Given the widespread adoption (and consumer dependence) on delivery across the restaurant industry, it’s hard to believe that Shake Shack only started testing delivery directly through its app in December.
While the New York City-based chain had previously been available on third-party delivery platforms, it is now getting serious about driving delivery customers through its own channels, CEO Randy Garutti said during a call with analysts Thursday.
App-based delivery is now available at more than 100 of Shake Shack’s 186 locations, with a systemwide rollout planned by the end of Q2.
The chain is testing a 5% menu price increase on third-party platforms to incentive consumers to shift to Shake Shack’s app.
“I’m actually ordering delivery tonight, myself, from my local Upper West Side Shack in New York City through our app,” Garutti said.
More than 60% of Shake Shack’s business is now digital, though the chain declined to break out how many of those orders are for delivery but said it has seen an increase in delivery especially during the recent cold weather and pandemic-related dining room closures.
“We want these different channels including delivery, and certainly delivery through our own app, to be customer-acquisition opportunities,” CFO Tara Comonte said. “And, then, from that, to drive frequency and to drive retention and to drive in-home, long-term sort of customer loyalty and engagement.”
Comonte said it is too early to tell whether a 5% price increase will offset the margin hit Shake Shack is taking on third-party delivery.
“It’s meaningful,” she said of the margin impact. “It’s expensive. I mean, I think we’ve got a lot of opportunity, as Randy pointed out, in terms of bringing it back into our own ecosystem.”
Even as it rolls out app-based ordering, Shake Shack will remain on the third-party platforms, Garutti said.
“We want people to order however they want,” he said. “That said, we want to create our channel as the most-preferred channel. We want it to be the best price, the most rewarding and the most engaging.”