Ex-Uber CEO Travis Kalanick has a new mission in LA

The Scoop

Ex-Uber CEO Travis 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.

That push has spurred some independent restaurant owners — a group that has often had a strained relationship with companies like Uber Eats and DoorDash — into the arms of the delivery apps, which are vehemently fighting Kalanick’s efforts.

He’s making the move, which pits him against the company that made him famous (and infamous), to help CloudKitchens, a company facilitating food preparation for delivery-only restaurant brands that have no brick and mortar presence.

CloudKitchens’ parent firm, City Storage Systems, also owns software company Otter, which allows restaurants to accept deliveries from multiple services in one app.

Kalanick made his fortune at Uber by ignoring regulators, whom he cast as corrupt taxi industry pawns. His latest push focuses on Los Angeles, according to lobbying records filed in April. The Digital Restaurant Association, which is linked to Kalanick, according to people familiar with the matter, plans to advocate for “regulations on third party online food order and delivery,” which matches the description of similar lobbying efforts in other places like Florida’s Miami-Dade County and in Georgia. A statewide bill in California is also moving through the legislature but has lost the data provisions that originated the effort.

“Restaurants in Los Angeles urgently need your help to defend restaurants from harmful business practices of big tech food delivery apps,” reads a website set up by DRA, which describes itself as “a coalition of restaurant owners and operators, associations, civic groups and concerned citizens.”

The DRA was created by lobbying firm Tusk Holdings, led by Bradley Tusk, an Uber investor and a long time Kalanick associate. It’s pushed a handful of similar bills, none of which have yet been successful, elsewhere in the country that would force food delivery firms to provide data to restaurants that utilize their services.

Some restaurant owners like Leland Neal, CEO of the Taco Rio chain in South Florida, oppose the efforts. “I don’t want it. I don’t need it,” Neal said. “And if I want to get hold of any customers, I just put a coupon on there. We do it all the time.”

The DRA, however, says restaurants are squarely on their side and declined to confirm whether Kalanick has any connection to the group. “We have had 800 different restaurants sign a petition in Los Angeles County and we have thousands of members nationally. That’s all we are — a collection of independent mom and pops,” says DRA executive director and CEO Joe Reinstein.

Chamber of Progress, a tech industry coalition that includes food delivery apps, says the effort is disingenuous. “It’s surprising to me to see how far they’ve gotten given the lack of transparency,” said Chris MacKenzie, a spokesman for the group. “We’ve noted in our communications with lawmakers that this is a Travis Kalanick project.”

Spokespeople for Kalanick, CloudKitchens, City Storage Systems, and Tusk Holdings did not immediately respond to requests for comment.

Know More

After being ousted from Uber amid accusations of presiding over a toxic work culture, Kalanick set his sights on a new idea in 2018 often called ghost kitchens or dark kitchens. The idea was that, with the rise of food delivery apps, “virtual restaurants” could spring up using cloud kitchens or excess space in existing restaurants, and deliver meals directly.

City Storage Systems began buying up real estate and building its kitchens. But the business, valued at $15 billion with backers like Microsoft and Saudi Arabia’s Public Investment Fund, has faced challenges.

It cut staff last fall and it closed its effort in India.

It’s Kalanick’s other company — Otter — that could prove to be the smarter entrepreneurial bet. The software helps restaurants manage the many food delivery company orders in one place, and could be a source of valuable data.

Reed’s view

There’s one voice that’s noticeably absent from this fight over food delivery data: small, independent restaurant owners. And there’s a reason for that: They’re too busy trying to survive in a grueling industry. So instead, they’re represented indirectly by Kalanick, who has a bad boy image after his ouster from Uber.

I spent a good amount of time listening to the DRA’s point of view and a lot of their arguments make sense.

Reinstein said restaurants have to put up with a lot in an industry that has been forever altered by a delivery service startup wave. Chargebacks, bad reviews after botched deliveries that are out of their control, and an inability to field special customer requests directly are just some of the headaches they’ve faced.

But the way DRA is handling its lobbying push appears sneaky. Some lawmakers undoubtedly think they are trying to help small businesses and consumers, only to find out the effort is tied to Kalanick and a $15 billion startup.

“It’s been an extremely effective tactic,” Reinstein told me. But even then, he said he wouldn’t say whether Kalanick was even indirectly connected.

Reinstein’s argument is that journalists put Kalanick’s name in the headline of articles (like this one) about DRA in order to get attention. “Mention his name and you’ll have millions more readers of this article. It’s total click bait. It’s very frustrating because we’re trying to focus on some real issues with some real restaurants,” he said.

But if Kalanick’s name is going to be in the headline anyway, why not be up front about what’s going on? A big, heavily-funded startup is arguing to lawmakers that new regulations will help small restaurant owners while also benefiting itself.

Room for Disagreement

The DRA is essentially arguing that it shouldn’t matter who is backing a bill: It should be about the substance.

“I spend all day long talking to restaurants. No one has ever had a differing point of view about the challenges and pain points of working with the big delivery platforms. There isn’t a restaurant operator that couldn’t talk about these issues and how it impacts their businesses,” Reinstein said.

Notable

• Business struggles at Kalanick’s CloudKitchens have been well documented and this scoop from the FInancial Times lays some of the problems out clearly.

• Could the answer to the challenges of CloudKitchens be … robots? The Spoon scooped that Kalanick hired a former Uber executive who worked on self-driving cars to lead the program, dubbed Lab37. Robots could be the key to lowering costs and competing with traditional restaurants. But is the tech there yet?

• The FT was the first to report on Kalanick’s earlier lobbying efforts.