After seeing sales growth slow in the first three quarters of 2021, third-party delivery companies made a leap in the fourth quarter.
That was also the period in which COVID-19 cases started to climb once again, surging 243% on a weekly basis from October through December, according to Our World in Data.
But the two largest providers in the U.S. appeared to disagree on how that surge affected their business.
Uber Eats, which saw gross delivery bookings accelerate by 5% quarter over quarter, acknowledged that COVID-19 probably had something to do with it.
Delivery “exceeded our expectations and performed better than we typically see in January, likely in part due to omicron,” CEO Dara Khosrowshahi said during the company’s fourth quarter earnings call this month, according to a transcript from financial services site Sentieo.
Rival DoorDash, however, downplayed omicron’s influence on its nearly 8% sequential sales growth in the quarter.
“On omicron specifically, the impact in Q4, even January, has been relatively muted, it's not significant,” CFO Prabir Adarkar told analysts, according to Sentieo. “In fact, with every successive variant, the impact on our business has basically diminished.”
Third-party delivery sales
Source: SEC filings
Meanwhile, restaurants definitely felt omicron’s effect on their staffing, traffic and sales. Some saw October and November gains erased as the virus spread in December. A whopping 88% of operators said fewer people were dining in because of omicron, according to the National Restaurant Association.
It’s likely that many of those would-be diners ordered more takeout or delivery as they hunkered down, which helped companies like Uber Eats and DoorDash, just like earlier in the pandemic.
As the COVID noise starts to recede, I believe restaurant delivery sales will look more like they did during the first three quarters of 2021 than the last. Restaurants will continue to do a lot more of it than they did before the pandemic, but the days of big gains are likely in the rearview mirror.
For as much attention as delivery gets, it still makes up the smallest portion of off-premise restaurant sales, at about 11%, according to researcher NPD. Most restaurants don’t have much incentive to grow the service, given that it is less profitable for them. It’s also more expensive for customers, who are now contending with across-the-board inflation after getting a boost last year from stimulus checks.
Of course, the publicly traded delivery companies are working hard to stoke their growth. Both are focused in particular on retaining customers, whose loyalty is key for driving sales: Uber Eats rolled out its refreshed Uber One membership program in November, and DoorDash noted that more than 10 million people now use its DashPass subscription.
They’re also aggressively pursuing other delivery categories like grocery, alcohol and retail. DoorDash in December launched an “ultra-fast” grocery delivery service that promises fulfillment in 10 to 15 minutes. And Uber Eats is putting a lot of capital behind its own non-restaurant delivery category, as witnessed during the Super Bowl.
All of that investment suggests that these companies know their long-term growth depends on more than just restaurant delivery, which is clearly subject to the ebbs and flows of outside factors like the pandemic.
That said, we should expect at least one more big quarter from the delivery providers. The omicron wave peaked in January, meaning delivery was once again a more likely option for consumers as they entered 2022.