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Delivery Apps vs. Foot Traffic

Over the last couple of years we've seen food delivery services explode in popularity: companies like Grubhub Seamless, Eat24, Postmates and DoorDash are rapidly expanding and fiercely competing to deliver your favorite food from any restaurant quickly and cheaply.

The innovation of the new breed of food delivery apps is in the fact that this service is being implemented completely independently of the restaurants who actually prepare the food.

This begs the question: are these services cannibalizing the restaurant's direct-to-customer business? Do people who use delivery apps just stop visiting the restaurant?

Let's explore a few cases using our panel of over 3 million credit and debit card accounts.

Breaking down transactions at one of the popular services Postmates, we see that Chipotle is by far the most popular restaurant on the app, accounting for 4.9% of all transactions in the last 6 months:

Now, let's look at how customers who ordered from Chipotle using Postmates spend directly at Chipotle, compared to all customers:

The average transaction amount is comparable: $13.45 for all customers vs. $12.60 for customers who also ordered from Chipotle using Postmates.

On the other hand, spend per customer directly at Chipotle is much larger for customers who also ordered Chipotle using Postmates: $77.19 over the last 6 months, which is 54% more than $49.87 for the average customer in the same period.

Let's also look at the next 3 most popular restaurants on Postmates:

We see that with the exception of McDonald's, customers who ordered from a restaurant using Postmates also spent much more directly at the restaurant over the same period of time, compared to the average customer. And in the case of McDonald's, where customers who ordered McDonald's using Postmates spent $72.58 directly with McDonald's over the last 6 months, compared with $84.35 for the average customer, the $12 "lost" revenue is easily made up by the additional $58.13 those customers spent through Postmates.

In other words, for all of the most popular restaurants we analyzed, the combined total spend (directly at restaurant and using Postmates) is significantly more than what the average customer spends directly at the restaurant.

Because of this, we can safely say that the food delivery service business is not cannibalizing the direct foot traffic to the restaurants.

Learn more about consumer spending analytics with TXN.

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