NEW YORK — Shake Shack is launching an exclusive third-party delivery partnership with GrubHub, Inc. More than 140 restaurants across 20 states will offer the service beginning Nov. 14, the companies said.
The partnership gives Shake Shack access to GrubHub’s 21.2 million diners. It also includes a data-sharing agreement that will be used to reward customers with special experiences and promotions.
Exclusive third-party agreements like the one between Shake Shack and GrubHub are becoming increasingly rare. A growing number of food service operators are expanding beyond single delivery platforms, looking instead to multiple providers to gain access to additional customers. McDonald’s, Dine Brands and Restaurant Brands International all expanded their services to more than one provider this year.
Shake Shack began dropping other delivery providers, including DoorDash, Postmates and Cavier, in August, when it first announced the deal with GrubHub. Shares of the burger chain dropped 20% last week after it reported disappointing third-quarter sales. Randy Garutti, chief executive officer at Shake Shack, attributed weakness to the switch from a hybrid to exclusive third-party delivery model.
“We believe the transition to GrubHub caused some noise in our Q3 numbers and will certainly have an impact through the fourth quarter and into next year,” he told analysts during a Nov. 9 conference call. “As we remove direct point-of-sale integrations with DoorDash, Postmates and Caviar, we expect an impact to our delivery revenue, especially in those regions where Grub may not be the current market leader.”
GrubHub also struggled to maintain growth in the third quarter. Shares of the company dropped 40% last month after it reported revenues of $322 million, close to $10 million short of estimates. Orders decreased 15% year-over-year, dropping further from a second-quarter decrease of 11%.
Matt Maloney, c.e.o. of GrubHub, blamed a decrease in customer loyalty.
“Online diners are becoming more promiscuous,” he said in an Oct. 28 letter to investors. “For years, we saw in our data that a GrubHub diner was extremely loyal to our platform. However, our newer diners are increasingly coming to us already having ordered on a competing online platform, and our existing diners are increasingly ordering from multiple platforms.”
Expanded collaborations with national and global brands may help boost diner retention, he added. This includes data-sharing agreements like the one with Shake Shack, which are used to build loyalty programs.
“We are excited about these programs because they result in enduring diner benefits that improve restaurant sales and can be profitably scaled over time, unlike straight discounts and promotions like free delivery,” Mr. Maloney said.