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Consider it Dunkin’ on Demand.
The coffee and donut chain has tapped food delivery service Grubhub (GRUB) to begin the rollout of a nationwide delivery program, company executives tell Yahoo Finance. Starting Monday, more than 400 Dunkin’ restaurants in New York City’s five boroughs will offer delivery through Seamless, Grubhub’s well-known New York City brand. The service will quickly scale up to markets in Boston, Chicago and Philadelphia in coming months.
Stephanie Meltzer-Paul, Dunkin’ U.S. vice president of digital and loyalty marketing, tells Yahoo Finance the goal is to have delivery available in one-third — or more than 3,000 — locations by year end. Meltzer-Paul says the company plans to have delivery available in about 70% of Dunkin’s 9,400-plus U.S. stores next year.
“We want to make a serious push with delivery,” Meltzer-Paul said. The Dunkin’ executive revealed Dunkin’ approached Grubhub last year and quietly began testing the delivery service in select stores in New York City, Boston and Philadelphia. Seth Priebatsch, head of enterprise at Grubhub, tells Yahoo Finance the average wait times at the test stores have been under 15 minutes. The average fee for Dunkin’ delivery is below $5.
Dunkin’s shareholders — who have patiently waited for the company’s same-store sales to pop amid a pivot last year by new CEO Dave Hoffmann into snazzier coffee — should view the deal favorably.
For one, Meltzer-Paul says average order sizes in the test markets have been two times the normal ticket. That should ultimately serve as a boost to Dunkin’s same-store sales and bottom line as more stores get delivery turned on.
What’s more, says Meltzer-Paul, the orders are profitable given the undisclosed arrangement Dunkin’ inked with Grubhub. Delivery services such as Uber Eats and Grubhub have gotten a bad wrap of late by fast-food franchisees — given the often high delivery fees, the sales tend to be lower margin than if someone came into the store to make a purchase.
The last thing Dunkin’ — or any fast food chain — needs are unhappy franchisees.
The deal with Grubhub is not exclusive. Meltzer-Paul hinted the company may extend the delivery deal with Grubhub to Dunkin’ Brands-owned Baskin Robbins.
The war to deliver coffee and breakfast
As for Grubhub, the deal looks to also be another nice win. Priebatsch points out this is one of the largest partnerships of its kind for the company. Grubhub has also made strong inroads of late with Yum! Brands-owned (YUM) KFC and Taco Bell, launching delivery availability at thousands of locations.