Is Food Delivery Sustainable During A Recession?

Everyone’s home. Everyone’s either cooking or ordering takeout. This is the reality we’re living in thanks to the infectious disease known as the coronavirus.

In a recent episode of the Foodbeast Katchup podcast, host Geoffrey Kutnick and Foodbeast managing editor, Reach Guinto, had a conversation with the editor-in-chief of Restaurant Business Magazine Jonathan Maze about the state of food and restaurants during the time of Covid-19.

With people essentially ordered to stay at home to prevent the spread of the virus, Kutnick posed the question, “What is the value of these delivery apps?”

“Delivery is a lot of what restaurants have,” Maze said speaking to the current state of restaurants during this “stay at home” mandate. “They don’t have anything besides delivery and take-out. So they’re going to have to survive on it. For delivery apps, this is their time to shine — their ability to continue to serve a lot more customers to get a much greater share. To get consumers onto their platform, it’s going to be really important for them.”

Maze, however, voiced a concern for delivery services in the months and even years ahead.

“I tend to have a longterm concern with delivery apps overall, simply because I think it’s expensive,” he said. “When I’ve gone to delivery and I’ve compared to what it would cost if I just went and ordered at the restaurant directly rather than through one of the third-party apps, especially if you’re not a jerk and you tip them.”

You’re going to spend a 70-75% premium on that order, if not more. That’s expensive.

Maze says when everything clears up, we’re going to be in a recession, and it’s going to be a while before the economy recovers from that.

“You get into a situation where people are really cutting back. Are they going to spend that kind of premium when they’re cutting back and everything? That’s a legitimate question down the line.”

Maze isn’t alone in this belief. Trevor Broomstra, director of AlixPartners restaurants and hospitality services told CNBC that restaurants should be wary of leaning too heavily on delivery sales. The December 2019 article hauntingly mentions that if the economy were to slow down, consumers would have less disposable income to spend on delivery fees.

In the short term, however, Maze says it’s a certainly benefit. Delivery apps will definitely play a role and restaurants need them. Especially in the immediate weeks to come.