In early 2019, Jimmy John's defied industry trends saying it would never work with third-party delivery companies because the math doesn’t work.
Now, after piloting a test with DoorDash, the numbers are starting to add up.
The Champaign, Ill.-based sandwich chain announced plans Wednesday to take advantage of a new DoorDash service called Self-Delivery.
The third-party delivery company said the new platform is geared for brands with their own delivery fleets. Restaurants like Jimmy John's can now leverage DoorDash’s vast marketplace to increase orders.
Starting today, roughly 2,500 Jimmy John’s restaurants across the nation will be hawking subs on DoorDash’s app — a move that comes after testing Self-Delivery earlier this year in 200 stores.
Chief Marketing Officer Darin Dugan said the chain saw the advantage of growing incremental transactions through DoorDash’s marketplace.
The sandwich chain, known for its “freaky fast” delivery, will continue to fulfill orders through its own delivery fleet while taking advantage of the “many eyeballs” browsing DoorDash’s app, Dugan told Nation’s Restaurant News.
“We saw very encouraging incrementality. It was hard to ignore,” Dugan said of the pilot test that occurred during the pandemic at stores in Chicago and Austin, Texas.
Panera Bread and Lou Malnati’s Pizzeria in Chicago are also using DoorDash’s Self-Delivery. Unlike Jimmy John’s, Panera Bread has been leveraging third-party delivery companies to supplement its own in-house delivery for more than a year.
Ben Beckstrom, chief information officer for Lou Malnati’s, said using another company to deliver its deep dish pizzas doesn’t “make a lot of sense” for a brand that offers its own fleet of drivers.
However, “Self-Delivery made all the sense in the world for our business,” Beckstrom said in a statement.
“With this product we can reach an audience that is totally different than our own and grow our sales incrementally,” he said. “But the real benefit for us is that through leveraging our own drivers and driver platform we can increase same-store efficiencies and ensure the end customer experience is the same across the board.”
Dugan agreed, adding that using DoorDash’s self-delivery program allows the sandwich chain to maintain valuable consumer data because the company is making its own deliveries. During the pilot, the company determined that cannibalization was not occuring by using DoorDash's marketplace.
Jimmy John’s said franchisees will have the option to adjust marketplace pricing to maintain margins and offset any commission fee for placement on DoorDash's marketplace. This tactic, often dubbed premium pricing, is used by many brands to offset commission fees for marketplace and last-mile delivery costs.
DoorDash estimates that 120,000 restaurants currently offer in-house delivery, making Self-Delivery a new opportunity for restaurants looking to generate new revenue while still using their own drivers.
The San Francisco-based third-party delivery company plans to raise up to $2.8 billion in its initial public offering. The company, the No. 1 player in the space in terms of market share, is going public as it faces fierce competition from Uber Eats and Grubhub.
Uber Technologies, the parent of Uber Eats, completed its purchase of Postmates this week. Earlier this year, Grubhub said it would merge with Just Eat Takeaway, based in Europe.
DoorDash has been expanding its services over the past year. Last year, the company introduced DoorDash Kitchens, a ghost-kitchen facility in the Bay Area. This year, the company has expanded delivery of convenience-store items by establishing delivery partnerships with CVS, Walgreens, 7-Eleven and Wawa. The company’s DoorDash Drive platform is also being used by Wegmans Food Markets.
The company recently introduced DashMart, a one-stop shopping platform that provides doorstep delivery of household essentials ranging from laundry detergent to pantry goods. DashMart’s inventory is curated from food distributors and restaurants.
Contact Nancy Luna at [email protected]
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