Despite dining rooms being closed and delivery being one of the few sales channels on which restaurants can rely, the numbers are down as far as third-party platforms like Grubhub and DoorDash are concerned. Data from Earnest Research shows that these platforms are “declining in growth,” according to an article today on Nation’s Restaurant News.
Earnest Research analyzes credit and debit card purchases. Its findings, which end with numbers from March 18, show that instead of ordering more restaurant delivery, consumers are instead spending their money on grocery store purchases.
From NRN:
Earnest Research recorded national restaurant spend down 17% year-over-year for the week ending March 18, specifically driven by declines in QSR (-12% YoY), fast-casual (-24% YoY), and casual dining (-34% YoY). Spend with delivery aggregators (how Earnest defines third-party marketplaces and delivery app services) decelerated to +11% YoY from mid-twenty percent growth year-to-date.
Brick-and-mortar grocery stores, on the other hand, saw a 79 percent year-over-year growth, while online grocery orders were up 66 percent year over year. “This suggests a shift in shopper behavior as customers are trying online grocery for the first time, increasing their frequency, or both,” the report notes.
You can hardly blame consumers for wanting to spend their money on grocery items that can stretch across multiple meals. I, too, had a recent experience that really underscored how expensive restaurant food delivery actually is. Over the weekend, I ordered a $20 pizza from a local place here in Nashville. The shop only delivers through Postmates, and between delivery fees, service fees, and a tip, I dropped about $38 for that pizza. (Part of that did go towards a larger-than-normal tip.) Fast-forward to yesterday when I swooped into a grocery store to pick up enough for a few meals plus a week’s worth’ of oat milk. The goods cost about $30 total.
Many more are probably making similar comparisons right now. More than 3 million people filed for unemployment benefits in the last week, and that number could rise. Federal Reserve Chairman Jerome Powell said today that we “may well be in a recession” and that economic activity will substantially decline from April to June.
All of which is to say, this isn’t exactly the climate in which to regularly cough up $10-plus in fees on delivery orders, which makes it not all that surprising that numbers are down for delivery platforms.
It’s a bummer, to be sure. In an ideal world, everyone would have the funds to support local restaurants and regularly purchase delivery and takeout meals from them while COVID-19 has us all on lockdown. It’s unrealistic to expect the majority of Americans to do this, though.
Some restaurant chains have gotten hip to the issue of high delivery fees. Subway, McDonald’s, Del Taco, Chipotle, KFC, Taco Bell, and others have all announced free delivery promotions through some of their third-party partners. Still, even with waived fees, for most of us, our money goes a lot farther when we’re spending it at Publix.
Another week or two of lockdown should tell us if such deals are enough to reverse the declining numbers for third-party delivery platforms. With no seeming end in sight to either the pandemic or the economic roller coaster we’re currently on, more people willing to spend their bucks on delivery is far from guaranteed.
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