Food-delivery services can't seem to pull people away from the 23 pounds of pizza they eat every year
- While franchises like Domino's are worried about food-delivery companies hurting their business, data from Cowen suggests services like UberEats and Grubhub have failed to lure consumers from ordering pizza the old-fashioned way.
- According to Cowen analyst Andrew Charles, pizza delivery won't experience a sharp drop-off as food-delivery companies expand. And any decline that does occur will be more gradual in nature.
- Cowen conducted a survey of 2,500 consumers and found those ordering the same amount of delivery between this year and last year indicated no change in pizza consumption.
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The origins of food delivery can be traced back to calling a local pizza place. Now, people can get virtually any food they want with the tap of a few buttons on a smartphone.
But it appears that despite the rapid expansion of apps like UberEats, Grubhub, and DoorDash, consumers aren't forgoing pizza as much as one would think, according to a report from Cowen. That's a positive for chains like Domino's that have found their delivery businesses threatened by new upstart services.Still, Domino's stock price took a hit today after it reported a drop in same-store sales in the US, which it attributed to mounting competition. It's part of a long-running battle the company has forged against services like UberEats and GrubHub - one it's waged by speeding up delivery times and opening new stores.
In January 2019, Cowen updated its digital-delivery industry overview from December 2018, which includes a survey of 2,500 consumer that found that pizza still holds 61% market share in the delivery space across different cuisines.
"We argue restaurant delivery continues to be a secular growth theme and while established pizza delivery is in a more mature state of growth, we don't foresee a watershed moment on the horizon for pizza delivery that investors may be fearing," the firm said in the report.
Cowen forecasts the restaurant delivery space will grow by 3.5% per year from $561 billion in 2018 to $666 billion in 2023. Of the survey respondents, 37% said they used Grubhub, while 25% said they used UberEats, and 19% ordered on DoorDash.
"Relative to our last survey in 2017, the popularity of a restaurant app or web site has declined and UberEats and DoorDash have both extended their reach," the report said.Uber has already made it clear that UberEats is going to be an important avenue to help the company achieve profitability. The ride-hailing company has also reportedly been weighing a possible acquisition of Postmates, a food-delivery startup with plans for a 2019 IPO.
Cowen's report also said it's important for individual restaurants to try drive customers to their own ordering platforms. Chipotle is an example of a resturant chain that's made attempts to do this. The company launched a mobile-app in 2017 to let customers order online.
"We are most encouraged by restaurants with the highest mix of sales placed through the restaurant's combined mobile app and website, as evidence that specific concepts have made the greatest inroads to own the customer," Cowen said.
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