Chili’s Grill & Bar is jumping into delivery through an exclusive agreement with third-party service DoorDash, the casual chain’s parent, Brinker International, announced this morning.
Under the deal, delivery will be provided by DoorDash from more than 1,000 of Chili’s 1,248 U.S. restaurants, Brinker said.
The arrangement marks an about-face for Chili’s, one of the few big casual-dining chains to forgo delivery as that form of service has boomed in recent years. Reliance on a third party didn’t make economic sense because those services charged such a huge commission, management had maintained. The fees usually fell within a range of 20% to 30%.
In addition, the executives voiced concerns about entrusting the brand’s food to a third party. Chili’s has plotted a turnaround that calls in part for winning back customers who had abandoned the brand because of disappointment with its food, service and value.
“We've seen a lot of players skin their knees on the bleeding edge of this burgeoning business, and, frankly, for us, it's been too high a risk as we worked hard the past year to build trust with our guests,” Brinker CEO and Chili’s President Wyman Roberts told investors at the end of April.
But he observed at the time that the delivery services were starting to shave their rates as they hit resistance in their drive to become national operations.
Roberts also noted that Chili’s had learned a great deal about the off-premise market from its to-go business, which totaled about 13% of the brand’s sales for the third quarter ended March 27. Takeout sales jumped 17.2% during that period, according to Brinker.
The terms of Brinker’s arrangement with DoorDash were not revealed. But Brinker said the service would also become the exclusive delivery partner of Chili’s sister chain, 53-unit Maggiano’s Little Italy. That operation had been using both DoorDash and Postmates.
The DoorDash ordering platform will be integrated into the POS systems of Chili’s and Maggiano’s, so orders placed through the DoorDash app will be presented to restaurants as if they originated from the chain’s own apps, Brinker said. That integration is happening now, it added.
“We chose DoorDash as an exclusive partner because they have a leading market share in areas where Chili’s restaurants are located and have a fast-growing delivery platform,” Roberts said in a statement. “While we tested delivery with several partners, DoorDash integrated seamlessly into our operations, demonstrated the ability to drive incremental sales and provided a consistent guest experience.”
Several major casual chains, including Olive Garden, Texas Roadhouse and Del Frisco’s Double Eagle Steakhouse, are still refusing to add delivery because of the economics and concerns about maintaining food quality.