Severe Weather's Impact on Delivery
Can Subway go digital? Instacart's new shopper features
So, are severe storms good or bad for the delivery industry? Looks like we finally have the data to answer that question! And now that Roark Capital has gobbled up Subway, what comes next for the chain and its iconic sandwich artists? Oh and check out some new features on Instacart…
Today:
Did Hurricane Hilary Help or Hurt Food Delivery?
Roark Eats Fresh, Now What?
Chart Time | Hurricane Hilary Part Two
Instacart Unveils New Shopper Features
3PD | Impact of Hurricane Hilary on Food Delivery
This past Sunday saw Southern California hit by a rare hurricane (eventually downgraded to a tropical storm.) While the region avoided a Florida-style whopping, it still had a huge impact on the food delivery industry, as consumers first geared up in anticipation, and then hunkered down as the storm hit. (DoorDash even turned off its services at the peak of the storm.) On Saturday, the day before the storm hit, order volume shot up a whopping 43.82% compared to an average Saturday.
The Big Picture: Once the storm actually arrived, order volume receded. Orders were down 42.76% on Sunday, the main day of the storm (as compared to an average Sunday.) Sales remained depressed on Monday and Tuesday, before stabilizing on Wednesday. Evidently it took folks a few days to eat through their “emergency” rations…
FINANCE | What Will Roark Do With Subway?
Subway’s long ride as an independent brand is coming to an interesting end, as Roark Capital has emerged as the sandwich chain’s new owner, with a $9.6 billion bid. While the restaurant had go-go growth years in the early 2000s, it hit a stumbling block around 2015, tied to the downfall of its longtime spokespervert Jared Fogle. Between 2016 and the end of 2021, the company’s unit count fell by 22%. More recently however, its “Eat Fresh Refresh” campaign has returned the brand to growth; the company has logged 10 consecutive quarters of improving same-store sales.
The Big Picture: That growth, along with a built in JPMC-backed $5B debt financing plan, helped draw in a number of suitors, including Bain, TPG and Goldman Sachs. The ultimate winner, Roark, has a lot of experience in the restaurant sector. One of its holding companies, Inspire Brands, operates the likes of Arby’s, Baskin Robbins, Dunkin’ Donuts, Jimmy John’s, Sonic, and Buffalo Wild Wings. Another of its holding cos, Focus Brands, operates Auntie Anne's, Carvel, Cinnabon, Jamba Juice, McAlister's Deli, Moe's Southwest Grill, and Schlotzsky's (seems kind of mean to have a second company just for your loser brands…) Now its up to Roark to continue growing the brand (or… do the classic private equity thing and cut costs to the bone.) While Subway’s digital sales mix has grown, it hasn’t outpaced overall growth by much, suggesting there’s plenty of room to improve delivery and pickup operations. Or maybe add a virtual brand that can make use of kitchens that tend to go quiet in the third daypart?
Fun Fact: The first West Coast Subway (restaurant) opened in Fresno, California in 1978. The first West Coast subway (underground train) opened in San Francisco 60 years earlier. The first international Subway (restaurant) opened in Bahrain in 1984. Bahrain does not have a sizable public transit system.
CHART TIME | Hurricane’s Impact on AOV
But wait, there’s more data! Not only did the storm cause order volume to spike before the storm, it also caused order value to shoot up, spiking 57% from $35 to $55. Orderbyte Co-Founder Gary Chaglasyan, who partnered to provide this data, said “we saw that customers were really stocking up in preparation for the storm. One of our pizza shop operators had customers order a whopping 10 pies, others 6-8 pies at a time."
3PD | Instacart Unveils New Shopper Tools
Instacart announced a suite of new features aimed at improving the platform for its shoppers. “Log in faster with passkeys” will let users log in via a facial recognition or fingerprint sensor, as opposed to having to use text-messaging for two-factor authentication. “Ensuring quick and easy deliveries” means the platform now verifies customer addresses against USPS’ database to improve accuracy, extended chat times so shoppers can continue communicating with customers for 20 minutes, and a new notification tool that allows shoppers to request that customers turn their porch lights on in the dark.
The Big Picture: Instacart may be heading towards an IPO, but it’s not resting on its laurels in the meantime. Adding these new features should help with shopper retention, improve delivery throughput, and increase customer satisfaction as well. But will that be enough to restore core product growth, or will Instacart have to rely more and more on its advertising division?
A Few Good Links
DoorDash pays $1.6M to City of Seattle over Gig Worker Paid Sick and Safe Time Ordinance. Uber CEO reveals his most frustrating delivery runs. The big 3 3PDs all suffered recent outages. Tech world hoping Instacart IPO thaws public market pipeline. Digital trucking marketplace Convoy mulls sale. IHOP turns to Google Cloud for AI-powered online and in-store ordering. Teamster’s strike against Amazon DSP expands to second California location.
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