Dive Brief:

• Grubhub this week launched a new in-app feature, called Perks, offering discounts and new ways to earn and redeem loyalty rewards from nearby restaurants, according to a press release.
• Perks features giveaways and incentives only available on Grubhub. The feature integrates restaurants' loyalty programs so consumers can earn points digitally, as well as through the restaurants’ white label app or in the actual restaurant.
• "Restaurants have always used free food as a perk for their VIP diners to keep them happy and coming back. We have now extended this practice to Grubhub diners by building loyalty tools so our restaurant partners can promote their restaurants more aggressively on our marketplace and reward their best digital diners as well," Grubhub CEO and founder Matt Maloney said in the release. 

Dive Insight:

Grubhub already powers some restaurant brand loyalty programs, like Shake Shack and Just Salad, so this new feature should expand seamlessly to its more than 125,000 restaurant partners.

"To date we've seen a sizable lift in new diners as well as repeat frequency for brands that have integrated loyalty to our marketplace," Grubhub Chief Product Officer Sam Hall told Restaurant Dive in an email. 

The Perks tab on the Grubhub app includes a redeem piece, with all rewards earned or offered for immediate use. This part allows restaurants to promote their brands more aggressively with deals and special offers, Hall said.  An earn piece, which has all available restaurant loyalty programs where diners can track their progress, allows restaurants to streamline loyalty enrollment and participation in existing programs, Hall said. It also allows diners to receive rewards regardless of which channel they use to order, Hall said.

Some of the restaurant brands initially leveraging this new feature include Taco Bell, Auntie Anne's, Red Lobster and Smoothie King. Grubhub also will help build a new loyalty program for restaurant partners that may not have one already whether it's a large multi-location chain or individual business, Hall said. 

While the program offers many upsides for restaurants, it could also further blur the lines between restaurant brands and the aggregates that power their growing delivery channels. With this new feature, for example, a major question looms — what happens with the data from those loyalty customers — especially when the top 25% of restaurant customers typically contribute 70%-plus of revenue for brands. 

Also, many restaurants have reported providing such offers through delivery apps hurts their bottom line, further illustrating the paradox created by the delivery space. 

But restaurants are in a cutthroat competition over traffic, and these types of discounts and offers typically drive guest counts, which could outweigh everything else as this space continues to evolve. 

Grubhub is also embroiled in a growing competition among rivals Uber Eats, DoorDash and Postmates. Because of this leveling playing field, analysts concluded in March that Grubhub was experiencing deterioration of diner retention and diner spend. In theory, Grubhub should benefit by incentivizing guests to come back to its platform to earn such perks, especially since the app is keeping track of coupons and discounts for consumers in one spot. 

Grubhub is hardly alone in offering a loyalty program. Restaurant Business reported last year that a number of services have launched incentives, and earlier this year Uber Eats launched Uber Rewards. But those programs don't integrate directly into the restaurants' loyalty program. This could translate to a win-win if Grubhub is a true partner of its restaurants. If loyalty data isn't shared, however, it could potentially cannibalize restaurants' loyalty programs just as most brands are investing more in such a feature.