(Bloomberg) -- Grubhub is expanding its convenience delivery service in collaboration with 7-Eleven Inc. and considering adding urban warehouses in a bid to boost customer retention amid intense competition from DoorDash Inc. and Uber Technologies Inc.
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The Just Eat Takeaway.com NV subsidiary is rolling out Grubhub Goods to 3,000 locations across the U.S., allowing customers to order on-demand some of 7-Eleven’s most popular items, from energy drinks to ice cream and personal care. The national expansion follows a pilot program with 7-Eleven at several locations in Manhattan.
Adding more warehouses, known as dark stores, would also extend an existing model in New York, where the company operates a Grubhub Goods location to stock its own inventory and make deliveries faster.
“There’s a number of different strategies that we’re pursuing. At the end of the day, it’s really about getting the diner what they want,” Chief Executive Officer Adam Dewitt said in an interview.
One of the goals is to improve customer loyalty and frequency, as people who order convenience items on Grubhub place more orders from restaurants in the following month than those who don’t, Dewitt added.
Dewitt said the company is “absolutely looking at opportunities” to open more fulfillment centers but it’s still in early stages of assessing “the right economic model long-term.” A hybrid third-party partnership and dark store approach is intended to tailor how it can best manage inventory in suburban markets compared with dense urban areas. “It’s a question of profitability, access and also diner demand. This is the best of both worlds,” he said.
In New York City, the dark store model has gained traction among instant commerce startups like Gopuff, Gorillas Technologies GmbH and Getir which promise delivery as fast as 10 minutes. DoorDash also has dark store locations.
Grubhub’s share of the U.S. food delivery market has stagnated since the start of the pandemic while rivals have continued to gain. Grubhub’s European parent company Just Eat has been under pressure from investors to sell or spin off Grubhub in an attempt to boost Just Eat’s weak stock performance, a move Dewitt dismissed. Just Eat has fallen 20% this year.
“We have very strong underlying profitable unit economics,” Dewitt said. “This is a valuable at-scale business and JET is looking to invest and grow the company and is not focused on selling it.”
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