But it was saved by coronavirus lockdown orders and fearful diners, according to a study slated to hit research website Social Sciences Research Network on Thursday.<\/p>\n
Sales last year surged 122 percent to $51 billion, compared to sales of $23 billion in 2019, as pandemic lockdowns forced people to turn to takeout more often, say researchers Daniel Minh McCarthy, a marketing professor at Emory University\u2019s Goizuita Business School, and Columbia University PhD candidate Elliot Shin Oblander.<\/p>\n
But the vast majority of that growth, or 69 percent, came from artificial demand that\u2019s expected to largely evaporate as the pandemic lifts, according to the study, which tracked a total of 27 delivery apps, including GrubHub, Doordash and Uber Eats.<\/p>\n
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\u201cWall Street is pricing in so much growth into these companies, but we know that there will be a headwind coming,\u201d McCarthy told The Post of his research. <\/p>\n
The study is based on five years of credit card spending data from Earnest Research, a data analytics firm that tracks card spending that culled data on 1.8 million consumers for the report.<\/p>\n
McCarthy said the data shows that \u201cwhen dine-in visits would increase, delivery would decrease on the same day in the same area and vice versa.\u201d<\/p>\n
What that means, he says, is that people weren\u2019t eating out more. They were just ordering in more \u2014 resulting in \u201ca big transfer of wealth from the restaurants to the delivery companies\u201d that is expected to dissipate this year.<\/p>\n
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McCarthy is no novice to impactful reports. His research on Wayfair losing money and Blue Apron\u2019s struggles in 2017 was widely cited in the business press. <\/p>\n
Some large, publicly traded food delivery apps already appear to be bracing for a slowdown. Doordash in February said it expects total orders for 2021 to grow 33 percent after reporting total order growth of 233 percent for the fourth quarter alone.<\/p>\n
\u201cOur outlook anticipates the successful rollout of COVID-19 vaccines, among other things,\u201d the company said at the time. \u201cThough we cannot predict the short or long-term effects this will have on consumer behavior, our guidance assumes it creates headwinds to growth in total orders and average order values.\u201d<\/p>\n
Uber on Wednesday introduced a handful of features to better integrate its food-delivery service with its ride-hailing service in an apparent effort to drive demand. Users will be able to pick up food and alcohol while on an Uber trip through a \u201cPickup and Go\u201d options.<\/p>\n
Experts say investors should prepare for the industry\u2019s 2019 woes to return in full force this year, including stock volatility and a rush to consolidate.<\/p>\n
Prior to the pandemic, food delivery apps \u201chad all hit a growth wall because the market was over saturated,\u201d said Wedbush analyst Dan Ives. \u201cThey knew the only way to compete was to cut costs and to consolidate.\u201d<\/p>\n
This year, Ives concluded, \u201cthere will be some growth challenges ahead and the food delivery industry will need to adjust to moderated growth.\u201d<\/p>\n
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So far, however, demand continues to surge. GrubHub on Wednesday said revenue grew by 52 percent in the first quarter, adding to growth of between 41 and 53 percent in its three previous quarters. <\/p>\n
Doordash and Uber declined to comment for this article and GrubHub did not respond to a query. <\/p>\n