Why is Pizza Hut testing delivery with Grubhub?
- Pizza Hut is piloting a delivery program where Grubhub processes its incoming orders, becoming the first major nationwide pizza brand to work with a third-party provider, according to Skift Table.
- Pizza Hut will still use its own drivers for the program.
- "We have been working with the Pizza Hut team and recently began piloting some Pizza Hut locations on our marketplace," Grubhub CEO Matt Maloney said during the company's earnings call last week. "We are planning on expanding to several hundred stores in the coming months."
This unusual move for Pizza Hut could signal a new iteration of pizza delivery — one with expanded distribution. Gaining access to Grubhub's current user base, without giving up its own delivery drivers, could help the brand gain new customers. Grubhub processes 125 million orders per year, an enticing opportunity for Yum Brands' worst-performing restaurant. Pizza Hut only grew 1% in worldwide system sales last year compared to 6% growth reported by both Taco Bell and KFC, according to Yum's year-end 2018 results.
Yum is already rolling out delivery via Grubhub at KFC and Taco Bell nationally, and may also want the same technology used across its three brands — especially since it already invested $200 million in Grubhub.
But with most consumers using restaurant apps and websites to order directly from their favorite brands, the decision to partner with Grubhub seems puzzling — especially since delivery is practically synonymous with pizza. It's possible that shifting too much of its ordering capabilities to Grubhub could weaken Pizza Hut's brand.
Its delivery capabilities also don't appear to be lacking. Pizza Hut shaved down delivery times by an average of three minutes last year, executives told investors during a February call. Last year, it bought QuikOrder, a third-party online service provider that offers a digital ordering platform, systems and services that will allow the chain to run its own e-commerce platform. So why fix something that isn't broken, especially since third-party aggregators tend to take a portion of sales?
It's unclear, and a first for major pizza players. Chuck E. Cheese's is the only other nationwide pizza brand that offers delivery through third-party providers, likely because it tended to lean toward in-house operations more so than delivery. Beyond the children's eatertainment chain, third-party apps have partnered with independent pizzerias, which make sense since regional chains likely don't have the the bandwidth to develop delivery systems on par with those at national brands.
Other major chains, like Domino's and Papa John's, have been working to improve their proprietary technologies, with Domino's recently announcing it will never work with third-parties. Since Pizza Hut's pilot is in its early days, time will tell how exactly this partnership will benefit both Pizza Hut and Grubhub, and if the delivery player's assets will be as reliable as the pizza chain's technology.
- Skift Table Grubhub Will Now Power Pizza Hut Delivery
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