Some eateries sit out 3rd-party food delivery boom

Food delivery services like Uber Eats and Grubhub are taking off like a rocket. But some restaurants aren’t on board.

This week, Jimmy John’s sandwich chain launched a national ad campaign promising never to use third-party delivery. Jimmy John’s says its own drivers — which number around 45,000 at its 2,800 U.S. restaurants — can best ensure fast, quality service.

“We just don’t trust anybody else to deliver our product,” said Jimmy John’s President and CEO James North.

Jimmy John’s is swimming against the tide — for now, at least. Starbucks recently announced it’s expanding delivery to more U.S. stores through its partnership with Uber Eats. Taco Bell said Thursday it will offer delivery nationwide through Grubhub.

A third-party service lets customers order food through an app. It then contracts with drivers who use their own cars or other transportation to make the deliveries. The services earn money through restaurant commissions, delivery fees or both. Grubhub was founded in 2004, but most are much newer.

Others besides Jimmy John’s have rejected third-party delivery, including Domino’s, Panera Bread and Olive Garden. In some cases, it would disrupt their long-established business models; Domino’s has been delivering pizzas for 60 years. Other companies just aren’t convinced. Olive Garden tested third-party delivery but says its

customers weren’t satisfied.

There’s a lot for restau- rants not to like. Delivery services eat into their profits. Grubhub charges them a commission of 12 percent to 18 percent per order; Uber Eats charges as much as 30 percent. Service can be haphazard; some drivers have coolers to keep food chilled, for example, while others don’t.

“They are delivering a very valuable experience to the consumers, but they are still growing themselves,” said Dylan Bolden, a senior partner at Boston Consult- ing Group who has studied restaurant delivery. “Their mod e l isn’t completely ironed out yet to deliver a consistent experience.”

Third parties can also take longer. Boston Consulting Group found that four of the most popular services — Uber Eats, Grubhub, Postmates and DoorDash — aver- aged 49 minutes to deliver an order. Liz Meyerdirk, Uber Eats’ head of global business development, says Uber Eats averages 31 minutes.

Jimmy John’s promises a sandwich in less than 20 minutes, partly because it limits delivery to a small radius. The company trains its drivers and gives them uniforms, North said. Pay varies by location. Jimmy John’s charges customers around $2 for deliveries — some third parties charge $8 or more — and makes that work economically by doing more deliveries per hour.

The phenomenal growth of third-party delivery indicates customers will put up with some hiccups for the convenience and variety they provide. On Thursday, Grubhub reported $5.1 billion in food sales in 2018, a 34 percent increase from the prior year.