Dive Brief:
- New York Gov. Andrew Cuomo outlined on Friday the second phase of New York's Empire State Digital Initiative, aimed at supporting the state’s restaurants and foodservice industry affected by the COVID-19 pandemic. As part of this phase, the state will offer Ritual's commission-free digital ordering platform, Ritual One, to restaurants at no cost for pickup and delivery. The offer is in place through April.
- Restaurants that join Ritual through the initiative will be able to accept contactless payments through PayPal and Venmo apps. Ritual, which will waive setup, monthly subscription and credit card processing fees as part of the program, can customize platforms to match branding. The feature can also be integrated directly with restaurants' point-of-sale systems, as well as with Instagram, Facebook and Google Ordering. Businesses can opt out at any time.
- Ritual launched its One platform in the U.S. in June, in Chicago. It was initially created through a partnership between Ritual and the City of Toronto before expanding to Los Angeles in October.
Dive Insight:
Waiving fees to support restaurants' digital business could provide a significant lifeline for New York's restaurants while indoor dining is banned again, particularly as many platforms charge 20% to 30% commission. Other than the drive-thru, off-premise channels are facilitated by digital ordering and without such a presence, restaurants will struggle to stay open through another round of dining room shutdowns.
Digital channels have in fact become so critical during this crisis, digital sales are expected to make up more than half of limited-service restaurants' business by 2025, a 70% increase over pre-pandemic estimates. Enabling restaurants to provide ordering directly from their channels is also critical, as it provides the ability to create direct relationships with customers and retain their data for targeted marketing.
Chicago was the first U.S. city to have access to Ritual One's resources and when the e-commerce company announced its plans, it said would later move into additional cities with "free for life" offers. While Chicago doesn't have a partnership with Ritual as New York does, it has a similar program in place with Tock, which offers restaurants a free, six-month subscription for the digital management of reservations, takeout, delivery and events.
While this program could be a lifeline, it may not be a panacea. Though delivery and takeout have grown exponentially, they continue to generate just a fraction of sales for many restaurants. The best chance for restaurants remains a federal stimulus aimed at the industry, though that has yet to transpire in Congress.
New York's vast restaurant industry has struggled plenty through this crisis. There were about 50,000 eating and drinking establishments in New York prior to the pandemic — the second highest in the U.S. behind California — making it particularly vulnerable to the industry's "free fall” of more than 111,000 closures so far this year. According to Upserve's State of the Restaurant Industry 2020 report, New York City restaurants have experienced year-over-year sales losses of more than 65%.
In a statement regarding the Ritual One partnership, Gov. Cuomo said, "It's critical that while restrictions are in place on how bars and restaurants can operate in order to protect the public health, we also open new opportunities to counteract the economic strain they face. This latest piece of New York’s Empire Digital initiative will give these establishments an opportunity to expand their online businesses free of charge, with an added incentive that will encourage customers to continue supporting their favorite restaurants, bakeries and coffee shops."
Still, that doesn’t seem to be enough for New York City Hospitality Alliance Executive Director Andrew Rigie, who said Gov. Cuomo’s decision to shut down indoor dining again was "shameful."
