UPDATE: March 18, 2021: A Shake Shack spokesperson said that the new app could help grow sales, as diners who use the Shake Shack app order more frequently and have higher average order values. The restaurant plans to explore loyalty program opportunities later this year via the new app.
UPDATE: March 17, 2021: Shake Shack began to offer delivery via the Shake Shack app nationwide on Wednesday through an exclusive partnership with Uber Eats, according to a release shared with Restaurant Dive. The chain also debuted a mobile-first web design, offering delivery in the Android app and allowing new payment options, including Apple Pay and Google Pay, in the second half of 2021.
Shake Shack is expanding its technology development team in collaboration with Uber Eats fulfillment as part of its digital investments, which accelerated in response to pandemic pressure. Digital sales made up almost 60% of total sales in Q4 2020 and app and web sales for the period grew 3.5 times year-over-year. From March last year through January 2021, the chain accrued over 2 million first-time purchasers to those channels.
Dive Brief:
- Shake Shack has introduced an in-app delivery test with third-party partner Uber Eats. Restaurant Business reports this is the first time Shake Shack has offered delivery directly through its own channels.
- The test is available at three restaurants in the Miami market, with a nationwide rollout planned for early 2021.
- CEO Randy Garutti noted the company was targeting its own delivery during Shake Shack’s Q3 call in late October, saying that it wanted to be able to oversee the customer experience and use the data and insights to better connect with its diners.
Dive Insight:
White label apps seem to be growing in the restaurant space as delivery orders increase. Last year, Sweetgreen entered into an exclusive delivery partnership with Uber Eats that included the launch of an app-based delivery program. Also last year, KFC and Taco Bell leveraged their then-exclusive partnership with Grubhub to build a white label app. At the time, Grubhub CEO Matt Maloney said he was indifferent if an order comes across the Grubhub marketplace or a restaurant's branded app.
A restaurant might feel differently, however. Chipotle has been largely insulated through the pandemic, thanks in large part to its triple-digit growth in digital sales. Third-party delivery has been a part of that growth for the company, which partners with all of the major aggregators, but the company itself runs about half of its delivery orders through its own app.
Chipotle has touted its white label app for providing the ability to run targeted promotions and control “more of the variables” that can incentivize behaviors on the app, CEO Brian Niccol said during the chain’s Q2 call in July. One of those variables is lowering delivery prices in its white-label app versus marketplace prices.
Indeed, having such a white label app can drive more profits by circumventing high commission fees from third-party providers. Shake Shack experienced an increase in operating expenses during its Q2 due primarily to increased delivery commissions. The chain should be able to correct some of those expenses by bringing orders onto its own app.
All of the major delivery providers now offer a white-label delivery solution, which could facilitate even more growth in the space and provide restaurants with a more efficient solution than building a delivery program in-house.
Shake Shack could very well reap all of these benefits as it ramps up its delivery presence, which it appears to be doing through its traditional restaurants, a new digitally focused Shake Track prototype and ghost kitchens. The chain’s digital sales are now about 60% of total sales, the company noted during the Q3 call, and its web and app sales combined have more than tripled since last year.
