Restaurants

Shake Shack taps Grubhub for nationwide delivery

Key Points
  • Shake Shack and Grubhub are teaming up for nationwide delivery. The service will roll out in coming quarters.
  • The partnership is being tested in four locations: Morningside Heights in New York; the River North area of Chicago; Livingston, New Jersey, and Darien, Connecticut.
  • The announcement comes as major restaurant players are seeing key growth from delivery.
Customers pick up their orders from Shake Shack.
Andrew Burton | Getty Images

Shake Shack and Grubhub are teaming up for nationwide delivery as the competition for consumer dollars in on-demand food delivery intensifies.

The partnership, which is being tested in four locations, will roll out over the next several quarters and includes technology integration at the point of sale to better time deliveries to enhance the guest experience.

Monday's announcement comes as major restaurant players are seeing key growth from delivery. McDonald's recently added DoorDash as a partner, ending its exclusivity with UberEats. The burger chain has said delivery will be a $4 billion business globally this year.

Chipotle Mexican Grill also teamed with DoorDash for national service and has said delivery is the fastest-growing part of its business, after experiencing record digital growth the past two quarters. Starbucks will be nationwide with UberEats delivery by early 2020, underscoring the notion that the days when pizza delivery was the only option are long gone — now any restaurant player that matters is getting in on the action.

Shake Shack CEO Randy Garutti said communication between restaurants and delivery systems is key for a better guest experience.

Garutti said the partnership was the result of a "journey" after working with Grubhub, Doordash, Caviar and Postmates for the last two years.

The Grubhub partnership with Shake Shack is in Morningside Heights in New York; the River North area of Chicago; Livingston, New Jersey, and Darien, Connecticut. The partnership will give Shake Shack access to tools to analyze performance or ordering trends, as well as Grubhub's enterprise support team. The two brands will also engage in joint marketing.

"It really does a dynamic job on the tech side of measuring time, giving guests and carriers a good marriage of time goals so we have the best shot at lessening the time," Garutti said. "We decided Grubhub was the best partner overall. With their national footprint and the way we are going to integrate on the tech side — we have a really good opportunity to give the best guest experience."

Although delivery is becoming increasingly important, it is also expensive for restaurants to put in place. The partnership allowed for the best revenue opportunity for guests and both businesses, Garutti said.

"In the old days, the power was in the restaurants' hands to tell you how you could get there — what I love about this is we've put all the power in the guests' hands, which is exactly what hospitality should be about — now however you want it, wherever you want it, you get it. And that is what's so exciting," he said.

Grubhub has recently faced accusations of charging fees to restaurants for phone calls that did not result in orders and of making copycat restaurant websites. The company just released a blog post on the issue of phone charges, allowing restaurants to look back at phone orders and offering refunds if warranted, as well as holding roundtables with its partners.

Grubhub CEO Matt Maloney said the company is being targeted, adding that the accusations are false and mischaracterized. He said Grubhub delivery couriers keep 100% of the tips they are paid.

Garutti declined to comment on Grubhub's business outside of Shake Shack but says the company feels good about the partnership, and the fact that there are no hidden fees and drivers are paid the tips they earn in full.

Plant-based meat? Not so fast

Shake Shack is known for its premium burgers made of 100% all-natural Angus beef. Garutti reiterated that despite the consumer excitement around plant-based meats, the company isn't planning on adding Beyond Meat or Impossible Foods' burgers. The CEO did say both companies are doing "incredible things" and he's "rooting for them."

"It's really fun to watch, and it's been an incredible reaction both on the investment front and the consumer in this initial phase," he said. "We will never say 'never' to anything, but we want to really watch it and listen to our guests. … Our motto and our mission is 'Stand for Something Good' — real ingredients, real food."

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