Dive Brief:
- Taco Bell has partnered with DoorDash to provide delivery to over 5,500 Taco Bell locations nationwide, or about 75% of its domestic locations, according to a press release emailed to Restaurant Dive.
- To launch the partnership, customers who place their orders on DoorDash can get 50% off of Taco Bell’s Nachos Party Pack with a $0 delivery fee when they spend $15 or more Oct. 15 through Oct. 24.
- This partnership comes two years after Taco Bell parent company Yum Brands signed an exclusive delivery partnership with Grubhub. The two companies are now embroiled in a lawsuit brought forth by Yum Brands over the summer alleging that Grubhub violated terms of the agreement.
Dive Insight:
Taco Bell's Door Dash promotion hits on the consumer behavior driving the staggering growth of delivery during the pandemic by featuring large or bundled meals for families quarantined together at home. Taco Bell has pivoted its marketing to promote more such group bundles, as well as to drive delivery, Yum Brands' CEO David Gibbs said during its Q2 call in July. He also added that an increased focus on digital and delivery has driven profitable growth for franchisees.
Nikki Lawson, Taco Bell’s chief global brand officer, said in the press release that growing delivery has "always been a priority for the brand" and this partnership proves just that.
It's also likely a blow for Grubhub, once Taco Bell's exclusive delivery partner after that 2018 agreement, which also included Yum Brands' KFC system. But that agreement has since gone south and, in June, Yum Brands filed its lawsuit against Grubhub accusing the delivery company of regretting its master services agreement with the restaurant company. Though there have not been any updates on the lawsuit, KFC added DoorDash as a delivery partner just in September at nearly 3,000 locations.
Lawsuit aside, it is worth noting that several brands have moved away from delivery exclusivity in the last 18 months — an effort to reach more consumers who remain uncommitted to aggregators. Chief among them is McDonald's, which ended its exclusive partnership with Uber Eats after two years, signing with DoorDash and Grubhub in 2019.
Still, there are some holdouts. Brinker's Chili's brand partnered exclusively with DoorDash in 2019 as did Bloomin' Brands. Wingstop is doubling down on its exclusive DoorDash partnership, signing a new three-year deal to expand into more delivery models, such as ghost kitchens and pickup lockers.
DoorDash has a very clear command of the segment's market share at 46% as of August, according to Second Measure. This is followed by Uber Eats at 24% and Grubhub at 21%. Adding Taco Bell to its portfolio will no doubt extend the delivery company's foothold.
The staggering growth of delivery demand during the pandemic — along with recent segment consolidation — has further intensified the third-party delivery space. The result has been a near constant state of diversification for these companies. Just this month, for example, Grubhub began offering free subscriptions to Lyft Pink members, while Uber Eats announced a revamp of its app and website and DoorDash launched a new DoorDash for Work product enabling businesses to offer employees meal benefits and food perks.
Such diversification is not only a response to increased competition, but also likely a play to generate a profit — a feat still very much elusive in the space despite its growth.
