Data Drives Shake Shack’s Delivery Decision
Shake Shack is deepening its partnership with Grubhub to deliver nationwide. This will rollout system-wide over the next two to three quarters.
In addition to Grubhub, Shake Shack has been using other third-party delivery services including Postmates, Caviar and Door Dash for about two years.
“We've learned a lot with each of the delivery providers with whom we've piloted, and we're excited to move forward on this important part of our overall digital ecosystem and guest offering,” said Randy Garutti - CEO & Director, in an earnings call with analysts.
“Those relationships continue in the near term exactly as they've been and where they've been,” he added. “However, as we roll this out and we reach mass scale with Grubhub .. it's about integrating the tech. So there could be some volatility there.”
This partnership decision prioritizes long-term revenue opportunity, technology integration and functionality, guest services capability, geographic footprint, guest data insights, marketing capabilities and overall economics.
“As of today, a small number of Shacks have Grubhub available to guests as we work through tech integrations and operational process on both sides,” said Garutti.
As it onboards Grubhub, it will no longer market the other third-party delivery service options as it hopes to convert current delivery customers over to Grubhub. “We do expect to see some volatility in our delivery sales in the remainder of the year and in certain parts of the country,” he said.
Shake Shack Partners With Grubhub for Delivery Nationwide
Shake Shack has entered into an integrated partnership with Grubhub, an online and mobile food-ordering and delivery marketplace. The partnership reflects Shake Shack’s long-term digital growth and innovation strategy to make its iconic food more accessible to consumers through an increasing number of channels.
“Shake Shack is experiencing incredible growth. Now more than ever, we’re doubling down on our commitment to be an accessible, omnichannel business,” said Randy Garutti, Shake Shack CEO. “Over the last 15 years, we’ve built our brand around creating community gathering places and becoming the next generation’s burger joint. Our partnership with Grubhub is a reflection of our commitment to expanding that connected community through our increasing number of digital products, and our relentless focus on providing both convenience and excellence in experience through those digital offerings. The Shake Shack-Grubhub partnership demonstrates our strategic commitment to digital innovation and guest experience, and represents an important component in our overall digital ecosystem, including web-ordering, mobile app, kiosk and delivery.”
Shake Shack delivery through Grubhub and Seamless is currently in test and available to guests at a small number of Shacks. A nationwide rollout will continue gradually over the next 2-3 quarters, bringing Shake Shack’s innovative menu offerings like the ShackBurger, Chick’n Shack, frozen custard shakes and crinkle cut fries to more Shack fans whenever and however they want it.
Changes In Store
With digital sales increasing, Shake Shack has tweaked its back of house setup to build what it calls “split kitchens, which continue to evolve,” said Garutti. “...Part of our decision to go with Grub is the way that we're going to integrate that technology, and make sure that we can really start to have a more dynamic ordering capability for ... delivery.”
To help with guests and drivers picking up orders, Shake Shack is adding pickup shelves and is also tweaking the store design. “We're designing some restaurants that will really truly separate those areas,” said Garutti. “So next year, you'll see some Shack designs that will really have a completely separate section for the digital pick up from the in-house pickup, because we really want to honor our guests who continue to come to Shake Shack.”
Integrated Tech = Data
Once fully up and running, the partnership with Grubhub will allow Shake Shack to throttle orders in real time during peak periods. One of the biggest benefits is the data. “We're really excited about the data that we intend to retain and access throughout their marketplace for our guests,” said Garutti. “That was one of the most important considerations to this decision was for us to be able to have that data and be able to connect with our guests regardless if they choose to order on a third-party platform. And that's one of the things we're really excited about. So over time, we expect to do some really great marketing both Shake Shack direct and together with our partnership with Grub.”
For Q2, Shake Shack systemwide sales increased 33% to $225.9 million, and total revenue grew by 31% to $152.7 million, driven by the addition of 58 Shacks since the end of the Q2 2018. Same store sales increased 3.6%.
“... Our digital channels, including delivery, were a key contributor,” said Garutti.
The company’s full earnings statement is available here.
Shake Shack is a global company with 245 locations, including corporate and franchised locations, in 16 countries, in 29 states and 128 cities.