Customers are not flocking to third-party delivery apps like they did two years ago at the start of the pandemic.
But they’re still ordering delivery at a steady clip, even as prices for food, gas and other products keep going up.
DoorDash and Uber Eats—the nation’s two largest third-party delivery providers—each generated more sales in the second quarter of 2022 than they did a year ago.
At DoorDash, marketplace gross order volume rose 22% year over year, to $12.8 billion. At Uber, delivery gross bookings rose 7%, to $13.9 billion.
But from a bird’s-eye view, the companies’ overall growth is continuing to slow. A look at their quarterly sales over the past two years shows Uber Eats decelerating over the past four quarters, while DoorDash has made modest sequential strides.
Source: SEC filings
Factor in the struggling Grubhub, where sales have flatlined and orders have dropped 10% year over year, and it would appear that DoorDash and Uber Eats are also taking share from their smaller competitor rather than benefiting from a rising tide of demand.
At the same time, a slowdown in delivery was inevitable as COVID-19 restrictions eased and consumers returned to more normal dining habits. Its relative stability has surprised many, including the providers themselves. Add in inflation at levels not seen since the 1980s, and it almost defies logic.
In a letter to investors this week, DoorDash said it hadn’t seen any measurable changes in how its customers are behaving, despite the macroeconomic situation.
“This is not to say there has been no impact, as it seems likely that our order volume would have been stronger in a healthier discretionary spending environment,” the company said. “Nonetheless, our consumer engagement metrics remained healthy in Q2 and we believe demand for our service has continued to grow faster than many other areas of e-commerce and local commerce.”
Indeed, DoorDash processed a total of 426 million orders in the period, a 22% year-over-year increase that included a benefit from the recently acquired Wolt delivery service. It also added customers in the quarter, and its customers ordered more often.
Uber Eats likewise said there hasn’t been a noticeable change in demand because of inflation. In fact, it said, COVID case rates have had a bigger effect on its results than price.
“Recently in Japan, COVID spiked, and you saw demand spike for delivery,” CFO Nelson Chai told investors this week, according to a transcript on financial services site Sentieo. “So it's been a little bit more about still the COVID trade recovery and things that happen there than we've seen impact on inflation, at least so far.”
DoorDash offered a few explanations for how it's continuing to grow in an uncertain economy. It said its service and selection are improving, for one, and that it has a long, long runway ahead of it: A third-party researcher found that its gross order volume represents just 8% of total U.S. restaurant spending.
But the biggest reason for consumers’ continuing appetite for delivery might just boil down to this: “People need to and typically enjoy eating,” as DoorDash so elegantly put it.
It’s true: People have to eat, and eating is going to be more expensive no matter how you do it these days. But inflation tends to have less of an impact on higher-income consumers, who are more likely to be delivery users in the first place.
It’s also worth remembering that DoorDash and Uber Eats spend a lot of money on discounts and promotions to get people to use their services. DoorDash invested $421 million in marketing in the quarter and Uber spent $1.2 billion, which includes its ride-sharing business.
That’s sure to keep driving sales and adoption, but not necessarily profits. Both companies widened their losses in the period compared to a year ago: DoorDash recorded a net loss of $263 million, while Uber lost $2.6 billion.