Some restau­rants re­sist third-party de­liv­ery

Daily Local News (West Chester, PA) - - BUSINESS - By Dee-Ann Durbin AP Busi­ness Writer

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,” Jimmy John’s Pres­i­dent and CEO James North told The As­so­ci­ated Press.

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 restau­rants not to like. De­liv­ery ser­vices eat into their prof­its. Grub­hub charges them a com­mis­sion of 12 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 Con­sult­ing Group who has stud­ied restau­rant de­liv­ery. “Their model 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 — av­er­aged 49 min­utes to de­liver an or­der. Liz Mey­erdirk, Uber Eats’ head of global busi­ness de-

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

vel­op­ment, says Uber Eats av­er­ages 31 min­utes.

Jimmy John’s av­er­age is 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.

“With Uber Eats, the driv­ers

have no vested in­ter­est in get­ting the cus­tomer their food quickly,” North said.

Chicago col­lege stu­dent Matthew Rob­bins has seen the is­sue from all sides. He fre­quently or­ders meals through Uber Eats. He also man­ages a Slim Chick­ens restau­rant in Plain­field, Illi­nois, that started us­ing Uber Eats five months ago.

Rob­bins said his restau­rant gets around 10 or­ders a day through Uber Eats. He would like to see more con­sis­tency from the ser­vice. Some driv­ers seem pro­fes­sional, but oth­ers bring a car­load of friends and clog up the drive-thru in­stead of

pick­ing up their or­ders in­side the restau­rant.

Rob­bins has also had oc­ca­sional is­sues as a cus­tomer, like wait­ing so long for sushi that it ar­rived warm. But he’ll con­tinue to use de­liv­ery ser­vices be­cause it’s the most con­ve­nient way to eat be­tween classes.

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, and said it has grown to 17.7 mil­lion

din­ers. Uber Eats said it ex­pects to de­liver $10 bil­lion worth of food in 36 coun­tries this year, up from $6 bil­lion in 2018.

Mey­erdirk says poor ser­vice can get weeded out thanks to cus­tomer re­views on Uber Eats. And the com­pany is con­stantly work­ing to im­prove lo­gis­tics and speed up de­liv­ery times.

“We’re all try­ing to fig­ure out how to serve that cus­tomer,” she said.

Third-party de­liv­ery ser­vices can help restau­rants by bring­ing in new cus­tomers. Grub­hub has 100,000 restau­rants in the U.S. and Lon­don on its plat­form, in­clud­ing ones that do their

own de­liv­ery and just rely on the site for re­fer­rals. Uber Eats has 200,000 world­wide.

Farm Burger, an At­lantabased grass­fed burger chain with 12 lo­ca­tions, has lim­ited mar­ket­ing re­sources, so it’s grate­ful for the busi­ness that de­liv­ery ser­vices bring in. Af­ter DoorDash fea­tured the chain in a De­cem­ber pro­mo­tion, it saw an all­time monthly high of 2,942 or­ders, says Dawn Law, the chain’s mar­ket­ing di­rec­tor.

Even McDon­ald’s says 70 per­cent of the or­ders it gets through its part­ner­ship with Uber Eats are cus­tomers it might not have got­ten oth­er­wise, par­tic­u­larly late

at night.

Bolden of the Bos­ton Con­sult­ing Group ex­pects third­party de­liv­ery ser­vices will prob­a­bly con­sol­i­date over the next few years, leav­ing two or three big play­ers with the scale to be prof­itable.

At the same time, he said, many big restau­rant brands will prob­a­bly fol­low Jimmy John’s lead and do their own de­liv­ery so they can con­trol the cus­tomer ex­pe­ri­ence and re­tain valu­able or­der data.

“They may use third par­ties to­day be­cause they want the de­mand, but in the long run they don’t want to be de­pen­dent on them,” Bolden said.


Tyler Sch­wecke, a de­liv­ery driver for Jimmy John’s, gets in his car to make a de­liv­ery Wed­nes­day in Las Ve­gas. 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.

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