Last month, I wrote about how restaurants are fighting a losing battle to get customers to order pickup and delivery directly from their websites and apps. Their opponents in this tug-of-war are third-party delivery companies like DoorDash and Uber Eats, whose services have proven to be a tough habit for customers to break.
A DoorDash report about online ordering trends published this week indicates that customers are indeed changing their off-premise ordering habits in favor of those apps, and sheds some light on why that’s happening.
In one illuminating section of the report, DoorDash asked 1,504 consumers the following question: When you’ve made up your mind to order takeout or delivery, what do you do next?
About a quarter (24%) said their first step is to open an app like DoorDash. About the same amount (23%) will go straight to a restaurant’s website. Ten percent said they would simply think about what restaurants are near them and go from there.
That might not sound all that surprising. But compare those results to consumers’ responses to the same question a year ago, and it’s clear there’s a shift underway.
In 2021, the plurality of respondents (29%) said that when they have decided to order food to-go, they do a mental rundown of nearby restaurants. The next two most popular options were going to a restaurant’s website (17%) and using an app like DoorDash (15%).
In the space of a year, the ranking of those behaviors flipped upside down, according to DoorDash.
How consumers find food for to-go
Source: DoorDash
“They are opening their phones and searching on their computers,” the report said in summing up the shift in people's ordering habits, concluding that restaurants today need to have a strong online presence, be it on a third-party app or an app or website of their own.
This is not news to anyone who has been following the restaurant industry over the past few years. Many restaurants had to join a third-party platform or set up online ordering just to survive the pandemic. It’s now common to hear those channels referred to as table stakes in today’s “omnichannel” ordering environment. But the channels are not created equally.
One of the most interesting findings from last year’s report was that a lot of off-premise customers (43%) said they preferred ordering delivery directly from a restaurant’s own website or app. In fact, a significant amount even said they would rather call a restaurant on the phone (27%) than use a third-party app like DoorDash (27%).
It was an encouraging sign for restaurants. Direct orders tend to be better for operators because they bring fewer fees and more data. They can also cost less for the customer. It appeared that diners were starting to understand the benefits and were switching to first-party ordering as a result.
But that behavior has swung in favor of the big apps over the past year, according to DoorDash. In the new survey, 38% of respondents said they preferred to order delivery straight from a restaurant’s website or app. But almost the same amount (37%) said they like to use a third-party app—a 10 percentage-point increase over last year.
What’s driving the change? Mainly ease of use and force of habit. People who prefer using a third-party app said it’s easier (33%) or more convenient (32%). And 20% said it’s just how they’re used to ordering now.
In one head-scratching result, a not-insignificant number of people (12%) said they believe ordering through a third party is better for the restaurant because the restaurant pays fewer fees, a perception that is entirely false. Restaurants pay commissions of as much as 30% per order when they use a third-party delivery partner like DoorDash. It suggests that there’s more diner education to be done, and restaurants will have to be the ones to do it.
And though a good amount of customers still profess to favor direct ordering, conversations with operators illustrate how difficult it can be to get them to actually do it. Island Loco, a Hawaiian-fusion food truck in Phoenix, has tried all kinds of things to get customers to switch from third-party ordering to its more profitable direct channel. It offered deals and lower prices. It stapled flyers to its bags. Nothing worked.
“I think we got maybe one person that ordered [off a flyer], and then after they never ordered again,” said owner Jeff Chang. “It was really hard to try to shift the mentality of the consumers that we were providing our service to to just ordering directly from us.”
At the National Restaurant Association Show this week, there seemed to be considerable energy around easing this problem. Some operators are even looking into self-delivery as a way to make the service more profitable.
“Restaurants are asking us, ‘Hey, we want to do our own delivery because we need to protect our margin,’” said Bryan Solar, head of restaurants for tech supplier Square, during a panel at the event. “The frequency we’re starting to hear it is becoming increasingly surprising.”
One refuge for restaurants in this situation could be good old pickup. First off, 41% of consumers told DoorDash they’re picking up their food more often than last year, compared to 37% who said the same for delivery. And pickup customers are more likely to order directly, either online (43%) or over the phone (29%) rather than through a third-party app (21%), according to DoorDash.
Overall, pickup accounts for more restaurant orders than delivery does and is more profitable. As I wrote earlier this month, restaurants that can figure out how to promote their pickup experience might be better able to absorb the growing dominance of third-party apps.