Straits #132
It’s the summer break. We at The Family pride ourselves on always being on call, because startups require all-hands-on-deck in their frequent moments of crisis. However, we’ve observed that even in startups everything in Europe comes to a halt in August. Children are out of school across the continent. Angel investors and VCs are far away on their boats or sandy beaches. Entrepreneurs catch up on sleep. And so there’s no point to staying connected and trying to work when everyone else isn’t 🤷.
As for me, I’m spending the next weeks in Normandy with my wife and kids. We have a small house there, one that’s deep into the countryside, without any neighbors. We can enjoy the silence at night, rabbits running around the garden early in the morning, the possibility of listening to extremely loud music without bothering anyone, thousands of DVDs for the long evenings, and almost all of our books, which makes for quite a choice when we don’t know what to read.
One thing’s missing, however: restaurants. Our place is so far removed from any town that you need to drive at least 25 kilometers to find a decent place with good food. That’s not necessarily bad: cooking your own food makes it possible to fully control your diet and nutrition. But restaurants are about much more than food, and to compensate for the lack of them around here, I’ve decided to dedicate this issue to the future of restaurants. Read along 👇
The future of restaurants
1/ What inspired me to write about restaurants is a long article in the Guardian that my wife Laetitia tweeted about a while ago: The rise and fall of French cuisine. What we learn in this article, among many other things, is that just like most of what we take for granted, restaurants are a fairly recent invention. They appeared sometime in the 18th century, when butchers in Paris started to entertain customers with food (in that case, bouillon) that they could consume on site rather than taking it away. And so restaurants developed out of retail in Paris, becoming a global possibility for buying food and eating it right away—an alternative to Asian food stands, English pubs, and German Biergärten.
2/ Indeed, as discussed in Wendell Steavenson’s article above, restaurants are as much about the experience as they are about the food. It’s about the ritual interactions between customer and waiter, the customers themselves, and careful orchestration. And the French approach to this experience—being seated by a maître d’hôtel, ordering from a waiter while seated, taking as long as you need to consume your food, not interacting with other customers too much, and paying right before you leave—became a kind of world standard. It determined a whole, complex economic equation that has been refined over centuries and mastered by restaurateurs like Anthony Bourdain.
3/ Now let’s go through everything that is changing in the restaurant as an experience. One of the oldest articles clipped in my Evernote related to restaurants is about reservations. Why does a reservation add so much value as a service (you really want to have a table in that favorite restaurant of yours), and yet no restaurant dares to make the customer pay for it? Here’s the secret: You rarely pay for the reservation because that would be an affront to the chef, who entertains the myth that you’re paying for their food rather than the whole experience that is that restaurant. But there is such a thing as paying for reservations, and entrepreneurs are already experimenting in that space.
4/ Now something else is happening in the industry: there are fewer and fewer people willing to work in restaurants. You might have heard the story of Emmanuel Macron telling an unemployed graduate about the many jobs waiting for him in restaurants “across the street”. It was taken as an insult. Why, indeed, would someone with a master’s degree work at a restaurant? The pay is low; you need to live in the city, which is expensive; hours are odd (evenings and weekends); management is terrible; harassment is frequent; and don’t count on benefits since your work is probably not registered anyway. And so like every business in proximity services, restaurants have a hard time hiring.
5/ Not only are restaurant workers more difficult to attract, owners have difficulties paying the rent. Because restaurants are typically located in dense urban areas, they’re affected by the same tension that’s making rents skyrocket in every large city around the world. In certain places, this leads to absurd outcomes, like restaurants becoming scarce in Manhattan—not because they’re lacking potential customers hungry for a great experience, but because covering the rent would mean billing staggering prices for ordinary meals. And customers now have many fallback options: they can take away their food or have it delivered wherever they like. And so you can only go so high when it comes to pricing a meal.
6/ There’s something else. Like in every industry, customers are confronted with a broadening choice of food. The diversity can be staggering. For restaurants, it means two things: volatility (you can’t count on customers coming to the same place forever), and customers having the upper hand (if they have a broader choice when it comes to eating, they’re entitled to a higher quality at a lower price, to say nothing of counting on more transparency on ingredients and how dishes are prepared). Let me tell you that traditional French restaurants are not used to accommodating their customers with vegan, gluten-free, or lactose-free options. And that, according to customers, needs to change.
7/ That change is not happening in restaurants, but outside of them. Retail food stores are now way ahead of restaurants when it comes to accommodating specific tastes and dietary requirements. Unlike on a restaurant menu, at a store you can actually check what’s in the food you’re buying. Add to that the spectacular development of the food delivery sector, and you have a looming picture of restaurant doom. Because it collects so much data from its users, Deliveroo has been spotting all the gaps in the current supply and has come up with satisfying options for frustrated diners. If you browse the Deliveroo Editions section in the app in London, you’re certain to find the niche food of your dreams: vegan pizza, poke bowls, Peking duck, even delicious Indian curry (which, believe it or not, is now rare in London).
8/ The enabler of the dining experience getting out of restaurants is that new phenomenon known as dark (or cloud) kitchens. Entrepreneurs have realized that freshly prepared food is in the process of being unbundled from the experience of consuming it—which can now happen at home, at the office, at some food court somewhere in the city, or wherever you’re attending an event. As a result, a logistics revolution is happening: fresh food can now be prepared away from where the customers consume it, which makes it easier to find affordable rents for those kitchens and to attract workers to populate them. Note that Travis Kalanick himself has joined the cloud kitchen battle after leaving position as Uber CEO.
9/ Now, if you connect the dots, you realize why that article in The Guardian was discussing the fall of the French cuisine. The food itself might still be good, but the experience is now quaint and economically unsustainable. These days, high-quality, customized food is commoditized, providing an opportunity to build giant urban infrastructures dedicated to preparing it on demand. What is not commoditized is the experience of consuming that food, and this is where the focus of innovative entrepreneurs has been shifting. I see two main options emerging on the market. One is the revenge of the hawker center: places where you can sit, alone or with a group, to consume the food bought from your preferred supplier. You’ll likely have to pay for the reservation, though—talk about unbundling!
10/ The other option has been summed up by my cofounder Oussama: “Food is the new music, chefs are the new stars”. Imagine if the best chefs, instead of being stuck in one restaurant all year long, were constantly on tour. You would have them in your city for 1 to 20 nights, bookable in advance, delivering a full stack experience: briefing you on the ingredients, demonstrating how the dishes are prepared in the kitchen, introducing you to their team, and hearing your feedback. It’s not a fantasy, because one of our entrepreneurs, Luca Pronzato, has designed exactly this experience. It’s called ONA, and the idea was envisioned by food critic Jonathan Gold as early as 2009: “While nobody was paying attention, food quietly assumed the place in youth culture that used to be occupied by rock’n’roll—individual, fierce and intensely political.”
Should we expect French-style restaurants to go the way of classical music?
No news, because it’s summer break! But let me highlight our best startups in the restaurant space:
🌟 ONA. Luca’s experience in the world’s best restaurants—including Copenhagen’s Noma—showed him that young chefs are often constrained in their creativity, executing other people’s menus. ONA lets them dream big, managing pop-up restaurants around the world so that the chefs can concentrate on what they know best: innovative, locally-inspired cuisine.
🦞 Nestor. This hard-working, detail-obsessed team figured out that working professionals don’t always need tons of choices, they just need a tasty, convenient meal. With strategically-placed kitchens and one chef-designed menu per day (with appetizer, main and dessert), they can deliver lunch to Paris’s office workers in a matter of minutes.
🍝 Cala. Perfectly cooked pasta is a question of precision and repetition—precisely the kind of task that a robot can do well. Cala lets you customize your dish with the form of pasta and sauce you like, for a great Italian meal. They’re currently fine-tuning the product, but stay tuned!
📠 Nulisec. As takeaway and delivery slowly change our eating habits (just wait for the homes without kitchens), supply chains are also changing. Nulisec, a portfolio company from the Czech Republic, is part of that shift, connecting brands directly to restaurants and retailers.
I assume you have time to read these days, so here are many, many articles about the restaurant industry:
Where Restaurant Reservations Come From (Alexis Madrigal, The Atlantic, July 2014)
Paying to Get Inside the Restaurant (Tim Hartford, The Atlantic, May 2015)
Cuisine and Empire (Eugene Wei, Remains of the Day, August 2015)
A Seismic Shift in How People Eat (Hans Taparia and Pamela Koch, The New York Times, November 2015)
The great British curry crisis (Malcolm Moore, The Financial Times, January 2016)
Dinner, Disrupted (Daniel Duane, The New York Times, August 2016)
The Food Delivery Death Star (The California Review, Medium, November 2016)
How the Hospitality Industry Is Adapting to Laptop Squatters (Matthew Sedacca, Eater, December 2016)
There's a Massive Restaurant Industry Bubble, and It's About to Burst (Kevin Alexander, Thrillist, December 2016)
Who killed the great British curry house? (Bee Wilson, The Guardian, January 2017)
Millennials are killing chain restaurants thanks to Instagram (Carissa Lintao, The Next Web, June 2017)
Rent spikes are creating fine-dining deserts in Manhattan (Bloomberg News, Crain’s New York Business, June 2017)
Grocery Stores Draw Millennials With In-Store Restaurants (Kristofor Husted, NPR, August 2017)
Airbnb’s newest plan to win over travelers is telling them where to eat (Allison Griswold, Quartz, September 2017)
Uber’s Credit Card Is Bankrupting Restaurants… and It’s All Your Fault (Nick Abouzeid, Product Hunt, December 2017)
Why I left Google to join Grab (Steve Yegge, January 2018)
The Surprising Reason that There Are So Many Thai Restaurants in America (Myles Karp, Vice, March 2018)
A Fast-Food Problem: Where Have All the Teenagers Gone? (Rachel Abrams and Robert Gebeloff, The New York Times, May 2018)
The new big restaurant chain may not own any kitchens (Jonathan Shieber, TechCrunch, October 2018)
How Restaurants Got So Loud (Kate Wagner, The Atlantic, November 2018)
This Meal Delivery Company Was Just Another Struggling Startup Until Wooing Restaurants Paid Off (Olivia Zaleski, Bloomberg, December 2018)
San Francisco is so expensive that waiters can no longer afford to live in the city, and it's changing the way restaurants are serving food and hiring workers (Lina Batarags, Business Insider, December 2018)
The Party Is Over: Chicago’s once-vaunted dining scene has lost its luster (John Kessler, Chicago Magazine, December 2018)
For your mouth only: welcome to the era of personalised food (Bee Wilson, 1843 Magazine, March 2019)
The 2 most innovative companies in the world today are changing how hundreds of millions of Asian consumers buy food, book hotels, and (a lot) more (David Lidsky, Fast Company, February 2019)
Soleil Ho is a young, queer woman of color who wants to redefine food criticism (Maura Judkis, The Washington Post, March 2019)
Cooking As A Service (Alex Danco, Snippets 2.0, May 2019)
A rare glimpse into the sweeping—and potentially troubling—cloud kitchens trend (Connie Loizos, TechCrunch, June 2019)
Uber Eats and Deliveroo are so massive that startups are raising millions to create 'virtual restaurants' you'll never visit (Shona Ghosh, Business Insider, June 2019)
Remembering Anthony Bourdain (me, my weekly newsletter, July 2019)
The rise and fall of French cuisine (Wendell Steavenson, The Guardian, July 2019)
Warm regards (from Normandy, France),