Dive Brief:

• Around 44 million U.S. smartphone users will use third-party food delivery apps by 2020, representing a 6 million increase compared to 2019, according to eMarketer research that was emailed to Restaurant Dive
• By 2021, nearly 50 million U.S. consumer will use a food deliver app bumping up to 60 million people in 2023, making up 23% of smartphone users. 
• As of February 2019, DoorDash (27.6%), Grubhub (26.7%) and Uber Eats (25.2%) claimed the most food delivery market share.

Dive Insight:

Consumers are showing a big appetite for having their food delivered, which ties into overall demand for convenience and tech-driven experiences sweeping the restaurant industry. 

Though many restaurants are lured by the convenience and of partnering with a third-party delivery app, these arrangements aren't without downsides. Some restaurants and franchise owners have started speaking up about the steep fees associated with food delivery services, with some suggesting that the price isn't worth the inconvenience that the restaurant faces in fulfilling delivery orders.

But consumers demand for delivery is clear, and restaurants are going to have to figure out some way to play the game in order to stay competitive and relevant. Over 51% of consumers said they would make more food delivery orders if the service was offered, and 30% reported that they want to see more delivery features on restaurant apps. More importantly, a whopping 83% of consumers are willing to pay as much as $5 in delivery fees, which is a key metric for restaurants and third-party apps that are trying to figure out how to roll out new features without hurting their margins or burdening diners' wallets.

Staving off the competition is already a huge challenge considering that users tend to try multiple apps and often fail to use the same app more than once. Eighty-six percent of people who use delivery apps stop engaging with an app within two weeks. This is a frustrating proposition for restaurants because mobile apps are starting to account for 60% of digital restaurant orders, which makes dabbling in the app world a worthwhile proposition. Part of the high consumer churn rate is attributable to low barriers to entry in the app space and growing competition among app developers.

The big food delivery apps, including both third-party apps and restaurants, are already trying a number of tricks to differentiate. Grubhub claims the highest number and is dabbling in geofence technology to monitor traffic for effective delivery times. It partnered with Dunkin' to begin its national delivery program rollout in June, which will expand to other major cities as the year unfolds.

Meanwhile, DoorDash recently partnered with Wyndham Hotels to offer food delivery to guests, while Uber Eats has started delivering food to travelers at their gate at the Toronto Pearson airport. Postmates, which sits fourth in the food delivery app race, recently added 1,000 cities to help it reach diners in all 50 U.S. states.