Major Restaurants See Consumers Shift to Pickup to Avoid Fees
From Applebee’s to Domino’s Pizza, major restaurant brands across the industry are seeing consumers shift away from delivery toward pickup to skip the added fees amid inflation.
In the wave of earnings presentations over the past several weeks, fast-casual concepts, casual dining chains and quick-service restaurants (QSRs) alike have been observing this shift.
For instance, Brett Schulman, president and CEO of fast-casual chain Cava, said Tuesday (Aug. 15) on the company’s first earnings call since going public, that the brand is “beginning to see a slight shift in delivery to pickup.”
Similarly, Mitch Reback, chief financial officer of another fast-casual concept, Sweetgreen, observed on the brand’s last earnings call that there has been “channel movement into the frontline and pickup from native delivery.”
Full-service restaurants (FSRs) are seeing the same. Take, for instance, Dine Brands, parent company of Applebee’s and IHOP.
“While our off-premise sales volume remains strong, we saw a shift in mix from delivery to pickup, a deliberate decision to avoid extra cost associated with delivery and fees,” Dine Brands CEO John Peyton told analysts on the company’s latest earnings call.
Even restaurant brands known for their delivery offerings are seeing consumers make similar decisions, sacrificing convenience to save on cost. Take QSR behemoth Domino’s.
“Carryout customers, they really want value,” Domino’s CEO Russell Weiner told analysts on the company’s recent earnings call. “And one of the reasons they’re doing carryout is they want to avoid the tip; they want to avoid the delivery fee.”
PYMNTS research suggested that restaurant customers, amid rising prices, are increasingly looking for ways to skip the tip and to avoid the additional fees of the delivery channel.
According to the study “Connected Dining: Rising Costs Push Consumers Toward Pickup,” 48% of consumers reported that they have been more likely to pick up their restaurant orders themselves rather than have them delivered due to inflation. Plus, the study found that pickup orders outnumber delivery nearly 4 to 1.
Additionally, results from a report earlier this year, “Connected Dining: Inflationary Pressure Squeezes Restaurant Tips,” revealed that many consumers are pulling back across restaurant channels. The study found that nearly 1 in 3 diners said the expectation to leave a tip makes them eat at home more frequently instead of dining at a restaurant.
Plus, restaurant menu price increases exceed overall food inflation. Consumer Price Index (CPI) data from the U.S. Bureau of Labor Statistics (BLS) showed that restaurant prices are up 7.1% relative to last year, nearly twice the year-over-year grocery inflation rate of 3.6%.
As such, consumers are adjusting their dining behavior, not only shifting channels but also pulling back on frequency, managing their check sizes, and considering how expensive a given eatery is when deciding where to make their restaurant purchases, as PYMNTS research last year for the study “The 2022 Restaurant Digital Divide: Restaurant Customers React to Rising Costs, Declining Service” revealed.
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