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Illustration: Aïda Amer/Axios

The restaurant industry is increasingly digital. That's good news for tech bros, but it's bad news for restaurateurs.

The big picture: Restaurants have always embodied the perils and the promise of capitalism. Their failure rate is high, but they're also a time-honored way for immigrants in particular to use hard work and entrepreneurial zeal to break into the middle classes.

The catch: Tech companies are changing the economic calculus for restaurateurs. A decade ago, restaurants might have had to pay rent only to their landlord. Now, payments go to a slew of digital platforms, all of which are looking to extract their own little slice of total restaurant-industry revenues.

Driving the news: Travis Kalanick's new startup, CloudKitchens, raised $400 million from Saudi Arabia’s sovereign-wealth fund, at a valuation of about $5 billion, according to the WSJ.

  • The idea behind the company: That as people move from eating out to having meals delivered, there's no need to bother with things like tables and waiters. Just put a kitchen in a cheap warehouse, and deliver multiple kinds of food with minimal overhead.
  • If Kalanick disrupts restaurants in the same way he disrupted taxis, then the big losers will, once again, largely be immigrants of color.

As restaurants position themselves to compete against Kalanick's cut-price offerings, they find themselves paying increasing amounts of money for other digital services.

  • Delivery is migrating to big online platforms like Uber Eats, DoorDash and Grubhub (which owns Seamless, and is facing a federal lawsuit over phantom fees). These services often take 25% or more of each order for their services.
  • Reservations are taken increasingly online, and are invariably offered via platforms like OpenTable and Resy that charge restaurants for their services while remaining free for diners.
  • Seated is an app that aims to fill open seats at restaurants by offering diners as much as 30% of their check back in the form of gift cards to Amazon and other merchants. Naturally, the restaurants pay even more than that to the platform.

Our thought bubble: All of these services can feel a bit like a protection racket. Some restaurants join because they genuinely think these services will be good for business, but most join because they worry, with good reason, that if they don't join, their customers will just migrate to more convenient competitors.

"Without them you're dead, with them it is a slow death."
— N.Y. Councilman Mark Gjonaj on the delivery apps he's trying to regulate, quoted by Crain's

The bottom line: Digital platforms are not restaurants' friends. If the amount Americans spend at restaurants stays roughly constant as a percentage of GDP, then all the customer money flowing to the lavishly financed startups is money that ultimately comes out of restaurateurs' pockets.

Go deeper:

Go deeper

Bill Gates faces scrutiny over relationship with Microsoft employee, Epstein ties

Photo: Alessandro Di Ciommo/NurPhoto via Getty Images

Representatives for Bill Gates pushed back on claims Sunday that he left Microsoft's board because of an earlier sexual relationship and against two other reports detailing more extensive ties with Jeffrey Epstein than had previously been reported.

Driving the news: Microsoft said in an emailed statement to Axios that it "received a concern" in 2019 that its co-founder "sought to initiate an intimate relationship with a company employee in the year 2000," but denied a Wall Street Journal report that its board members thought Gates should resign over the matter.

AT&T in talks with Discovery to combine media assets

Illustration: Annelise Capossela/Axios

AT&T is in talks with media giant Discovery about merging its media assets, like CNN, TBS and TNT, according to two sources familiar with the discussions.

Why it matters: A potential merger could allow AT&T and Discovery to better compete with entertainment giants like Disney and Netflix in the video streaming wars.

Updated 5 hours ago - Politics & Policy

Franklin Graham worries Trump too old to run in 2024

Graham and Trump at a rally in 2017. Photo: Ralph Freso/Getty Images

The Rev. Franklin Graham says a potential 2024 presidential bid by Donald Trump would "be a very tough thing to do," the prominent Christian leader told "Axios on HBO."

Why it matters: Graham, the president of the Billy Graham Evangelistic Association and Samaritan's Purse, was among Trump's earliest and most prominent evangelical defenders.