Travis Kalanick, the former CEO of Uber, is back in the public eye with what looks like an effort to ramp up operations for his new businesses in California.
But in a twist, Kalanick appears to be trying to work with policymakers instead of battling against them, as Uber famously did under his tenure.
Following his exit from Uber, Kalanick moved into the restaurant space—arguably a strange focus given the industry’s famously low profit margins, which average about 3-5%.
But Kalanick is not operating conventional restaurants. With backing from the Saudi Arabian sovereign wealth fund and Microsoft, Kalanick has two food-related ventures under his parent company, City Storage Systems.
One is Otter, the provider of “all-in-one restaurant software… [that] helps businesses make more money, delight guests, and navigate the ever-changing world of food.”
Another is CloudKitchens, which focuses on the preparation of food then supplied to customers via delivery.
The latter effort puts him in competition with traditional dine-in restaurants, many of which also supply food through their own delivery operators or the big delivery firms like DoorDash and Uber Eats.
Kalanick, or at least an entity with links to him, has been pushing for regulatory changes that would benefit his side of the food business while potentially hurting more traditional restaurants.
As Semafor recently reported, through an entity called the Digital Restaurant Association (DRA), “Kalanick has been quietly lobbying regulators to force delivery apps like Uber Eats and DoorDash to hand over valuable customer data to restaurants, which would also benefit his food company.”
Kalanick’s CloudKitchens venture wants that data because, backed by big investor money to the tune of $15 billion, it can use it to target consumers in a sophisticated, tech-savvy manner, to gain more of their business.
However, traditional restaurants lack the financial and technological resources to do the same—as well as the financial resources needed to protect the data they would be supplied with under such laws or regulations.
A recent study from Accenture found cyber criminals disproportionately target small businesses: 43 percent of cyberattacks are aimed at small businesses; only 14 percent of small businesses are adequately prepared to defend themselves.
Most recently, the Sacramento Bee reported one such legislative effort in California, though the language of the bill does not currently contain any data-handover mandates.
There is also speculation that a push is about to be launched in Los Angeles for a more localized data-handover mandate because a representative of DRA recently registered to lobby there. That registration came in the aftermath of the legislator backing the California-wide bill indicating the legislation would not be a vehicle for such a mandate.
Previously, as Semafor notes, similar efforts have been attempted in Georgia, Florida, and Miami-Dade county, specifically.
As Leland Neal, CEO of the Taco Rio chain in South Florida, put it to Semafor regarding consumer data that would have been handed over under the Miami-Dade version and could be required to be provided to restaurants under a Los Angeles-specific version, “I don’t want it. I don’t need it.”
But if Neal and others wind up in possession of the data, consumers—to say nothing of state or even federal regulators—would likely expect them to protect it. Such data protection could be hard for traditional restaurants to afford given their already-slim profit margins.
Despite this concern, the DRA does claim to speak for these restaurants. Its executive director and CEO Joe Reinstein told Semafor that “all we are [is] a collection of independent mom and pops.”
But according to the Sacramento Bee, “The DRA has ties to former Uber executive Travis Kalanick, who resigned from his post at the ridesharing company in 2017.”
Even were this not the case, DRA’s leadership’s experience is much more focused on big restaurant and food brands, not mom-and-pop operations.
Reinstein’s biography on the DRA website notes that his early career was focused on work with Taco Bell to roll out its value menu, and that thereafter, he worked with PepsiCo, Aquafina, Quaker, Cap’n Crunch and Life cereals, Pepe’s Mexican Restaurants, as well as Wrigley gum and mint brands.
Bill Garrett, a DRA board member, is the former SVP of Operations of McDonald’s.
Karim Webb, another DRA board member, is a McDonalds and Buffalo Wild Wings franchisee.
Is it possible that mom-and-pop restaurants would benefit from some of what DRA says it is pushing for, such as more transparency in delivery fees, just the same as these bigger food and restaurant brands, plus Kalanick’s CloudKitchens? Maybe.
But a $15 billion business, plus existing, established national brands appear much better poised to leverage consumer data that might be mandated to be handed over for their benefit in a way that smaller, single location restaurants with more typical small amounts of investment and slimmer profit margins could not.
Restaurants in the latter category may therefore want to keep tabs on legislation and regulation in which DRA shows an interest. Kalanick’s ventures could see real upside from such legislation or regulation passing, but the local Thai restaurant might find it to be more of a curse than a blessing. It all depends on what individual bills or proposed ordinances say.
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