Brandon Donnelly

Daily insights for city builders, delivered every morning at 6 AM ET. I’m Brandon Donnelly — a Toronto-based real estate developer and founder of Globizen. I’ve been writing here since 2013.

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Category: Food

  • Voi Cube — the first store in Switzerland without any employees

    Swiss supermarket chain, Migros, has just launched what is being called the first store in Switzerland to not have any employees. The concept, called the Voi Cube, is a small container-like outparcel space that is open 24/7 and offers about 500 or so everyday items. You enter using their app, you grab what you need, and then you check yourself out. (Presumably the doors don’t open back up until you’ve paid.)

    The concept is being positioned as a convenience add-on to its existing grocery store business. Swiss federal labor laws still prohibit retail staff from working on Sundays, and so this is a clever way for people to shop for essentials during that time. They just got rid of the labor component. It also begins to show just how flexible and adaptable grocery stores can be as the retail landscape continues to evolve.

  • CloudKitchens has spent more than $130 million on property over the last two years

    According to a recent Wall Street Journal review of property and corporate records, Travis Kalanick’s ghost kitchen startup, called CloudKitchens, has spent over $130 million over the past two years buying more than 40 properties in about two dozen cities.

    Travis is co-founder and the former CEO of Uber and this latest startup provides commercial kitchens to restauranteurs who are looking for a low-cost way to launch delivery-only food concepts.

    In some ways, it can be compared to coworking spaces for delivery-only restaurants. Instead of renting a full restaurant space, you lease 200-300 square feet of real estate at a lower cost address. CloudKitchens then handles all of the distribution and fulfillment, effectively lowering the barriers to entry for food startups.

    Some of the properties that they have been buying include a vacant restaurant space in Miami Beach for $9.2 million (May 2020) and an industrial property in Queens, New York for $6.6 million (March 2020). They’ve also bought in cities like Portland and Las Vegas.

    As you might imagine, now is a pretty good time to be buying some of these properties. And if you think about it, there are some real cost advantages to what they are doing, not to mention some co-working-style arbitrage on the real estate.

    The company is apparently going to great lengths to conceal what and where they are buying. But what is perhaps more interesting is their asset-heavy approach. They’re buying lots of real estate, which is inline with what companies like Opendoor are doing, but is distinct from Uber’s asset-light approach.

    It is also different from what many other ghost kitchen startups are doing. It seems that most are leasing their spaces. There has to be a reason for this difference.

  • Peak meat

    There is evidence to suggest, according to this recent Bloomberg Green article as well as many other sources, that we may be hitting “peak meat.” That is, the global production of animal proteins appears to be declining. It declined last year in 2019 and that was only the second time since 1961 in which that happened. And this year, the same is projected to happen, which is supposedly unprecedented in modern times.

    The big change is that people are eating a lot less beef. In fact, per capita beef production peaked way back in the 1970s and has been slowing declining ever since. The growth over the years has really been coming from chicken. In 1961, 39% of all meat production was beef. As of 2018, that number had declined to 20%. Pork as a percentage of all production has remained more or less consistent. But chicken has basically tripled from 11% to 34%.

    From an environmental and climate change standpoint, this is a very good thing. As most of you know, greenhouse gas emissions from the production of beef are vastly higher (about 10x) than for pork and chicken. Chicken is the lowest (see above). At the same time, big bets are being made that this growing love of chicken isn’t enough. In the first 7 months of 2020, over $1.4 billion of venture capital was raised for “faux meat” startups (source). This is already a significant increase compared to 2019.

    This money is expecting the future of meat to be plant-based and cell-based.

    All charts from Bloomberg Green.

  • The value of Champagne

    Westmount Gaurantee hosted a Champagne tasting event for its clients this evening. Obviously it took place over Zoom. It was a great event and I learned a few things about Champagne. As most of you will know, sparkling wine cannot be called Champagne unless it’s from Champagne, France — a region that, as of 2008, included about 76,000 acres of vineyards and 319 villages. But as I started thinking about this acreage, the developer in me couldn’t help but wonder: “How was the boundary for the Champagne region established? Is it based on unique soil conditions that can’t be found anywhere else in France and the world, or is this a way to artificially control the supply of Champagne and fix prices?”

    As you might imagine, the answer is complicated. (See the Champagne Riots of 1910-1911.) The viticultural boundaries of Champagne were legally defined in 1927. And the entire area is compromised of five wine-producing districts. But there have been revisions to this boundary. In 2008, the production zone was increased from 319 communes to 357. (I’m sure this was highly controversial.) And since the value of land is dependent on what you can do with it, this would have had a dramatic and overnight impact on land values. Yesterday you couldn’t apply a Champagne label, but today you can. According to this article from 2008, we are talking €5,000 a hectare to €1 million per hectare because of a simple boundary change. That is the value of “Champagne.”

    Photo by Lomig on Unsplash

  • The state of the restaurant industry

    People are starting to eat at restaurants again. Here is a recent chart from the WSJ showing seated diners at restaurants on the OpenTable network:

    OpenTable has been publishing this data since the beginning of the pandemic in something they call “the state of the restaurant industry.” All of their datasets from around the world can be downloaded here.

    Back in March, it was interesting to see this data, but most people basically just stopped eating out around the middle of the month. After that, in-person dining mostly flatlined. (This data wouldn’t capture takeout, delivery, and other activities not flowing through the OpenTable network.)

    At this point, we are now seeing geographies reopen in different ways. Germany, for example, is ahead of many other countries (at least on the OpenTable network). Note the spike (i.e. lower year-over-year decline) on May 21st. It was a national holiday.

    You can also drill down into individual cities:

    I think this is a pretty good indicator for how people are feeling, and so it could be useful to follow this data. Governments can reopen things, but people need to feel confident to go out and spend money. It looks like a number of people already feel that way.

  • Deal is back on: Amazon to buy stake in Deliveroo

    This is an interesting business story. Deliveroo is a London-based online food delivery company that was founded back in 2013 and today accounts for a big chunk of the online restaurant platform market in the UK. (They are also developing a network of “ghost kitchens” through a subsidiary called Deliveroo Editions.)

    Amazon has been and still is interested in buying a minority stake in the company (Roofoods Ltd). But the Competition and Markets Authority (CMA) has been blocking it out of fear that it would stifle competition. The thinking was that if they blocked this deal, maybe, just maybe, Amazon would enter the market on its own. And more participants means more competition.

    The merger case was opened on July 5, 2019.

    Well, Deliveroo’s business is now struggling amid this pandemic. To deliver food from restaurants and then charge those restaurants a commission, it turns out that you typically need those restaurants to be open for business. So the CMA is now revisiting the case. Is it better to have Amazon invest in Deliveroo or have Deliveroo possibly fail?

    The CMA has decided that the former now makes more sense — at least provisionally.

  • Maeklong Railway Market — plan view

    Many of you have probably visited or seen videos of the Maeklong Railway Market in Bangkok. (I’ve done the latter, not the former.) It is one of the largest seafood markets in Thailand and it is literally housed on the railway’s tracks. Every time a train passes through, the entire market needs to be pulled up and relocated. Even the awnings that cover the market need to be collapsed. The videos I’ve seen have all been taken from grade. But the below video (via Vala Afshar on Twitter), showing the market in plan view (from what was likely a drone), is arguably even more impactful. There isn’t a foot of wasted space.

  • Tacos, snowstorms, and laneway suites

    Few things go as well together as tacos and snowstorms. And so that’s exactly what I did for lunch today given the awesome — I love snow — storm that we’re having in Toronto this weekend. The garnish you’re seeing below is grilled cactus. Dave, the owner of Playa Cabana Taqueria, grows it on location and uses it for special dishes like this one here. If you haven’t been, I would highly recommend it. They’re located at 21 St. Clair Avenue East.

    In addition to tacos, I also spent the morning with Gabriel Fain Architects working on our upcoming laneway suite collaboration. Some of you may remember that our previous laneway project was refused at the Committee of Adjustment back in 2017. Well now that laneway suites are permissible as-of-right, it’s time to get going. We are not planning to seek any variances from what is currently allowed.

    But if you’re thinking about building your own laneway suite, there are still a number of issues that you might run into depending on your property. Servicing, proximity to a fire hydrant, access, and trees are maybe some of the most common. I know that the city is working to resolve / streamline some of these complications, as the objective is truly to build laneway suites across the city.

    As Gabriel and I work through our project this year, my plan is to write about it here on the blog. And hopefully when the project is complete, the posts will serve as a kind of guide for homeowners. These suites are really setup to be built by individual homeowners, as opposed to by developers. If you don’t already email subscribe to this blog and are interested in learning more, sign up here.

    In the meantime, if you have any questions about laneway suites, there are a number of experts in the city, including Gabriel Fain Architects and the folks over at Lanescape.

  • Trade patterns in global cuisine

    In 2017, the US restaurant industry generated about $560 billion in annual revenue. By comparison, the movie industry generates some $30 billion a year. Food, and eating out, is a big business.

    A recent paper by Joel Waldgogel of the University of Minnesota has tried to estimate the “implicit cuisine trade” associated with this industry. To do this, he used restaurant data from TripAdvisor and sales figures from Euromonitor.

    Domestic consumption of a foreign cuisine was considered an “import.” And foreign consumption of a domestic cuisine was considered an “export.” Here’s what he discovered (graph from the Economist):

    Italy is, by far, the biggest net “exporter.” And the US is the biggest net “importer.” If you exclude fast food, the US “deficit” balloons to approximately $140 billion.

    I guess everybody does really love Italian food. For the full paper, click here.