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Tech roundup: Why food delivery is getting even more expensive

Restaurants are hiking prices on delivery apps by up to 25%. Also, Wow Bao launches a plant-based chicken concept, and a fully automated ghost kitchen is born.
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Photo illustration by Nico Heins

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Restaurant prices in January were the highest they’ve been in 40 years, increasing more than 6% over the past year as restaurants work to offset rising labor and food costs.

But that hike seems minor in comparison to the menu prices on third-party delivery apps, where restaurants are cranking up prices at almost outlandish levels.

On average, restaurants are marking up their menu prices by almost a quarter (24%) on delivery aggregators relative to the prices on their own websites, according to a new report by tech supplier Paytronix. That’s four times the rate of regular menu inflation. 

Fast-food places are more likely to do this, with 27% saying that they raise prices for delivery, compared to 14% of full-service operations.

And the higher prices seem to be turning off some consumers. According to Paytronix, 63% of restaurant customers have not used a third-party delivery service since early 2020. Four in 10 said it’s because they don’t want to pay delivery fees, and more than a quarter said it’s simply too expensive.

The hikes are a calculated move by restaurants to push customers to their own ordering channels, which are more profitable than third-party delivery. Now that the pandemic is easing and people appear more eager to dine out, operators can afford to depend less on delivery to drive traffic. But those astronomical prices don’t bode well for the future of the service, especially as consumers are dealing with inflation across the board.

Wow Bao is launching a virtual plant-based chicken brand. Crazy Crispy Chick’n is part of a partnership with Skinny Butcher, a plant-based protein startup that will also sell products in grocery stores. Wow Bao helped the company develop the restaurant side of its strategy, creating a menu that includes chicken sandwiches, tenders, salads and more, all featuring Skinny Butcher’s Chick’n, which is made with pea protein and spices and a “unique breading system” that makes it crispy. 

The Asian bao chain has 650 locations and will use its scale to help grow Crazy Crispy Chick’n. It’s also partnering with ghost kitchen operator Reef to launch the brand nationwide.

Qdoba Mexican Eats is also joining Reef. It’s launching 25 delivery-only units in Seattle, Austin and Atlanta and plans to add more throughout the U.S. and beyond over the next two to five years. The 740-unit chain said the ghost kitchens will allow it to reach more customers in a more sustainable way and marks an “aggressive expansion” into franchised and licensed locations.

Saladworks is also growing with ghost kitchens. The fast-casual salad chain is opening 20 such locations in central Florida through a partnership with Combo Kitchens, a company that helps connect existing restaurants with established brands to use as off-premise add-ons. In this case, the Florida-based chain WingHouse Bar & Grill will start offering Saladworks items behind the scenes for takeout and delivery. The deal will allow Saladworks to expand into a new market and continues the concept’s rapid growth through nontraditional formats. It opened 42 locations last year, 79% of which were in ghost kitchens, food trucks and nontraditional venues like airports, it said.

Nala Robotics is launching a fully automated ghost kitchen. The Naperville, Ill.-based company last week announced the Nala Marketplace, which allows restaurants to create delivery-only concepts that are prepared entirely by Nala’s robotic chefs. The company said its AI-powered robotic arms can prepare a variety of cuisine types. New concepts will upload their menus and specs to the system in a process that takes just 24 hours, the company said. The bots are currently being used by three Nala-created restaurants and one outside brand called DesiOwl. All four are being prepared by Nala’s bots inside a Naperville mall and are available on third-party delivery apps.

“Startup costs were minimal and exponentially lower than it would cost to open a traditional restaurant,”  said Michael Chintamaneni, owner of DesiOwl, in a statement. The setup costs less than $1,000, he said, and also requires no human labor. “It seemed too good to be true, but I was able to open my own restaurant in 24 hours.”

Nextbite has a new menu management tool. The product, part of the virtual brand provider's Ordermark online ordering system, allows restaurants to manage their menus across multiple third-party delivery marketplaces from a single interface. Operators can use it to add or remove menu items, update pricing and images and synchronize their menus across delivery platforms.

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