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How the restaurant industry will change post-pandemic

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Deborah Williamson, Founder of James & Chris Webb, Founder and CEO of ChowNow, joins Yahoo Finance’s Sibile Marcellus and Alexis Christoforous to discuss outlook for food delivery amid the pandemic.

Video Transcript

SIBILE MARCELLUS: Food delivery giant Grubhub's first quarter sales beat expectations. Revenue was up 52% in the first quarter, but of course, there's plenty of competition when it comes to the food delivery business. I want to bring in two new guests, Deborah Williamson, founder of James, and Chris Webb, founder and CEO of ChowNow. I want to start first with Chris. Chris, tell me how is your platform different than third party delivery platforms in terms of the fact that you don't actually charge commissions to restaurants.

CHRIS WEBB: Yeah, that's exactly right. The biggest difference is we do not charge restaurants commissions at all. And so that's better for restaurants. And we share all the customer data with restaurants. And so it really is a true partnership with the restaurant clients. But what that does in turn is, it also allows the restaurants to offer the better menu prices to diners. So not only is it better for restaurants, but it's also better for diners because they don't pay kind of inflated menu prices and other fees layered on with the other apps out there.

ALEXIS CHRISTOFOROUS: So Deborah, I have a question for you in a moment, but Chris, I have to follow up with what you just said. You know, a lot of the well-established online delivery companies have taken a lot of flak for inflating prices for consumers and then also charging the restaurants a commission. You say you don't charge that commission. So then how do you make money?

CHRIS WEBB: Yes, so our basic business model is very simple. It's what we've been doing since day one, which is, we just charge a flat monthly fee for the software. So we provide restaurants with their own apps, order on their website, their own customer data. And then we also have the ChowNow app that we list all our restaurant clients in. And so, the app is completely free for restaurant clients to use. There's no commissions. And all we get paid is that flat monthly fee, which is kind of roughly $99 a month.

ALEXIS CHRISTOFOROUS: OK, so Deborah, you own James, which is a restaurant in Brooklyn. And I understand you never closed once during the pandemic. That puts you in the minority. I've got to tell you. I'm sure you know that, among restaurant owners. How were you able to continue operating?

DEBORAH WILLIAMSON: Well, it was incredibly difficult. And we went from 28 employees to six. I was one of those six. I went to where-- doing everything, along with we basically kept our culinary team and had one server and me. And we worked-- I worked every day for the better part of the year. And we've grown from having the skeleton crew. And, you know, to be honest, we lost money. We lost money day after day, week after week, until maybe mid last year.

And then we started to see a turnaround. But I felt like part of the contract that you make when you go into hospitality is to be there for people and to feed them. And it was important that we were here. So a year later, we're at 20 employees. So we're on our way back. And, you know, I'm very, very optimistic about the future.

SIBILE MARCELLUS: And Chris, what's your outlook for the food delivery industry this year, as we're seeing indoor dining start to pick up? Do you think you might be in danger there? Or do you think people are still going to turn to food delivery and take-out?

CHRIS WEBB: No, no, so despite the country kind of opening up over the last number of months, depending on what city and state you're in, we've actually seen our numbers grow. And so we just think that the general public has been trained on the convenience of ordering takeout. You're not going to go out and eat seven days a week. And so if you're not going out to eat every single day of the week, what we're finding a lot of people just love the convenience, and they're ordering more and more takeout.

And so our platform offers three options for diners. We have pickup, kind of traditional. You pull out the ChowNow app, you order. You walk over to the restaurant or drive over to the restaurant, pick it up. Curbside pickup is one of the options. That's the second option. We've seen the most growth over the last year in curbside pickup. People love it. You've seen this kind of across commerce. Target, Walmart, and others outside of food are also doing curbside pickup. And it's really taking off. And then you have delivery. What we think is that pickup and curbside pickup will continue to accelerate. And delivery may pull back just a tad. But we're actually not seeing anything, really, pull back at this point.

ALEXIS CHRISTOFOROUS: Deborah, you know, sometimes people think, well, I don't really know how I can support my local restaurant. And does takeout really accomplish that? Because you're not helping the servers necessarily, those front of the house waiters, waitresses, maitre d' types. So is delivery sort of taking away from that part of the industry?

DEBORAH WILLIAMSON: I don't think so. A, it supports the industry and the restaurant as a whole. We went from maybe 1% of our business being takeaway-- it was something we never really did-- to I think now it's around 30%. And this is a year later. Certainly in the early days, it was 80%. So it's become more of a hybrid business. And all of the apps and ChowNow included offers an option for built-in gratuities and service fees that can be given to the service staff. And we wholeheartedly support that. And our whole team, our service staff sees a revenue and a tip stream based on everything that we do.

So-- and I will say that during the pandemic, you really got an opportunity to see generosity and, like, the beauty of people who just would tip an incredible amount. So, 20%, 30%, 40%, 50%. It's not an unusual circumstance. So our front of house team has actually done fairly well during this whole thing and continues to. So I feel like takeaway and delivery is here to stay. And it's changed the way we will do business moving forward. And we have this opportunity to really morph. And yeah, I think it's here to stay.

SIBILE MARCELLUS: And Deborah, I know that during the pandemic, there was a lot of talk about the Paycheck Protection Program. And I spoke to the Independent Restaurant Coalition. They were lobbying and fighting with senators and congressmen and former President Trump to try to get a fund for restaurants so that they can be able to survive past the recovery because of the devastation of last year. Have you been able to access those kinds of funds?

DEBORAH WILLIAMSON: We have. We have participated in both rounds of PPP. And we're actually looking forward to the next round of the grants. And to be frank, we wouldn't be here without them. So, it has been a lifeline. And I think it's been a lifeline for the entire industry. And also not only have we all had to struggle with the changes and the lack of business and shutting down, but there's also been additional costs. So we built two patios that flank each side of our restaurant. We had to bring in new technology. We brought on ChowNow. And we had to completely change all of our POS systems. So, simultaneously, you're losing money. And your expenditures have gone up. So the PPP has been instrumental. And I think it's a real lifeline for this industry and others.

SIBILE MARCELLUS: Well, it's good to hear that restaurants are recovering. Deborah Williamson and Chris Webb, thanks so much.