DoorDash, Jimmy John’s Say New Service Will Lower Delivery Fees

Jimmy John’s is teaming up with DoorDash Inc. on a system that would let the sandwich chain’s own drivers distribute food via the delivery specialist’s app.

The move will help lower the third-party delivery fees that have haunted restaurant chains’ bottom lines amid the rise of online ordering and delivery during the pandemic, DoorDash says. More than 2,400 of Jimmy John’s stores will participate.

“We want to be on their platform so that consumers see us,” said Darin Dugan, chief marketing officer at Jimmy John’s. “We also want to retain the quality control of utilizing our own driver system.”

DoorDash, Jimmy John’s Say New Service Will Lower Delivery Fees

In addition to the rest of the difficulties that 2020 has brought, restaurants have seen the sudden rise in delivery orders during the pandemic whittle away at their profitability. Companies from Chipotle Mexican Grill Inc. to Bloomin’ Brands Inc. and Brinker International Inc. have mentioned the impact of delivery costs in their financial reports.

Delivery services, as a result, have attracted criticism -- and local governments are taking action. Seattle, San Francisco, Las Vegas, Philadelphia, New York, Cincinnati, Los Angeles, Washington and Portland are among the cities that have set caps on third-party delivery fees, according to the National Restaurant Association, an industry group.

DoorDash’s new service, which will be available for any restaurant that wants to use its own drivers, says it will help reduce costs. These restaurants will pay a lower commission to the platform, since they’re doing their own delivery, said Tom Pickett, DoorDash’s chief revenue officer. The delivery fee paid by the customer along with any tips will be passed back to the seller, he added.

See Also: Cowen Sees a $39 Billion Post-Covid Void in Restaurant Sales

DoorDash estimates that around 120,000 different restaurants have their own drivers and says the new model can help them attract to the platform.

Jimmy John’s customers can use DoorDash to order their food for in-store pickup or get free delivery via the DashPass -- DoorDash’s monthly subscription service. If the order is made with DashPass, the delivery is still free even if the driver is employed by Jimmy John’s.

Apart from DoorDash, Dugan said Jimmy John’s is also evaluating other third-party delivery options as they progress through 2021.

Jimmy John’s is owned by Roark Capital Group-backed Inspire Brands Inc., which recently announced plans to buy Dunkin’ Brands Group Inc.

©2020 Bloomberg L.P.

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