The food-delivery business has seen lots of ups and downs this year — shutdowns, layoffs, consolidations — as consumers resume their pre-pandemic ways.
Now, data and insider commentary about the recent performance of the biggest companies in the industry, such as DoorDash Inc.
DASH,
and Uber Technologies Inc.’s
UBER,
Uber Eats, suggest a slowdown in user growth and a decline in orders. Both companies will report third-quarter earnings this week, with Uber results scheduled for Tuesday morning and DoorDash results on Thursday afternoon.
According to YipitData, whose data is derived from email receipts, DoorDash saw a decline in the number of orders from July through September. The data also showed a drop in the average order value during the same period.
“Food delivery user growth continues to slow given the tough comps from 2021,” wrote Aaron Kessler, an analyst for Raymond James. Kessler said data indicate U.S. daily average users increased just 4% year over year, compared with 13% in the second quarter, and actually fell 3% quarter over quarter.
From two years ago: The pandemic has more than doubled food-delivery apps’ business. Now what?
Kessler also wrote that he expects Wolt, the European delivery business owned by DoorDash, to see a 5% decline in orders quarter over quarter but an 18% increase year over year.
Companies that have already reported earnings for the summer quarter have suggested a slowdown as well. Executives from fast-food restaurant chain Chipotle Mexican Grill Inc.
CMG,
said last week while reporting third-quarter earnings that things are returning to “normal,” meaning they’re seeing more in-store sales and fewer online sales.
Inflation could be a factor as customers rethink their spending on delivery. John Zimmer, co-founder and president of Lyft Inc.
LYFT,
said last week that he thinks the ride-hailing company made the right decision in not getting into food delivery during the pandemic, as rival Uber did.
“Getting a $30 salad is going to be less likely” because of inflationary pressures, Zimmer said during the Wall Street Journal’s Tech Live event.
And Instacart, the grocery-delivery platform whose initial public offering has been expected for the past couple of years, may not go public this year as planned, according to various reports.
See also: Food delivery is now a $150 billion business, but uncertainty and lack of profit continue to loom
Credit-card data indicate that third-quarter growth of gross order value for DoorDash’s U.S. core market was relatively flat quarter over quarter, Truist Securities analyst Youssef Squali wrote, which was better than Truist’s estimate that it would decline 1.3% quarter over quarter.
Squali showed a bit more bullishness about the industry than other analysts: “What’s more impressive is that average order frequency per customer has been improving even as the economy has been normalizing from the pandemic,” he wrote, “and as the consumer has been facing growing macro headwinds, implying a structural shift in demand, in our view.”
While YipitData reports that DoorDash remains the U.S. delivery market leader with 56% market share, the company’s shares have been trading at their lowest levels since its 2020 initial public offering and are down nearly 70% year to date. Uber, which YipitData says has 31% of the U.S. market, has seen its shares decline 35.9% so far this year, while the S&P 500 index has declined 18.2%.
