Dive Brief:
- Chick-fil-A is testing a new delivery program run through one of its restaurants in Norcross, Georgia, about 20 miles from Atlanta, where the chain is headquartered, the Atlanta Journal-Constitution reports.
- The restaurant includes a branded delivery car, orders for lunch and even catering can be made through the Chick-fil-A app for both regular meals and catering, and an employee from the restaurant makes the actual delivery.
- While the fast food chain is testing this service around the country, it plans to maintain its partnership with DoorDash.
Dive Insight:
While Chick-fil-A's restaurant-run delivery test doesn't mean the company is dropping its partnership with DoorDash, it does illustrate that nothing is really set in stone at this early point in the burgeoning delivery space. Chains are scrambling to scale delivery through aggregates to meet swiftly growing consumer demand and their approaches are all over the map — some chains have exclusive partnerships such as Chick-fil-A rival KFC's deal with Grubhub, while others, like Checkers, have multiple aggregates.
Even McDonald's is reportedly in talks to renegotiate its exclusivity with Uber Eats, its partner since 2017 — a lifetime ago in delivery.
There is plenty of motivation for a company as big as Chick-fil-A to explore in-house delivery; namely it offers more control over customer data, service fees and the brand's reputation. For the latter, once a meal is handed off to a third-party aggregate, that restaurant is often on the hook for any compromises that may happen, including if a driver is rude or if food is missing or at the wrong temperature. Such compromises are why Panera believes it has a competitive advantage in the delivery space, having launched its own in-house service in 2014.
These benefits could also explain why Chick-fil-A is testing out the option. The brand has a big reputation to defend, having been named the No. 1 limited-service restaurant two years running in the American Customer Satisfaction Index. The No. 2 brand is Panera.
Chick-fil-A has deep enough pockets to explore in-house delivery. But that doesn't mean such a launch will be quick or easy. There are logistics, insurance, packaging and workforce components involved, not to mention the management of additional volume. The average Chick-fil-A store generates quite a bit of volume, with average unit volumes of about $4.1 million, compared to $1.2 million at KFC.
In addition to this test, Chick-fil-A seems to be putting other pieces in place to set up its own delivery. Namely, the company has added a couple of prototypes specifically devoted to delivery orders to ease volume demands in regular restaurants.
In February, NPD Group VP David Portalatin predicted larger chains with bigger budgets and sophisticated infrastructure will start to develop proprietary delivery systems. Chick-fil-A's restaurant-run test may be an early sign of this prediction coming true.
