This roundup will be updated following earnings releases.
Restaurant chains built out their delivery networks last year, reaching a bulk of their systems. This capacity will help grow coveted delivery sales while maintaining consistency. 2019 revealed a split in delivery strategies. While companies like McDonald’s, Wendy’s and Potbelly expanded delivery partnerships with multiple providers to reach more customers, others like Starbucks, Chili’s and Chuy's and Shake Shack honed in on one provider to negotiate better rates in 2019.
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During Q4, the company used targeted promotions that drove new customers to BJ's delivery and repeat customers. It also integrated all third-party delivery ordering into its POS system, which improved execution and service fees. In addition, BJ's added a new delivery partner that has provided incrementality alongside continued expansion of delivery sales with existing partners, CEO Greg Trojan told investors during a February earnings call.
This segment made up about 5% of sales, Greg Levin, president, CFO and secretary said.
While delivery is growing, the rate of growth has slowed and the company has consciously dialed back its promotions in that space, he said.
"We still think it’s a robust growth area as I've said often consumers are voting and continuing to purchase from … that distribution channel," Trojan said.
Outback has rolled out its partnership with DoorDash to 574 locations after rolling it out in September, Chris Meyer, Bloomin' Brands EVP and CFO, said during a February earnings call. The partnership helped bring off-premise sales to 15% of Q4 2019 revenues. Total off-premise sales were up 20% year-over-year, he said.
"Delivery is proving to be a highly incremental occasion, and third-party delivery has had little cannibalization to our own delivery network," Meyer said. "The economics are compelling, and this business offers attractive margins. We expect third-party delivery to be a strong contributor to 2020 results."
Carrabba's completed its rollout of multiple third-party delivery partners in October. Off-premise made up 21% of sales in Q4, up 32% year-over-year, he said.
Off-premise was a primary driver of sales at Chili’s during the quarter, Brinker CEO Wyman Roberts told investors during a January earnings call.
Chili’s off-premise sales grew over 31% year-over-year with delivery and to-go representing 17% of sales during Q2 fiscal year 2020, CFO Joe Taylor said. Delivery at Chili’s makes up close to 5% of the sales while it makes up 4% of Brinker International’s total sales.
The company began rolling out a white label option allowing for direct orders on its website and app in October, but third-party marketplaces make up the mid-80s percentage range in terms of orders, Taylor said.
The Cheesecake Factory
The company's off-premise business drove 17% of sales in Q4, president David Gordon said on a February earnings call. Of that, 35% was delivery, 13% was online ordering and phone-in and walk-in was about 50%, CFO and EVP Matthew Clark said during the call.
Cheesecake Factory also saw year-over-year growth in pickup orders via its online ordering platform. Gordon added that the off-premise channel has been a good testing ground for marketing initiatives.
"We continue to see growth in delivery," he said. "We continue to do really creative marketing campaigns with DoorDash and with our online ability, and we see that as a traffic driver growth driver as well, and we'll continue to pull that lever throughout the year."
The company rolled out digital make lines, digitized its make lines and expanded delivery capabilities to over 98% of Chipotle’s system, CEO Brian Niccol said during a February earnings call. Delivery contributed to the company’s digital sales surpassing $1 billion during 2019.
While the fast casual chain primarily works with DoorDash and Postmates, Niccol said it would be open to working with other providers to give customers more access to Chipotle.
“The relationship with DoorDash has been great. Working with Postmates has been great. We'll see how things unfold going forward,” he said. “But I do think ultimately the delivery marketplace is not going to be an exclusive proposition. I think the delivery marketplace is going to be about giving customers access accordingly.”
In the early days delivery was one of the biggest parts of Chipotle’s digital business, but its order-ahead business is gaining a lot of ground, Niccol said. Both order-ahead and delivery have worked nicely as a system with the addition of rewards and Chipotlane, he said.
During the fourth quarter, the casual chain signed an agreement with DoorDash to become its systemwide provider, Steve Hislop, Chuy's president and CEO, said during a March earnings call. DoorDash's service is expected to be rolled out across the system by the end of the first quarter, including at 32 restaurants that didn’t offer delivery.
Previously, the chain worked with 15 different providers across its 100-plus unit system. Hislop expects the partnership to reduce overall delivery costs. Part of these savings will be reinvested into improving to-go packaging.
The company also is rolling out Dispatch, which synchronizes its online ordering and delivery process for better efficiency and order accuracy as well as providing a delivery option for the company's website, Hislop said. All Chuy's locations are expected to have this service by the end of the first quarter.
Off-premise grew 210 basis points during Q2 fiscal year 2020 versus the prior-year quarter at Cracker Barrel, Jill Golder, Cracker Barrel SVP and CFO, told investors during a February earnings call.
The casual chain offers delivery in about 600 stores and is testing several initiatives such as increased marketing support to help it expand its reach and frequency, CEO Sandra Cochran said during the call.
Dine-in transactions still make up the majority of the casual dining chain’s sales, but growth from delivery contributed to a 67% increase in Denny’s off-premise business from 7% of total sales prior to the launch of Denny’s on Demand to 12% of sales during Q4 2019, CEO John Miller told investors during a February earnings call.
About 89% of its domestic system now works with at least one delivery partner, and he said the company expects long-term growth in off-premise sales as more restaurants expand their delivery channels.
Delivery transactions tend to skew toward a younger guest and the late-night crowd, he said.
The company now offers branded delivery at Applebee's and IHOP through their websites and mobile apps through a partnership with DoorDash, Dine Brands CEO Steve Joyce told investors during a February earnings call. The company also improved its delivery partnerships on behalf of franchisees so that in-restaurant, carryout and delivery sales have about the same profitability, he said.
Delivery continues to grow at a healthy clip at Applebee's, John Cywinski, Applebee's president said during the call, adding that he expects the growth rate to slow as penetration matures and guest adoption stabilizes. Delivery made up 3% of sales during the quarter, while to-go made up 9% to 10% of sales, he said.
"This means more of a marketing-driven growth dynamic and less of a penetration-driven growth dynamic in the category," he said.
IHOP's delivery has been expanded to more restaurants through one or more third-party service providers and is now available at 1,350 restaurants, Jay Johns, IHOP president, said during the call. During Q4, off-premise made up about 10% of sales for the brand.
El Pollo Loco
The fast food chain expanded its third-party partnerships in September with the addition of Uber Eats and Postmates, which resulted in positive transactions and sales during the fourth quarter, Bernard Acoca, El Pollo Loco president and CEO, said during a March earnings call with investors.
The addition of these providers and the execution of the company’s bifurcated menu strategy, where it offers a curated delivery menu that emphasized family meals and combos, drove a systemwide delivery mix of 3% during Q4, Acoca said. Comparatively, its delivery mix was less than 1% a year ago.
The company recently added Grubhub to its portfolio and now works with four marketplaces.
Fiesta Restaurant Group
The restaurant group will be expanding Pollo Tropical's delivery in Q1 through more third-party partnerships such as Uber Eats to supplement its previously exclusive deal with DoorDash, Fiesta CEO Richard Stockinger said on the company’s February earnings call. The brand’s current delivery penetration is 2.5% of sales, but Stockinger believes it has the potential to grow to 10% or more of sales.
For Taco Cabana, the restaurant company is implementing marketing plans to drive awareness and trial in off-premise channels, with a strong focus on catering and delivery.
Rising delivery fees impacted the bottom lines of both brands, CFO Dirk Montgomery said during the call.
Jack in the Box
Jack in the Box's entire system now offers delivery with over 95% of its restaurants working with at least one of the four major providers as of the end of the Q1 fiscal year 2020, CEO Lenny Comma told investors during a February earnings call. The company completed POS integration with Grubhub and is working with other providers to integrate into its system as well.
While the company's biggest priorities will be over improving operations and product innovation, it will continue to put modest investments toward its mobile and and delivery channels as necessary to meet expectations of guests, he said.
Delivery contributed to the company’s U.S. comp sales, which increased 5.1%, during the fourth quarter, with new delivery partners DoorDash and Grubhub driving incremental sales, CFO Kevin Ozan said during a January earnings call. The rapid scale of DoorDash is showing consistent growth, CEO Chris Kemczinski said.
Delivery is available in 25,000 restaurants worldwide, or two-thirds of the company’s global system, growing from $1 billion in sales to over $4 billion within the past year, Kempczinksi said. The company now works with multiple third-party partners in most of its major markets, adding Just Eat to its delivery platform in the U.K. in January, he said.
“We continue to see great runway ahead of us to drive awareness and trial and we are doubling down on our efforts to encourage frequency and retention,” Kempczinski said.
Noodles & Company
During Q4 2019, the chain’s digital sales grew 34% over the year-ago period, CEO Dave Boennighausen said on the company earnings call. This helped lift overall off-premise sales, which drove 58% of company sales, he said.
Noodles implemented a 10% delivery pricing premium in Q4 as well, and CFO Ken Kuick said that the company hasn’t seen a negative impact on the overall guests value perception of delivery.
During Q2 2020, Noodles plans to roll out direct delivery executed by third parties but ordered through its branded channels to bolster delivery margins, Kuick said. Delivery accounted for 8.8% of sales during Q4 2019 and continues to grow modestly, he said.
The chain also plans to negotiate fees with with third-party delivery platforms, Kuick said. So far this year, almost 30% of Noodles' sales are being ordered digitally, 60% off-premise, Boennighausen said.
The pizza chain will have the top three third-party aggregators integrated into its systemwide point of sales platform by the end of Q2 2020, Robert Lynch, Papa John's president and CEO, said during a February earnings call. These partnerships are expected to support unit economics and drive profitable incremental transactions in markets with driver-constrained restaurants.
These companies have been beneficial in increasing order rates during some of its highest capacity or highest utilization times, such as Friday and Saturday dinners, by offering supplemental drivers for Papa John's drivers to improve service times, he said.
"We believe that that gives us a competitive advantage, and we're the No. 1 pizza company with the aggregators, and we're going to continue to leverage that partnership to give us that advantage, not just on access to new customers, but also on improving the operations and customer experience," he said.
Two-thirds of its domestic system is now supported by DoorDash and Postmates, and the company is currently completing its integration with Uber Eats in about the same amount of restaurants, Lynch said. Third-party delivery makes up about 2% of sales, with sales being very incremental, he said.
Last year, Potbelly launched delivery partnerships with DoorDash and Grubhub, and Q4 was the first period that saw the impact of both deals, CEO Alan Johnson said on the company's February earnings call. During the quarter, off-premise sales grew to 24% of sales from 19% in the year-ago period.
Third-party delivery fees, in addition to other costs, bumped up operating expenses, Will Atkins, Potbelly VP and controller, said during the call. Johnson attributed the investments its made in its app and website, including allowing diners to access past orders, pay online and pickup in store, have aided its off-premise performance. Potbelly diners also spend significantly more on off-premise orders than in-store orders, Johnson said.
The casual chain rolled out its branded Red Robin Delivery in January to a majority of its company-operated restaurants, Paul Murphy III, Red Robin CEO, told investors during a February earnings call. Guests will order directly through Red Robin with deliveries outsourced to third-party providers. He said this model produces favorable economics, the company retains guest data and diners can use their Red Robin Royalty program, which makes up 30% of its business.
"Continued growth of our off-premise business in the future will be supported by our new digital platform, which we believe will enhance the guest ordering experience and order completion rates, along with other initiatives and process focused on improving our to-go and delivery execution within the restaurants," Murphy said.
Restaurant Brands International
Burger King now has delivery at over 4,200 U.S. locations integrated into its POS system, Jose Cil, Restaurant Brands International CEO, told investors during a February earnings call. Many of these locations offer delivery through multiple providers, he said.
The fast food chain offers delivery at over 9,000 units globally and has a run rate business of over $1 billion for delivery, Joshua Kobza, Restaurant Brands International COO, told investors.
Popeyes rolled out delivery to over 1,600 restaurants and now makes up about $250 million in sales on an annualized basis, Kobza said.
The company now offers mobile apps, web ordering and white label delivery services, which allow guests to order directly through RBI branded delivery channels and have it fulfilled by one of its aggregator partners, he said.
At the end of Q4, more than 25% of Shake Shack locations were solely integrated with Grubhub, and the chain will continue to transition stores over on a market-by-market basis, Tara Comonte, Shake Shack CFO, said during the company's February earnings call. That progress grew to nearly half of its stores by February.
"As a result of this phased approach, we continue to expect potentially significant volatility in the delivery channel through much of 2020, and we're already seeing this play out through the first quarter so far," Comonte said. "Our goal in delivery remains unchanged: To prioritize the guest experience while capturing long-term revenue growth."
Still, Comonte says that one of the benefits of its Grubhub delivery partnership is a "sustainable cost economic model," which she believes will benefit the brand later in 2020.
The company is also focused on new store designs and layouts that separate delivery orders from the in-store pickup experience, Randy Garutti, Shake Shack CEO, said during the call. In a few weeks, Shake Shack will reopen its Upper West side restaurant after a major renovation that features a dedicated delivery entrance and pickup area.
Delivery has reached 75% of Starbucks’ U.S. locations and the company has now begun a national marketing program, Roz Brewer, Chief Operating Officer & Group President, Americas, said during a January earnings call. Comparatively, it had delivery in 115 stores and no marketing in January 2019, at the start of the rollout of its Uber Eats partnership. The company, along with its partner Uber Eats, added 33 markets to its delivery program and the service is available in 49 markets across 29 states, with plans to reach into nearly every state in the months ahead, according to Fast Casual.
“Our stores are equipped from a technology standpoint,” Brewer said. “The partners are well-trained in terms of how to handle the tradeoff between the transition of the beverage to the pickup delivery person.”
Adoption rates among U.S. customers has been modest, however, compared to China, where delivery made up 9% of sales during the Q1 fiscal year 2020.
The fast food chain will expand its delivery channels to Grubhub and Uber Eats in 2020, Todd Penegor, Wendy's CEO, told investors during a February earnings call. It already works with DoorDash. By the middle of the year, delivery partners will be fully integrated into the chain’s POS system.
In 2019, about 2.5% of U.S. sales came through digital channels, double from the end of 2018, he said.
The chain will continue to highlight delivery in its national TV marketing in a push to digitize every transaction, CEO Charlie Morrison said on a company earnings call in February. The company ended 2019 with 39% of sales coming through digital channels, and digital made up more than 40% of sales in January.
Wingstop’' average digital check is $5 more than non-digital orders, Morrison said. The company also opened its first ghost kitchen in the U.K. in Q4, a strategy Morrison anticipates will shape its international business in 2020. He estimates that Wingstop's total off-premise business drives about 80% of sales.
The company continues to roll out delivery and click-and-collect across its brands through its exclusive partnership with Grubhub. At KFC U.S., delivery expanded to over 2,800 locations with click-and-collect reaching 3,800 restaurants, Yum Brands CEO David Gibbs told investors during a February earnings call.
For Pizza Hut U.S., which has been in transition, the company will upgrade its technology for online ordering and delivery and will focus on more consistent execution in customer experience across delivery and carryout as part of its overall strategy, Gibbs said.
While delivery is a growing business, the company also remains focused on making sure its click-and-collect model works well. With delivery costing more, not all customers will want to use that service, he said.
“For those customers that want delivery, we're leaning in there,” Gibbs said. “And for those that are more carryout focused or dine-in focused, we have programs for them too.”