by Lionel Binnie
GrubHub is on a tear now with TV ads and they’re working hard to be the national source for restaurant delivery. The trouble is, they charge restaurants a lot to be on their app; a commission that ranges from 15% to 25% of each sale, plus 10% for delivery. Does it make sense for restaurants?
Maybe for smaller restaurants it does. And larger chains like Yum brands (Taco Bell, KFC and Pizza Hut) are working out their own private arrangements with GrubHub, no doubt at lower commission structures.
But there’s another way to go.
Two restaurant chains that are doing well with their own delivery systems are Sweet Green and Panera Bread.
Panera bread announced it’s expanding its delivery service to almost 900 cities around the country. Their food travels well. They use their own delivery drivers. Delivery sales can add as much as an additional 10% onto each unit’s sales.
And Sweet Green, a health-focused fast casual restaurant chain with 75 locations in major markets like Washington DC, New York and Boston, is also implementing its own delivery service, primarily focused on workplaces. This program is called Outpost. These are essentially, delivery hubs set up in workplaces like the HQ’s of We Work, Nike and Headspace. Workers can order exactly what they want from Sweet Green’s regular menu and also use their loyalty points. And Sweet Green uses its own delivery system to bring the food to each Outpost. They are planning to have 3,000 of these Outposts by the end of 2019.
It’s clear that online ordering and delivery will continue to be a growing part of fast-casual eatery’s plans. But outsourcing all that technology, payments and delivery to Grubhub and their competitors is expensive. Larger chains are likely to want to go it alone, especially in the markets where they have enough concentration of stores.