Walmart enters restaurant delivery: Can bundled orders along existing routes challenge established platforms?

Where does Walmart’s new service offer savings?

Since the summer, Walmart has announced partnerships with Subway, Dunkin and Papa Johns. Papa Johns is the first national brand to use Walmart Express Delivery for orders fulfilled by restaurants outside Walmart stores.
For restaurants, Walmart uses lower commissions to encourage the same menu prices online and in-store; Bernstein estimates that third-party platforms charge large chains commissions in the low double digits. Equal pricing is not a contractual requirement, however, and other platforms can offer similar incentives.
For consumers, the delivery fee for nonmembers is 5–10 dollars per order. Walmart+ members can have the delivery fee waived when they combine a meal with an eligible Walmart order and meet the minimum spend. Ordering a meal on its own may not be cheaper: most spending on DoorDash and Uber comes from members who receive fee discounts.

Walmart says 85% of its delivery routes already pass fast-food restaurants, and about two-thirds of restaurant orders are combined with grocery orders for the same household. Picking up food along the way can reduce additional detours, and delivery to the same address requires no additional stop.
Bernstein estimates that, assuming a meal order value of 25 dollars, a commission of 8%, a 5-minute wait for an en-route pickup and a driver wage of 16 dollars per hour, a bundled en-route order generates an incremental contribution of about 0.67 dollars. If the same order is delivered separately and requires an additional 20-minute detour, its incremental contribution is negative 3.57 dollars.
Route density is an advantage, but there are execution constraints: early driver feedback has been mixed, and willingness to accept orders depends on wait times, route complexity and pay. Bundling too many orders may also leave food cold and affect the experience.

Franchisees can retain commission savings as store profit or use them for promotions or lower consumer prices. Even if Walmart has yet to become a major sales channel, its presence as another option may help restaurant chains negotiate better platform terms.
Bernstein believes large fast-food chains close to existing delivery routes and able to prepare food quickly are best suited to this model. Adoption will expand gradually, however, and the near-term profit gain may be limited.
Consumer friction remains significant: when Bernstein tested Subway delivery in three locations, the restaurant entry point was hard to find, and a fixed service and delivery fee of 8 dollars was charged per order, making small orders especially poor value.

Online delivery accounts for about 14% of US restaurant spending. Bernstein believes penetration still has room to rise, so Walmart’s growth need not come entirely from taking orders away from existing platforms.
Third-party data show that about 34% of DoorDash users and 32% of Uber Eats users also use the Walmart app; this is only a proxy for user overlap. Established platforms also offer a wider selection, including independent and full-service restaurants, while Walmart currently focuses on bundling fast-food chain orders with groceries.
Bernstein maintains its outperform ratings on Walmart, DoorDash and Uber. The firm is watching whether Walmart reduces fees on standalone restaurant orders, expands to small independent restaurants and how driver recruitment progresses; these changes could make its competition with established platforms more direct.