Is Delivery Decelerating?
Walmart's wild Q2, Starship heads back to school
Is delivery decelerating, or just evolving? New results from Cava and Chili’s point to different paths forward for the industry, as consumers look to shave a few bucks off their ticket prices. But Walmart and Starship aren’t sweating — they’ve both got some big developments today. Read on!
Cava, Brinkers Point to Delivery Deceleration
Walmart’s Wild Quarter
Chart Time | Plus Week Grows Subs
Starship Heads Back to School
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RESTAURANTS | Is Delivery Declining or Evolving?
In its first quarter as a public company, mediterranean fast-casual star Cava saw net sales grow 62% to 172.9 million, with foot traffic up 10.3% and profit coming in at a respectable $6.5 million. So what’s the problem? Analysts are worried that a pull back in delivery could make that profitability a one-off fluke, with the company’s digital revenue mix already sitting at a relatively low 36.1%. “We are beginning to see a slight shift in delivery to pickup and moderating overall same-store sales growth,” noted CFO Tricia Tolivar. Other recent reporters are already seeing delivery come under pressure: Chipotle saw delivery rev fall 15.8%, while Sweetgreen saw a decline in digital revenue percentage.
The Big Picture: Some consumers are shying away from delivery in the face of creeping fee-flation. Others are instead opting for pickup as a way to avoid having to tip: recent data shows that while 50% of Americans tip on delivery (you other 50% are cheap bastards,) only 13% feel compelled to do so on a pickup or takeout order. But a recent move by Brinker-owned Chili’s shows that smart operators can follow their delivery customers to any channel. The company is “graduating” the It’s Just Wings virtual brand, putting it on in-store menus at Chili’s, after the concept proved to be a hit with delivery customers. The company saw overall comparable sales rise 6.6% YoY.
RETAIL | Walmart’s Wowzers Quarterly Report
Well, they’re smiling in Bentonville; retail juggernaut Walmart put out a stellar Q2, one day after its competitor Target had far less impressive results. Comparable store sales rose 6.4%, crushing expectations of a 4.04% rise; foot traffic was up 2.8%, AOV up 3.4%… all adding up to $6.1B in operating income on $110.9B in sales.
The Big Picture: Walmart’s quietly grown into an ecommerce and delivery giant, both domestically and in international territories (including through subsidiaries like Flipkart in India.) Ecommerce grew 24% domestically, and 26% internationally, with the company calling out “pickup & delivery” as a specific growth driver in the U.S. On a global level, ecommerce hit $24 billion in net sales. While the company did not break out results for its Spark Driver or GoLocal platforms, it recently noted the former had tripled its driver count in the past year, and now reached 84% of U.S. households.
CHART TIME | Take That Prime, Walmart+ Membership Soars
Maybe Walmart is gonna have a stellar Q3 as well, at least if we can read the tea leaves from its recent “Walmart Plus Week.” The promotional period, which is like a Middle America Prime Day, fell on the week ending July 9th, meaning its effects weren’t seen in today’s Q2 results. But it looks like the company managed to really drive growth to its Walmart+ Membership Service, which has recently added perks like travel, cash back, and TV streaming. Second Measure data shows that signups soared 43%, due in part to an aggressive half-off annual subscription. Remember, those membership services are sticky!
AUTOMATION | The Robots Head Back to School
As we head into the back half of August, it’s almost time for every child’s worst nightmare: going back to school! But these days, college kids will have some new companions on campus: delivery robots. PDD leader Starship Robotics is bringing its delivery robots to a number of new campuses: Miami University in Ohio, Wichita State in Kansas, and potentially University of Nevada Las Vegas, pending a legislative update.
The Big Picture: Starship has really made university campuses its bread and butter, a wise choice given that they’re light on cars and dense on hungry students. But the company has shown adaptability in how it serves each university. At Miami U, dispatching is handled via Grubhub, a 3PD that has an ongoing relationship with the bot startup. Over at Wichita State, students will order directly in Starship’s app, ensuring not only a stronger relationship with the customer, but a healthy $2.49 per order revenue stream.
A Few Good Links
DoorDash building out Plentiful, its in-house salad brand. NYC’s revised outdoor dining fully approved. Uber Eats UK ad campaign (see yesterday’s coverage) moves to TV spots. Kodiak Robotics and Pilot open autonomous truckport in Georgia. Drizly launches party theme and drink generator. Giving back to Maui: Uber, Hyundai, local restaurateurs. D2Cer Figs improves fulfillment efficiency. DHL pushes automation in Chi-town ecomm hub. Instacart sticker shock. LatAm local payments processor dLocal rebounds. NYC pushes for green TLC fleet by 2030. Walmart Int’l CEO to step down. Aldi gobbles up Winn-Dixie and Harveys in Southern supermarket expansion. Kroger, Costco, Walmart battle for low-end grocery dollars. Waymo to begin charging for rides on Monday. SF pushes CPUC to rescind Waymo, Cruise robotaxi approval.
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