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Shake Shack, Grubhub Tie Up to Boost On-Demand Delivery

Zacks Equity Research

Shake Shack Inc. SHAK has partnered with Grubhub Inc. GRUB for the rollout of delivery services nationwide. The popular ‘roadside’ burger brand’s more than 140 restaurants are now available for delivery on Grubhub. Following the news, the company’s shares inched up 1% on Nov 14.

Shake Shack, CEO, Randy Garutti said, “We're committed to being an accessible omnichannel business, giving our guests the chance to experience Shake Shack whenever they want it, with convenience and ease. We're excited to launch this partnership nationwide and begin our marketing efforts together across the country.”

The company stated that it will be launch other parts of the partnership throughout 2020. The partnership is expected to help Shake Shack drive sales. In third-quarter 2019, the company’s revenues rallied 31.9% to $157.8 million.

In the meantime, this Zacks Rank #3 (Hold) company is gaining momentum on the back of various sales-building initiatives and digitalization. Evidently, shares of the company have gained 23.5% in the past year compared with the industry’s 11% growth.



 

Digitalization: Need of the Hour

With Internet, digitalization and electronics influencing every facet of our daily lives, the restaurant industry has embraced this trend as well.

Per The NPD Group, foodservice delivery services have contributed significantly to restaurant sales in the past few years. Over the last four years, digital orders increased 23%. As a result, digital sales are no longer a luxurious feature but are the dire need of the hour.

Moreover, Morgan Stanley predicts the food delivery industry to contribute 11% to all restaurant sales by 2020.

Zacks Rank & Key Picks

Shake Shack currently has a Zacks Rank #3 (Hold). Better-ranked stocks worth considering in the same space include Brinker International, Inc EAT and Chipotle Mexican Grill, Inc CMG. Both the stocks carry a Zacks Rank #2 (Buy). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.

Shares of Brinker International have increased 14.3% in the past three months.

Chipotle Mexican Grill has reported better-than-expected earnings in all of the trailing four quarters, the average being 16.1%.

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Grubhub Inc. (GRUB) : Free Stock Analysis Report
 
Brinker International, Inc. (EAT) : Free Stock Analysis Report
 
Chipotle Mexican Grill, Inc. (CMG) : Free Stock Analysis Report
 
Shake Shack, Inc. (SHAK) : Free Stock Analysis Report
 
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