Report: Delivery Apps Don't Cannibalize Restaurant Visits | Street Fight

Report: Delivery Apps Don’t Cannibalize Restaurant Visits

Report: Delivery Apps Don’t Cannibalize Restaurant Visits

Consumer tastes are changing, and the restaurant industry is feeling the heat. Although restaurant sales are expected to reach $799 billion this year, the rate of growth has remained tepid, and restaurant owners are looking for someone to blame.

Enter the third-party delivery service. Popular apps like UberEats, DoorDash, and Postmates have drawn the ire of restaurant owners convinced these services are pulling guests out of their seats.

“The risk is that if consumers know they can get the same food via delivery as they can in the restaurant, they will substitute one for the other, in which case this new revenue stream is actually the same revenue with a tech twist,” says Eli Portnoy, founder and CEO of the data insights firm Sense360.

In an effort to see whether those concerns bear out, Portnoy’s firm leveraged its own mobile sensor technology and tracked more than 21 million anonymous full-service and quick-service restaurant visits both before and after consumers had downloaded third-party delivery apps. The results of that analysis are published in a report released this morning.

Sense360’s analysis found no evidence that delivery apps lead to significant drops in restaurant visits. The analysis also found that consumers who download delivery apps tend to have higher incomes, and visit fine dining restaurants 2.5x more frequently, than those who haven’t downloaded these apps.

“This question of whether delivery cannibalizes restaurant visits or is incremental revenue is on the minds of all restaurant industry executives as they figure out whether they should partner with delivery companies,” says Portnoy. “This why I think our data showing that delivery is not leading to a short-term decline in restaurant visits is important and should have profound ramifications for how the industry embraces delivery.”

According to Sense360’s report, restaurant visitation patterns tend to be guided more heavily by extrinsic characteristics—like geographic location or socioeconomics—than use of a third-party delivery app. Data also shows that delivery app users who frequent quick-service restaurants are more likely to visit higher-priced concepts, such as Starbucks and Chipotle, than traditional fast food locations like McDonalds.

Portnoy believes that these results should give restaurant owners and executives more confidence to experiment with delivery apps without fear that tech-driven services will cannibalize in-person visits.

“This is great news for consumers who clearly are embracing the convenience of delivery, great news for delivery apps and their long-term viability, and most importantly great news for restaurants who are finding a new and incremental revenue stream at a time when they desperately need it,” he says.

With Americans placing nearly one billion online orders in 2015, up 125% from 2010, there’s a valid concern from restaurant owners that they will be left behind if they don’t partner with delivery apps. Rather than taking an all or nothing approach, Portnoy believes restaurants should be strategic in deciding which apps or services to work with.

“There are a lot of delivery apps and not all of them are created equally,” he says. “In my opinion, restaurant owners and operators should consider which apps are strongest in their regions and experiment with their various offerings and marketing opportunities. If they can do this within the constraints of their margins, they should be able to build out a large and incremental revenue stream while it is in its early days and still ripe with opportunity.”

Stephanie Miles is a senior editor at Street Fight.

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1 thought on “Report: Delivery Apps Don’t Cannibalize Restaurant Visits

  1. Great data! How does this affect a restaurants bottom line? I get that these apps don’t link to a decline in visits but do they lead to an increase in orders? Then and if there are more orders, are they enough to cover the cost of these apps that take a hefty cut? UberEats takes ~35% of a burger joint near me alone.

    The data is great but how do delivery apps affect what is most important…the bottom line?

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1 thought on “Report: Delivery Apps Don’t Cannibalize Restaurant Visits

  1. Great data! How does this affect a restaurants bottom line? I get that these apps don’t link to a decline in visits but do they lead to an increase in orders? Then and if there are more orders, are they enough to cover the cost of these apps that take a hefty cut? UberEats takes ~35% of a burger joint near me alone.

    The data is great but how do delivery apps affect what is most important…the bottom line?

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