Over 50% of diners would switch delivery providers if fees rose, study shows

Dive Brief:

Over 50% of diners would switch third-party delivery services if fees rose, Coupon Follow data shows. On average, consumers said they would stop using a delivery app if delivery fees reached $9.
Consumer price sensitivity could impact major aggregators' consumer retention. Uber Eats has the highest average menu price markup of 75%, followed by Grubhub (66%) and DoorDash (59%), per Coupon Data research.
Still, 36% of respondents don't plan on changing their food delivery spending in 2022, which bodes well for aggregators looking to grow profitability. One in three consumers will spend over $300 on delivery fees this year, according to Coupon Follow data emailed to Restaurant Dive.

Dive Insight:

Consumer aversion to steep food delivery fees could undermine their loyalty to specific third-party delivery apps.

This brings up interesting questions about aggregators' value proposition for time-strapped diners, which is often linked with speed of service and the scope of partner brand portfolios. DoorDash's dominant market share of 58%, for example, could be partially tied to the fact it charges the lowest average menu markup prices among the aggregators examined by Coupon Follow.

Tillster data shows consumers' delivery fee threshold is much lower than $9 — in 2021, the average consumer was willing to pay a maximum delivery fee of $3.90, and only 44% were willing to pay $5 or more now. This wariness may stem from a combination of inflationary pressure and static disposable income through the last six months of 2021.

Most Coupon Follow survey respondents don't intend to reduce their food spend overall this year, but nearly 30% plan to reduce the frequency of food delivery orders in 2022. Only 18% of respondents plan to stop using delivery apps entirely.

Another recent survey from LendingTree finds, however, that 70% of Americans are willing to spend extra money to save time and effort via delivery. Nearly 30% admit to spending more than they can afford on delivery services, but 45% plan to continue ordering delivery as often as they did during the pandemic.

Still, some consumers are ordering delivery from restaurants directly more frequently to save money and support operators. The National Restaurant Association's State of the Industry 2022 report finds that six in 10 delivery customers would prefer to order directly from restaurants.