WE’RE GOING TO LEARN A LOT ABOUT DELIVERY THIS WEEK

Something unusual happened at Grubhub in the first quarter of this year: Its sales and orders declined (by about 5% each).

The reversal of quarter after quarter of pandemic-fueled growth has added to suspicions that food delivery is running out of gas.

We’ll get a better idea this week after DoorDash and Uber Eats report their own first quarter results. But there is some preliminary evidence that points to an ongoing deceleration.

For one thing, overall third-party delivery sales in March increased by just 6% year over year, according to data from Second Measure, which analyzes millions of debit and credit card purchases. If we assume that Grubhub’s sales were negative that month, then the growth was apparently driven almost entirely by DoorDash and/or Uber Eats.

Growth is growth. But 6% is peanuts compared to the numbers these companies were racking up two years ago. It doesn’t even equal food-away-from-home inflation for March of 6.9%, meaning order volume may have actually slipped compared to last year. 

For reference, food delivery sales for the same period one year ago, in March 2021, were up a whopping 116% compared to the year before that, according to Second Measure.

What all of that amounts to is a fast-approaching ceiling for food delivery as on-site dining approaches pre-pandemic levels and consumers start to watch their spending.

That’s not to say delivery is going away. It will probably continue to grow steadily, fed by new segments like grocery. But another leap will be a tall order unless someone can figure out how to make the service more affordable.

Look for more on this later in the week. Uber Eats reports Q1 earnings on Wednesday after the market closes, and DoorDash will do the same on Thursday.

In other tech news …

Cartwheel raised $3 million for its delivery technology. The company provides software that helps restaurants manage their own delivery operations, including both third-party and self-delivery channels. Clients include Portillo’s and P.F. Chang’s, and it has tripled its customer base over the past year and moved into new industries like cannabis and alcohol delivery. It will use the funds to continue expanding. The seed funding round was led by Moonshots Capital.

A Popeyes franchisee added AI voice ordering to the drive-thru. High Noon Restaurant Group in Lafayette, La., is using technology from OpenCity at a location in Carencro to take orders. High Noon CEO David Damato said the robotic voice system, known as Tori, has eased stress on staff because they can do other things while it takes orders. Tori has also increased drive-thru speed by 20% and the number of drinks sold by 150%, and has taken orders with 99.9% accuracy, proving to be a fast learner of Louisianans’ accent. 

High Noon plans to install Tori at more of its roughly 80 Popeyes locations over the next few months, it said in a press release. It joins other brands, including Checkers and Krystal, to automate drive-thru ordering.

Potbelly is opening ghost kitchens with Reef. The 443-unit sandwich chain expects the partnership to help it reach its goal of having 2,000 restaurants in the next eight to 10 years, though it did not say how many Reef units it planned to open. It’s the latest chain to ink an agreement with the fast-growing ghost kitchen operator.

DoorDash is extending its gas benefits for drivers. The company in March rolled out a Gas Rewards program to help delivery drivers offset the rising cost of gas. Last week, it announced that Gas Rewards would continue through August as gas prices remain high. Drivers that have a DasherDirect Visa card can get 10% cash back at the pump anywhere in the U.S. The company said drivers save an average of 42 cents per gallon with the program. 

The rising price of gas is a potential threat to delivery driver supply, and all three of the major U.S. third-party delivery providers have taken steps to help ease the impact on drivers.

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