- On Thursday, KFC and Taco Bell announced plans to roll out delivery at thousands of restaurants through a partnership with Grubhub.
- McDonald's rolled out delivery with UberEATS at 5,000 locations in the US in 2017, and says that the service is driving sales.
- McDonald's still has the upper hand — but with the Grubhub deal, KFC and Taco Bell have a major opportunity to enter the fast-food deliver war.
Fast-food delivery battles are heating up.
On Thursday, Yum Brands — the parent company of KFC, Taco Bell, and Pizza Hut — announced it had entered into a partnership with delivery company Grubhub. With the deal, KFC and Taco Bell will roll out delivery at thousands of locations across the US in 2018.
McDonald's made a major delivery push in 2017, going from a handful of locations testing delivery to roughly 5,000 locations delivering orders via UberEATS.
Here's how the two fast-food giants delivery strategies measure up.
McDonald's is modernizing — and has a huge advantage on speed
McDonald's delivery drive is part of CEO Steve Easterbrook's' more general efforts to modernize the brand, with initiatives such as adding kiosks to stores and rolling out mobile orderings.
"People are so used to living their lives with one click of a button," Easterbrook told Business Insider on the topic of delivery in April 2017.
By partnering with UberEATS, McDonald's gained access to a sleek, super-modern delivery interface. According to the company, customers tend to spend more and shop at different times — such as late at night — than when they visit stores.
While originally there was skepticism over if customers would be willing to pay the delivery fee required by UberEATS, McDonald's say that it has been impressed by demand. In a call with investors in January, McDonald's said that delivery was the biggest contributor to comparable sale growth in several major markets in the fourth quarter.
McDonald's biggest advantage when it comes to delivery is its size. Because the chain has more than 14,000 locations in the US, most customers are relatively near a McDonald's — meaning shorter delivery times, allowing food to arrive still warm.
"If you were to go on to UberEATS in many of the markets now, we'll be one of the early recommended restaurants, just because the operation that we run now we can actually get from order to delivery in under 30 minutes," CFO Kevin Ozan said in January. The speedy delivery "pretty much everywhere we are which puts us right at the head of the pack in terms of the convenience that we offer customers."
Taco Bell has been trying everything, while KFC plays catch up
Roughly 1,500 Taco Bell locations already offer delivery, Yum Brands said in a call with investors on Wednesday. Even prior to the Grubhub deal, the chain has been experimenting with how best to get tacos into customers hands, without having them leave the house.
Last year, Taco Bell CEO Brian Niccol told Business Insider that delivery was customers' top demand.
"We still haven't figured out how to do it," according to Niccol, who said at the time Taco Bell was exploring in-house delivery options.
"Could we probably just go do it? Sure. But it would just be OK," Niccol said. "OK usually ends up in a slow death. You buy a shirt, and you're like, eh, it's OK. But slowly and surely it moves to the back of your closet with the tag still on it. And it never makes it out of the closet because you're like, eh, it's OK."
While Niccol said that Taco Bell had found third-party delivery services weren't fast enough, the chain has experimented with various third-parties, including an ongoing partnership with DoorDash.
Perhaps the most out-of-the-box solution was "Taco Mode"— a feature Taco Bell tested last year that allowed Lyft passengers to push a button to have their driver take them to a Taco Bell drive-thru between 9 p.m. and 2 a.m.
KFC, meanwhile, is playing catchup. The chicken chain has only recently started testing delivery in a select number of markets.
The Grubhub deal proves KFC and Taco Bell finally getting serious about delivery
Taco Bell and KFC franchisees are still working with Grubhub on what exactly will be delivered and how deliveries will be executed, so keep an eye out for the chains to start popping up on Grubhub and Seamless in the coming months.
Both KFC and Taco Bell also have the advantage of being sister brands with a chain with serious delivery experience — Pizza Hut.
The pizza chain has been developing delivery tech over the last decade, with digital sales making up roughly half of all orders. As part of the partnership announced on Thursday, Grubhub will add Pizza Hut US President Artie Starrs to its board of directors.
The Grubhub deal — which includes Yum Brands agreeing to buy $200 million of common stock in the delivery company — represents a more overarching strategy for Taco Bell. Further, it proves KFC is ready to get serious about delivery.
As rivals like McDonald's ramp up their own efforts to take over the $100 billion delivery business, it's about time that the chains made an investment in figuring out how to deliver fast food.
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