Jack in the Box said it is offering delivery services at more than 800 of the U.S. fast-food chain’s restaurants starting on Thursday, under a new partnership with DoorDash.
The deal, which includes more than 200 cities, comes as chains ranging from McDonald’s (MCD) to Panera Bread (PNRA) hope that appealing to convenience-seeking U.S. diners will help reverse the industry’s stubborn traffic slump.
Partnering with DoorDash for delivery “is faster and more efficient” than doing it in-house, Iwona Alter, Jack’s chief marketing officer, told Reuters.
And, it has boosted business. “We are seeing larger orders, which are beneficial to our business,” Alter said.
Under its new deal, Jack (JACK) will extend delivery from its test market in San Francisco to cities such as Los Angeles, Dallas, Phoenix and Seattle. The deal, terms of which were not disclosed, covers almost 40% of the chain’s 2,200 restaurants.
In 2016, delivery accounted for 1.7 million U.S. restaurant visits, or about 3% of restaurant traffic, and $16.1 billion in sales, said Bonnie Riggs, a restaurant industry analyst for the NPD Group’s foodservice unit.
Traffic growth from delivery was up 7% in 2016 versus 2012, Riggs said, adding that most of the increase was from restaurants outside the pizza category.
Significant Opportunity
Executives at McDonald’s, who are experimenting with UberEats delivery in Florida and have plans to expand its U.S. test with other delivery providers, recently called delivery a “significant” $100 billion opportunity.
Seamless and GrubHub account for the most of the delivery industry’s sales, but companies like UberEats, DoorDash, and Postmates are growing briskly.
Delivery companies, many of which own the data they collect about consumers who order food through their sites, make money by charging restaurant partners a commission of 10% to 30%. Some also add separate delivery fees for diners.
Representatives from PF Chang’s China Bistro and Buffalo Wild Wings (BWLD) say it is worth outsourcing delivery to bring in sales that otherwise would have gone elsewhere.
Customers that come through third-party delivery sites “have already made a decision not to come to your restaurant,” said Todd Kronebusch, vice president of market development at Buffalo Wild Wings.
But other chains are going a different direction.
Panera Bread tested third-party delivery services before building its own. The chain wanted access to customer data and control over delivery and food quality, Panera President Blaine Hurst said.