Tech Check is a regular column on restaurant technology by Senior Editor Joe Guszkowski. It's also a newsletter.
It almost goes without saying at this point that third-party restaurant delivery is really popular.
Delivery apps like DoorDash and Uber Eats continue to report double-digit growth. A recent report from Intouch Insight found that 9 in 10 consumers are satisfied with the service. And even longtime delivery holdouts like Olive Garden are caving in and offering it.
Still, it bears repeating just how bonkers this is. After all, with its fees, price markups, and more fees, delivery is expensive, and consumers are decidedly price-conscious these days. There are also a lot of other, cheaper ways to get food now that daily life has more or less returned to normal post-pandemic.
And yet consumers continue to splurge on delivery.
A report published last week by investment bank Oppenheimer sheds some new light on this issue. First off, it adds to the growing pile of evidence that delivery is now a fact of life for many Americans. In a survey of 1,451 consumers, 67% said they have used a restaurant delivery app in the past six months.
Not only are the majority of people now using delivery, but they are typically spending more when they do. Sixty-four percent said they’re spending more via delivery apps than they were six months ago, while 24% are spending the same amount, and just 12% are spending less.
Those are big numbers, though not necessarily shocking. It’s what we might expect to see given how strong delivery companies’ results have been.
Here’s where it does start to get a little surprising. For most users, delivery is not just an occasional indulgence but a weekly habit. Six in 10 said they order delivery at least once a week, with 40% using the service multiple times a week.
To put that into perspective, 67% of consumers said they visited a restaurant for dine-in, takeout or delivery at least once a week, according to a Technomic survey of more than 112,000 people.
What has made delivery so ingrained for so many? The conventional wisdom is that delivery is just that convenient, never mind the price. But when Oppenheimer asked consumers why they’ve been spending more, the answer was surprising: 60% said it’s because their orders are being delivered faster or have fewer mistakes than in the past. By comparison, just 23% said it’s because they’re too tired to cook. So it’s not just convenience that’s driving delivery’s growth—the service itself is getting better.
Delivery apps have been making concerted investments on this front, but they say there’s still room to improve. That could unlock more growth, as a smoother experience is clearly something consumers want.
“We have to get more accurate. We have to get faster,” CEO Tony Xu said during an earnings call last month, according to a transcript from financial services site AlphaSense. “We're not yet satisfied with where we are on all of the dimensions.”
Now, before we get carried away, there is still a significant chunk of people who say delivery is just too expensive. Among the 33% of consumers who have not used a restaurant delivery app in the past six months, 93% said it was due to the cost. And among those who said they’re doing delivery less than they were six months ago, 81% cited costs.
The apps have made an effort to keep prices in check. The recent Intouch Insight report, for instance, found that delivery and service fees have declined by 15% since 2022. It also found that nearly half of all delivery orders featured some sort of discount.
The Oppenheimer report identified another potential solution to the apps’ affordability issue. It asked non-delivery users if they were aware that monthly subscriptions such as DashPass and Uber One can lower the price of delivery. More than 70% said no. So the apps have another big opportunity to bring in new users by marketing those subscriptions better.
Taken together, the data indicates that restaurant delivery is not slowing or even plateauing, as might be expected, but picking up speed with more room to run. Oppenheimer raised its price targets for both DoorDash and Uber Eats as a result.