Food ordering by mobile application, text message and the internet grew 18% in March from a year earlier as consumers sought greater convenience by eating at home rather than at a restaurant, according to market researcher NPD Group. The trend is spurring restaurants to build or improve their apps.
Half of consumers choose delivery because they don’t want to leave home, while other top reasons for food ordering are it’s “easier” or “quicker” than cooking. Half of those orders were dinner orders made in the evening, and 35% of digital ordering includes parties with kids. People under the age of 35 and those with higher household incomes are above-average users of digital ordering.
Same-store sales for restaurants fell through the end of 2016, making food delivery an imperative strategy for getting through the slump, NPD said. Delivery isn’t confined to pizza anymore as other kinds of food have grown 26% from 2013 to 2017, said Bonnie Riggs, a restaurant industry analyst at NPD.
Mobile ordering is growing at a time when overall results are weak, with same-store sales for restaurants falling 1.1% in May from a year earlier, according to data by TDn2K cited by Restaurant News. The industry hasn’t reported a month of positive sales since February 2016.
One possible reason for the decline is weak wage growth. Unemployment is at a 10-year low, according to the Bureau of Labor Statistics, but the weakness in wage growth since the last recession in 2008-09 has meant that consumers are hard-pressed to spend on dining out. Wage growth peaked at an annualized rate of 2.9% in December, the best performance since June 2009, when U.S. economy on the verge of recovering from the worst decline since the Great Depression.
While dine-in sales have been negative year to date, to-go orders are up 2.9%, indicating a partial shift in dining habits. Visits to casual dining restaurants fell by 4% and to midscale/family dining by 3%, according to NPD data.
NPD's numbers suggest the ease and convenience of mobile ordering and delivery is being embraced by hardworking younger consumers and higher income households. Savvy chains are ramping up efforts to address the trend.
McDonald’s is in the process of rolling out delivery service from UberEats to its 14,000 locations in the U.S. Other restaurants have mentioned the importance of developing an app, according to FactSet data cited by Marketwatch. Bojangles, Burger King parent Restaurant Brands International and Panera Bread are among the major chains that have developed mobile apps or plan to create one. Instead of using a third-party delivery service, Panera Bread plans to hire 10,000 drivers by the end of the year. More than a quarter of Panera’s transactions are done through digital order-and-pay, which doesn’t include digital orders that are paid at the restaurant. The company now has markets where 35% to 40% of sales are digital, according to Panera President Blaine Hurst.