Consumers are cutting back — just not on food delivery
Many people are trying to save money these days, but they’re still willing to pay for $30 delivery burritos.
DoorDash, Uber Eats, and Instacart all reported strong sales growth in their latest quarterly results, indicating that shoppers and diners remain willing to pay for the convenience of having groceries and restaurant meals delivered to their doors.
That resilience has even surprised DoorDash CEO Tony Xu.
The continued growth in delivery stands out against a more cautious overall spending picture. Walmart just posted its slowest quarterly comparable sales growth since 2020, and U.S. retail sales fell 0.6% in July — well below the expected 0.1% rise. Some diners are also shifting away from McDonald’s toward rivals like Burger King and Chili’s, which have seen gains partly driven by value meal deals.
Delivery apps are still expanding by reaching new customers and adding more options. DoorDash, for example, has brought more stores onto its platform, CFO Ravi Inukonda said on the company’s recent earnings call. This year the company has partnered with additional regional grocers and enabled SNAP benefits for Kroger grocery orders through the app.
There’s also a simpler explanation for the sector’s strength: people still need to eat. “People eat 21 times a week, whether it’s food or groceries,” Inukonda said. “Food in general as a category has been pretty resilient.”
Uber’s delivery gross bookings rose 26% in the second quarter, slightly outpacing growth in its ride-hailing business.
Paying for convenience
Frequent users say the higher cost is worth it for the convenience.
Bertram Philbern, 41, who lives outside Philadelphia, orders dinner through DoorDash five or six times a week. He has a disability and doesn’t drive. Since the pandemic, his family has also relied on Instacart and Walmart+ for most of their grocery deliveries.
Delivery services are “a way to feel independent,” Philbern told Business Insider. Having purchases arrive at the front door is satisfying in a way that in-store shopping isn’t. “There’s definitely a dopamine hit with it, the same way as when you post on social media, and it gets a lot of likes,” he said.
A DoorDash corporate employee, who asked to remain anonymous because they were not authorized to speak publicly, said they use the company’s app at least three times a week for “slop-bowl”-style lunches. DoorDash provides employees with a company-sponsored DashPass that waives delivery fees and reduces service fees. Even without the perk, the employee said, the service would still be worthwhile: “It would, honestly, take a lot longer for me to go get the groceries, plan the cooking, do the cooking, and clean up after.”
Scott Turner, a retired tech worker in Wimberley, Texas, said his family used to order through DoorDash and Uber Eats three or four times a week during the height of the pandemic. They order less often now, though he still uses the apps to coordinate group pickup orders at a local taco restaurant and still gets delivery once or twice a month after a busy day. “Sometimes, everybody’s tired and hungry, and just wants to sit, veg out, visit, and have food show up like magic,” he said.
Sometimes cheaper than the alternative
For some people, grocery delivery is actually more economical than shopping in person.
Marcella Cook, who lives outside Austin, Texas, relies on Walmart+ for most of her groceries and uses DoorDash’s DashPass about once a month for restaurant deliveries from places like McDonald’s and Long John Silver’s. She doesn’t own a car and used food stamps until she got a job earlier this year. Getting to the nearest grocery store would require a 30-minute bus ride each way.
A nearby convenience store sells some groceries, including ground beef, but the prices are higher than Walmart’s — even after factoring in delivery costs. “It’s literally more cost-effective for me to have my groceries delivered than for me to ride the bus,” she said.