Dunkin’ has tapped food delivery service Grubhub to begin the rollout of a nationwide delivery program, company executives tell Yahoo Finance. Starting late last month, 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, explained 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, said 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. Meltzer-Paul noted: “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 a lower margin than if someone came into the store to make a
purchase. 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.
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 KFC and Taco Bell, launching delivery availability at thousands of locations. Grubhub serves more than 19.3 million active diners.
Uber Eats is now available at 9,000 of McDonald’s 14,000-plus U.S. locations, McDonald’s U.S. Starbucks is smack in the middle of expanding a delivery service with Uber Eats to major metro markets — its goal is to reach 3,500 locations by year end.
Chicago-based Grubhub was founded in 2004 by Mike Evans and Matt Maloney, to create an alternative to paper menus. Two years later, in 2006, Maloney and Evans won first place in the University of Chicago Booth School of Business’s Edward L. Kaplan New Venture Challenge with the business plan for Grubhub. In August 2013, Grubhub merged with Seamless. Their merged company then went on to “roll-up” a number of companies in delivery.
In December 2015, Grubhub acquired Delivered Dish, a restaurant delivery service in seven markets across the Pacific Northwest and Southwest, including Denver, Las Vegas, San Diego, Portland, El Paso and Albuquerque. LAbite, a Los Angeles-based restaurant delivery service, was acquired by Grubhub in May 2016. Eat24, a San Francisco-based food ordering platform was added by Grubhub in October 2017. That was followed up by 11 franchisee-owned OrderUp markets in September 2018.
LevelUp, a Boston-based diner engagement and payment solutions platform was acquired by Grubhub in September 2018 and Tapingo, an Israel-based platform for campus food service late that year.
