Sparked by a San Francisco decision to cap third-party delivery fees at 15 percent, several other U.S. cities are implementing or discussing their own cap-limitations to help out restaurants during this pandemic. Seattle put a similar measure in place, capping fees at 15 percent though the end of the emergency declaration. Los Angeles is voting on a 15 percent cap this week (last week of April), as well. Both Chicago and New York have gone even further. In Chicago, where Grubhub is headquartered, a city leader proposed a 5-percent cap on order fees. The proposal also states that any service fees charged to customers would go directly to delivery drivers.
A new report from research firm Second Measure shows sales at national third-party delivery providers are up collectively 24 percent compared to the same period a year earlier. In addition, statewide lockdowns also appear to be driving more Americans to try restaurant delivery for the first time, with 28 percent of U.S. consumers now well versed in the ways of online restaurant delivery. Grubhub is still the most popular provider in the major Northeast cities, while DoorDash is dominant in large Texas cities, while also approaching two-thirds of the delivery market in its California Bay Area home turf. Postmates is especially strong in Los Angeles, with 36 percent market share, and in Miami, where the fourth-largest national delivery brand comes in second to Uber Eats, which, in turn, has 56 percent of the total delivery spend in that city. The survey did not highlight penetration in Minnesota.
The trend of big delivery brands offering customer subscription plans also appears to be gaining traction, with 17 percent of Postmates customers now subscribing to its Unlimited plan that was first launched in 2016. At DoorDash, 14 percent of its customers have joined its DashPass subscription program.
According to the Wells Fargo restaurants team, 25 percent of independent restaurants "will shut down entirely because delivery sales will be insufficient to cover fixed costs such as rent, food and salary." That’s compared to 5 percent of chain restaurants expected to close. The calculation is drawn from insights during the Great Recession, coupled with the swath of closures during this pandemic. Year-over-year growth of restaurant food sales fell 7 percent prior to the Great Recession to a decline of 1 percent in 2009 as food sales are highly correlated with personal income growth.
Without the scale of chains and their access to capital and the typical shift to value in a down economy, independents will be the hardest hit in a similar scenario. That’s especially damning for delivery providers because independent restaurants are key partners for third-party delivery, and third-party delivery is an ideal solution for many independents.
Online grocery sales in the U.S. grew by 37 percent in April, to a total of $5.3 billion, according to research from Brick Meets Click and Symphony Retail AI. The headline figure is a 33 percent increase in the total number of online grocery orders placed in the past 30 days, which increased to 62.5 million over 46.9 million during March, bolstered by a modest increase in basket size, as well.