TECHNOLOGY
DELIVERY APPS ARE DIALING UP DISCOUNTS FOR PRICE-CONSCIOUS CONSUMERS
ILLUSTRATION BY MIDJOURNEY/NICO HEINS
T hird-party delivery apps are pushing discounts as custom- ers become more price-sensi- tive. A study by researcher In- touch Insight found that nearly half (49%) of delivery orders have a discount attached. That included 65% of orders on DoorDash, 55% on Uber Eats and 27% on Grubhub. The study, The Path to Third-Par- ty Excellence, used secret shoppers to place 600 delivery orders from April through June. The orders were split evenly among the three apps and between limited-service restaurants and convenience stores. The shoppers were not allowed to use a paid subscription to waive their delivery fees or get other ben- efits. But they still found plenty of savings to be had, such as free deliv- ery, a dollar amount or percentage off their order, or a free item. Those discounts are funded by the restaurants, by the apps them- selves, or via a co-funding agree- ment between the two. NEARLY HALF OF ALL ORDERS ON DOORDASH, UBER EATS AND GRUBHUB FEATURED A DISCOUNT IN A RECENT SECRET SHOPPER STUDY. FOR RESTAURANTS, THE TACTIC CAN BE A DOUBLE- EDGED SWORD. BY JOE GUSZKOWSKI
BREAKING DOWN THE DISCOUNTS FREE DELIVERY WAS THE MOST POPULAR OFFER ACROSS BOTH RESTAURANTS AND C-STORES.
The discounting on delivery apps comes amid a surge of value offers across the restaurant industry as operators try to appeal to customers who have become more careful with their spending. Food delivery, with its menu price markups, fees and tip, is precisely the type of discretionary expense consumers tend to forgo when money is tight. And yet DoorDash and Uber Eats have continued to rack up sales and trans- action growth quarter after quarter, even as many restaurants struggle with traffic declines. That has been in part due to delivery’s convenience. Consumers got ac- customed to having meals delivered during the pandemic, and many hav- en’t stopped. The apps have also vastly expanded their selection to include not only more restaurants, but also grocery stores, pharmacies and retailers. And, as the Intouch Insight study shows, consumers really like the service: 91% of shoppers who ordered delivery from a restaurant said they were satis- fied with the experience. These benefits have apparently helped delivery apps overcome concerns about cost. But a greater focus on affordability could also be playing a role. For instance, the apps have quietly reined in their delivery and service fees in recent years. Average delivery and other fees declined from $6.87 in 2022 to $5.96 this year, a change of 15%, according to Intouch Insight. Lower delivery fees have been accompanied by more discounting. On Uber Eats, the number of merchant-funded discounts rose by 70% year
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RESTAURANT BUSINESS OCTOBER 2024
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