Consumers are trying to save money — just not on $30 delivery burritos.
DoorDash, Uber Eats, and Instacart all posted strong sales growth in their quarterly results earlier this month, showing that consumers are still willing to shell out for groceries and restaurant food delivered to their homes.
Diners' willingness to pay extra for delivery has even surprised DoorDash CEO Tony Xu.
That growth comes as shoppers and diners overall are more cautious about spending. This week, Walmart posted its slowest quarterly comparable sales growth since 2020, and US retail sales dropped 0.6% in July, well below the expected 0.1% increase. Some diners are also moving away from McDonald's and toward rivals such as Burger King and Chili's, which have reported sales growth, driven in part by value-focused meal deals.
One reason is that the delivery apps are still growing — both by reaching new customers as well as adding new offerings.
DoorDash, for example, has added more stores to its app, CFO Ravi Inukonda said on the company's earnings call this month. This year, the delivery service has struck deals with more regional grocers and added the option to order groceries from Kroger stores using SNAP food benefits.
There's also a more obvious reason for food delivery's continued growth: People have 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," he added.
Paying for the convenience of delivery
Frequent delivery app users told Business Insider that the convenience of having food dropped on their doorstep makes the higher costs worthwhile.
Bertram Philbern, a 41-year-old who lives outside of Philadelphia, said that he orders dinner through DoorDash between five and six times a week.
Philbern said that he lives with a disability and doesn't drive. Since the pandemic, he said, his family has also relied on Instacart and Walmart+ to get most of their groceries delivered.
Delivery services like DoorDash are "a way to feel independent," he told Business Insider. Philbern also said that having purchases arrive at his front door is satisfying in a way that shopping in a store 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.
One DoorDash corporate employee said that they use their company's app at least three times a week to order "slop-bowl"-style lunches.
DoorDash provides employees with a company-sponsored DashPass subscription, which eliminates delivery fees and reduces service fees, a company spokesperson said.
Even without that perk, the employee said, the service would be worth paying for, said the employee, who requested anonymity because they were not authorized to speak publicly.
"It would, honestly, take a lot longer for me to go get the groceries, plan the cooking, do the cooking, and clean up after," the employee said.
Scott Turner, a retired tech worker who lives in Wimberley, Texas, said that he and his family used to have food delivered through DoorDash and Uber Eats three or four times a week, especially during the pandemic in 2020.
These days, the family doesn't order delivery as often, though Turner said he still uses the apps to coordinate group orders for pickup at a local taco restaurant. And they still put in a delivery order once or twice a month after a busy day, he added.
"Sometimes, everybody's tired and hungry, and just wants to sit, veg out, visit, and have food show up like magic," Turner said.
Cheaper than shopping at a convenience store
For some shoppers, grocery delivery is a more budget-friendly option than shopping in-store.
Marcella Cook, who lives outside of Austin, Texas, said that she pays for Walmart+, the retailer's membership service that offers members free deliveries, for most of her groceries. She said that she also uses DoorDash's DashPass, another paid subscription service, for restaurant deliveries about once a month from McDonald's and Long John Silver's.
Cook said that she doesn't own a car and relied on food stamps until she got a job earlier this year. To get to the nearest grocery store, she would need to take public transportation for about 30 minutes each way.
A convenience store near where she lives sells some groceries, such as ground beef, but Cook said the prices are higher than Walmart, even factoring in the cost of delivery.
"It's literally more cost-effective for me to have my groceries delivered than for me to ride the bus," she said.
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Alex Bitter is a senior retail reporter covering the gig economy, food, and retail. His work focuses major gig delivery and ride-hailing apps, including Uber, Lyft, DoorDash, Instacart, and Walmart's Spark. He is interested in everything from what it's like to work on the apps to the companies' business strategies.Some of his recent stories feature gig workers who have been deactivated on the apps, DoorDash hiring traditional employees to make deliveries, gig workers' use of bots, and gig work expanding into new professions, such as nursing.Alex has also written about Aldi's US expansion, Starbucks' turnaround efforts, and the fallout from Kraft-Heinz's budget cutting. Convenience store chain Sheetz ended its "smile policy" after his reporting.Before joining Insider in September 2020, he wrote about consumer and retail companies for S&P Global Market Intelligence. He's a graduate of the University of Hawai'i at Mānoa and grew up on the Big Island.Alex lives in the Washington, DC, area, where you can find him studying ancient coins or searching for Civil War artifacts with his metal detector in his free time.Got a tip? Reach out at [email protected] or via encrypted messaging app Signal at +1 (808) 854-4501.
