Shake Shack Brushes Off Quality Concerns With Dive Into Delivery

(Bloomberg) -- Shake Shack Inc. is ready to bet that its burgers and fries can survive a car ride home.

The burger chain, which has resisted the pull of delivery, is partnering with GrubHub Inc. to offer delivery from its roughly 150 restaurants across the U.S., according to a statement on Monday.

The announcement comes after Shake Shack, which likes to tout its foodie credentials, said in December that its popular menu items were “not intended to be eaten half an hour after they were cooked.” The company added at the time that delivery did not “necessarily fit really well” with its brand.

But as more and more consumers look to have food sent directly to their homes, it has gotten over those concerns, according to Chief Executive Officer Randy Garutti. He said the company improved its delivery packaging and worked with GrubHub on a system that will “fire” orders once the drivers are close to the restaurant in a bid to ensure customers get fresh food.

“The No. 1 thing any restaurant can do is keep the time from pick up to delivery down,” he said. “We've been super deliberate about this.”

Shake Shack, founded by restaurateur Danny Meyer, tested delivery at various restaurants in the U.S. over the last two years, working with GrubHub, Postmates, Caviar and DoorDash. The company's food could remain on those other services, but it is integrating its ordering technology with GrubHub, Garutti said.

National Footprint

The chain settled on GrubHub, which is backed by the fast-food company Yum! Brands Inc., in part because of its national footprint. The delivery expansion is starting slowly, with four restaurants in Manhattan, Chicago, New Jersey and Connecticut. It will take as much as nine months to offer the service across the U.S., Garutti said.

It's an open question in the industry whether delivery brings in new customers, or simply gives existing diners a more convenient option. The economics can also be tough, with the third-party services taking a cut of the sales.

Garutti said the company's current arrangement with GrubHub addresses those concerns.

“We feel like we have nice situation here -- it lets them and us thrive,” he said.

To contact the reporter on this story: Craig Giammona in New York at cgiammona@bloomberg.net

To contact the editors responsible for this story: Anne Riley Moffat at ariley17@bloomberg.net, Jonathan Roeder

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