Dining Out, Delivery, & Staying In: The Shifting Landscape of Food Service Amid Economic Challenges
Customers are ordering less delivery and eating out less. In order to succeed, businesses in the food service industry need to stay up-to-date with the ever-changing landscape.
Earlier this week, I came across some interesting conversations on r/doordash_drivers, a subreddit among DoorDash drivers, discussing their experience of receiving fewer orders during their usual shifts.
The increasing concern among the redditors who depend on tips for their living made me ponder how the food service industry is evolving and how new trends impact the future of restaurants and delivery services.
The Background
In recent years, DoorDash, Grubhub, and Uber Eats have grown significantly due to their convenient and accessible delivery services. They have made it possible for consumers to enjoy restaurant meals from the comfort of their own homes, which has become a regular part of our busy lives.
The recent increase in inflation, layoffs, and an uncertain market have caused a shift in consumer spending habits, which is quite concerning.
People are now choosing to stay home more often, cook their meals, or refrain from going out or ordering delivery services as frequently as before.
It's important to recognize the impact of these changes on individuals and the economy as a whole.
According to a survey conducted by Personal Capital, a significant majority of respondents, 94%, have been ordering less delivery or dining out less in the past year. This finding contradicts reports from restaurants and delivery companies suggesting consistent demand despite increasing prices.
The survey also revealed that a notable 28% of respondents have been using DoorDash less frequently, decreasing spending from an average of over $70 per month to just over $45.
The high cost of delivery, which includes delivery and service fees, inflated menu prices, and tips, was cited as a significant factor for 47% of consumers.
The Insights & Takeaways
Considering the current situation, businesses need to take note of some important insights and takeaways that can help them navigate the changing consumer preferences.
Here are three key takeaways:
1. Consumers are more sensitive to prices: Due to food inflation, people are paying closer attention to prices when dining out or ordering delivery. Some are even cutting back on these activities due to financial constraints and high delivery costs.
2. Convenience is highly valued: Despite the decrease in dining out and delivery, consumers still want convenient options for enjoying restaurant meals. Takeout and curbside pickup services are becoming increasingly popular. In fact, 60% of U.S. consumers order delivery or takeout at least once a week, and 70% prefer to order directly from the restaurant rather than through a third party.
3. Restaurants must differentiate themselves: As people dine out less often and spend less on delivery, restaurants need to find ways to stand out. This might mean offering unique on-premises experiences, loyalty programs, or personalized deals to keep customers coming back.
The Recommendations
How can businesses adapt to the current consumer preferences?
Here are three recommendations:
1. Develop and promote value-based offerings: Restaurants can offer value-based meal options, discounts, or promotions to cater to the increasing price sensitivity among consumers. This can include bundled meal deals, limited-time offers, or loyalty rewards programs that incentivize repeat visits or orders.
2. Enhance the convenience of takeout and curbside pickup options: To address concerns about high delivery costs, restaurants can focus on streamlining and promoting their takeout and curbside pickup services. Offering a seamless ordering process, efficient pickup options, and incentives such as special deals or discounts for takeout customers can help cater to those who prefer to stay home while reducing delivery expenses.
3. Focus on customer experience and service: Businesses should prioritize exceptional customer service and unique on-premises experiences to differentiate themselves.
The Future of Food Service
In order to succeed, businesses in the food service industry need to stay up-to-date with the ever-changing landscape.
By understanding what consumers want and putting recommendations into practice, such as the ones discussed here, restaurants, delivery services, and other food service companies can set themselves up for long-term success and weather the tough economic challenges.
It's important to keep track of emerging trends, consumer behavior, and market shifts so that informed decisions can be made for the future. Those who are able to adapt and come up with new ideas will continue to thrive and find new opportunities in an uncertain world.
Quy Ma is a seasoned expert in Category Management, Customer Insights, and Market Research. With over 13 years of experience in managing categories across diverse industries, he has successfully aided numerous brands in creating innovative new products and programs. Quy's unwavering drive to empower small businesses and connect them with the right customers ensures that the customer experience is always maximized.
In my city, I've seen quite a few restaurants pushing back against these services- usually because they've either posted their menu w/o permission or because of upcharging.