More customers are opting to pick up their orders from restaurants to avoid high delivery fees.
They're "tightening their belts" and ditching DoorDash and Uber Eats, says the CEO of Pizzeria Uno.
At Dickey's Barbecue Pit, customers are using coupons "in record numbers" as well as loyalty points.
High delivery fees appear to be prompting some people to stop ordering on the likes of Uber Eats and Doordash and collect their food instead.
Erik Frederick, the CEO of Pizzeria Uno – a chain with dozens of outlets in 16 states – told Insider that the number of delivery orders seemed to be "dropping off, on at least third-party delivery."
"I think a lot of people are tightening their belts and saying, 'you know what, I'm just gonna go pick it up,'" he said. "We're seeing a pivot of people who were doing the Uber Eats and the Grubhubs and the DoorDash actually come into the restaurants and just pick up their pizza because it's much more economical."
Laura Rea Dickey, CEO of Dickey's Barbecue Pit, told Insider that fewer customers were using external delivery platforms. Online orders account for nearly half of Dickey's sales, and she said third-party delivery orders as a proportion of these were down by 6.8% over the past year.
In contrast, online orders for pickup rose by 7% to account for 22% of the total in the 12 months to May at Dickey's, the largest barbecue franchise in the US with more than 500 outlets. Free delivery directly from the Dickey's website now made up 6% of sales, up by a fifth over the past year, Dickey added.
Steve Heeley, the CEO of Pokeworks, a poke bowl chain with about 70 stores, told Insider that customers were trying to minimize third-party delivery costs and weren't loyal to platforms unless they had a subscription like DashPass. This was leading to a "promotion war" to try win over customers, he said.
Beth Hardy, VP of Marketing at Modern Market Eatery, a 29-store chain focusing on freshly-made food told Insider that there had been a shift in recent months away from third-party delivery aggregators, with more customers dining in, collecting orders themselves, or ordering delivery directly from the restaurant to save money and get loyalty points. Third-party delivery makes up 29% of its sales, while pickup comes in at 15%, the company said.
Third-party delivery services add fees that can push costs up significantly, especially on smaller orders.
Some restaurants make it cheaper to order on their own app or website because they get access to customer data. That means they can push diners to sign up to their loyalty program and send them marketing material to generate repeat orders. Margins are also typically higher for a restaurant when customers order this way.
It's usually cheaper for customers to simply pick up their order themselves, though.
An individual-size deep dish cheese and tomato pizza on Pizzeria Uno's site, for example, costs $12.49 for collection from its restaurant in Revere, Massachusetts, plus tax of $0.87.
To get the same thing delivered via Pizzeria Uno's website, which outsources it to DoorDash, the total is $22.98, including a $7.75 delivery fee. And to order on Grubhub is $23.39, with the menu price for the pizza itself being $2 higher than on Pizzeria Uno's site.
McDonald's CEO Chris Kempczinski said in April that after booming during lockdown, "the growth of delivery has certainly slowed." He said that may be because the Golden Arches had already penetrated the delivery market, or because of "consumer pressures" such as inflation.
Modern Market Eatery is encouraging customers to order directly through its website or app to avoid markups, get loyalty points, and in some cases get free delivery. It's offering a discount to customers who choose to collect their orders, too.
The cost of food away from home, which includes the likes of restaurants, fast-food chains, workplace canteens, and food trucks, has risen by 8.6% over the past 12 months, per data from the US Bureau of Labor Statistics. In comparison, total prices across the Consumer Product Index, which as well as food includes apparel, energy costs, and rent, increased by just 4.9% over the same period.
"We're probably seeing a little more bargain-hunting," Pizzeria Uno's Frederick told Insider. "We've gone after a lot of people from polished casual who are looking to not quite spend near as much money. You could feed a family of four on pizza for under $50 ... and that's with drinks and everything."
Dickey said that how and what customers were ordering had changed as they became "very value-conscious, budget-oriented and inflation-weary." Customers are using coupons at Dickey's "in record numbers," and "more guests than ever" have been redeeming loyalty points, she added.
Dickey added that Dickey's new value combos had "exceeded sales expectations" and accounted for 10% of orders, with customers choosing sandwich, side, and drink bundles over ordering individual menu items. People were also ordering more family packs to take away rather than individual meals for each person – and forgoing desserts, she said.
Kempczinski said in April that fewer McDonald's customers were ordering fries with their burgers as inflation took its toll. "Certainly the customer is being mindful about how they're spending their dollar," he added.
Some restaurant chains, however, say diners don't seem to be deterred by higher prices.
"We have not seen major resistance from customers on the pricing actions we have taken, as evidenced by the traffic growth that we have seen in the first quarter," Wendy's CFO Gunther Plosch told investors last month.
Are you a takeout lover who's recently switched to picking up your orders to avoid high delivery fees? Contact this reporter at email@example.com.
Read the original article on Business Insider