Jimmy John's is the first chain to use DoorDash's new "Self-Delivery" product.
Jimmy John’s appears to have had a slight change of heart on third-party delivery companies.
A pandemic environment in which foodservice delivery usage has increased by triple digits will do that.
The sandwich chain announced today a partnership with DoorDash to add the delivery company’s new “Self-Delivery” product to its more than 2,400 locations. DoorDash announced Self-Delivery today in a blog post, describing it simply as a “product for the restaurant who wishes to use their own in-house delivery staff” to fulfill orders through the channel.
Notably, this news comes after CEO James North’s comments last year vowing to “never use” third-party companies, like DoorDash, to deliver its sandwiches.
To be fair, DoorDash won’t actually be delivering Jimmy John’s sandwiches. The chain will continue to leverage its own delivery fleet, which has built its “Freaky Fast” reputation. In other words, the chain isn’t handing over the end-to-end delivery process, nor relinquishing control of its food, brand and data.
Anyway, haven’t we all had to move on from anything we said or did or planned last year? It was a remarkably different time, especially for the restaurant business. That said, this move is quite savvy for Jimmy John’s–putting itself on this giant app that attracts an estimated 20 million users. In a year in which delivery has become a table stakes channel, why wouldn’t Jimmy John’s want to tap into DoorDash’s marketplace, which has a commanding chunk of market share in the delivery space at 49%.
Indeed, in a release, Jimmy John’s said it will use DoorDash Self-Delivery to generate demand and reach new customers through the DoorDash platform, enhancing the visibility and scale of its own delivery operations.
“As a brand, we are relentlessly focused on reaching our guests on their terms,” Jimmy John’s CMO Darin Dugan said in the release. “In DoorDash we found a third-party partner that shares this commitment and offers us the ability to further reach our consumers where they increasingly are–digitally. We are so thrilled about this relationship and the visibility to consumers it provides for our brand, both now and in the future.”
Jimmy John’s conducted a six-month pilot of the new service with 100 restaurants before this chain-wide expansion. According to a DoorDash spokesperson, the pilot worked because it allowed Jimmy John’s to integrate DoorDash’s volume into its existing delivery model. DoorDash built a direct point-of-sale integration with Signature Systems, Jimmy John’s provider, which will minimize operational changes and ensure the chain’s information is synced with the platform.
Not only is Jimmy John’s able to use its own in-house fleet to fulfill its deliveries, the company can also choose a delivery radius and set a delivery fee for its customers. Pickup at Jimmy John’s is also be available through the DoorDash platform, and the chain will be available to subscribers of DashPass, DoorDash’s subscription program. According to Second Measure, about 20% of DoorDash’s customers are DashPass subscribers.
It is worth noting that DoorDash has strong existing relationships with Jimmy John’s sister concepts at Inspire Brands, including Sonic, Arby’s and Rusty Taco. Inspire’s Buffalo Wild Wings uses DoorDash’s Drive product, which enables the chain to leverage the delivery company’s backend infrastructure without driving guests away from its native ordering channels.
It is also worth noting that this idea–offering restaurants that have their own delivery fleets the ability to simply have a presence on popular marketplaces–could have big implications. Third-party delivery companies have come under a significant amount of scrutiny of late for charging commission fees up to 30%. As such, Jimmy John’s CEO is hardly the only executive to speak out against using these companies, and more restaurants seem to be adding their own fleets to better control the channel and those fees while avoiding further erosion of already-thin profit margins.
This product could change that. Adding in-house delivery is expensive (think drivers, insurance, tech stack, etc.) and though DoorDash’s Self-Delivery service charges a commission rate, it is reduced because that huge fulfillment piece isn’t involved. That’s not to say it’ll be a silver bullet, but the juice may be worth the squeeze for brand marketing and accessibility alone–delivery apps are simply becoming that ubiquitous and habitual.
DoorDash estimates that 120,000 restaurants today offer in-house delivery. Though Jimmy John’s is the first chain to launch the product, a DoorDash spokesperson confirms other brands, including Lou Malnati’s and Panera
Lou Malnati’s has been offering delivery for decades. In DoorDash’s blog post, Ben Beckstrom, CIO at Lou Malnati’s, said, “Delivery is something that's a core competency of ours and it didn't make a lot of sense for us to be signing up with a partner and pass off something we did well, which is why Self-Delivery made all the sense in the world for our business. With this product we can reach an audience that is totally different than our own and grow our sales incrementally. 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.”
This partnership–and new Self-Delivery product–comes as DoorDash readies for its IPO predicted to happen sometime this month with a valuation that could be as high as $32 billion, or double what it was just six months ago.
