The third-party delivery explosion

The restaurant third-party delivery market has skyrocketed since the pandemic started.
 
Right after the pandemic was announced in mid-March, consumer spending on apps like DoorDash, Grubhub and Uber Eats had increased, but nowhere near where it is today.
 
In late March, spending was "only" up by about 30-40% year over year - mostly because of the massive wave of grocery stock-ups as consumers prepared to shelter in place.
 
But after that, starting in late March, delivery spending exploded. From April onward, it has averaged an astounding +140% year over year growth.
 
Delivery's adoption rate has been growing consistently. According to a daily survey we've been fielding since March, delivery usage has been growing all over the country: in urban, suburban, and even rural areas.
 
3pd-urbanicity
 
Although the growth of restaurant third-party delivery apps has been impressive, what's even more astounding is the growth of grocery third-party delivery apps like Instacart, Shipt, FreshDirect, and PeaPod.
 
Consumer spending on grocery third-party delivery apps was up over 300% year over year at the height of the lockdowns in April and May, and in recent months has still been up around 200% year over year.
 
Instacart is the clear winner, owning over 80% of market share when it comes to consumer spending across all four apps (Instacart, Shipt, FreshDirect and PeaPod). The latter three each capture about 3-7% market share each.
 
When it comes to restaurant third-party delivery apps, the competitive marketplace is much more dynamic. While Grubhub was the market leader early last year, it was overtaken by DoorDash in January 2019 and Uber Eats in April 2020. DoorDash now owns 49% market share, Uber Eats has 25%, Grubhub has 18%, and Postmates has 7%. 
 
When surveyed about why they chose the delivery app they did, consumers reported that certain factors are growing more important to them in recent months. The most important and fastest-growing reason is reliable delivery time estimates
 
A factor that's lessening in importance to consumers is the fact that the app was already on their phone, suggesting that consumers are willing to switch to different apps if their go-to isn't meeting expectations.
 
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When consumers were surveyed on why they didn't order delivery from a restaurant, the main reasons were that it would cost too much and take too long. While the operational and economic implications are easier said than done, restaurants and delivery apps should try to optimize delivery times and costs in order to gain more market share.
 
3pd-detractors
 
The above survey responses vary geographically, though.
 
Urban consumers are more likely to avoid ordering delivery because it would take too long and they don't want to pay the fees. Suburban consumers are likelier to respond "I was afraid they'd get my order wrong." And rural consumers are more likely to respond that their favorite place doesn't offer delivery, or that they're too far outside the delivery radius. 
 
Depending on a restaurant's footprint, they might consider optimizing for the consumers who they're trying to reach - whether by widening their delivery radius, or deciding to partner with a delivery app in the first place.
 
Delivery insights at your fingertips
 
If you'd like more information on how you can use our datasets to optimize your reach and incrementality on third-party delivery apps, let us know.
 
Our DeliveryIQ dashboard allows you to understand how apps like Grubhub, Uber Eats, Door Dash and more are disrupting the industry and your brand. Get answers to questions like:
  • Which apps are my customers using?
  • How do delivery app users skew by region and demographics?
  • Is my delivery partner creating incremental growth, or cannibalizing my sales?

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