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It’s Saturday evening and you’re in the middle of binge watching Lucifer on Netflix. Rather than pausing to rummage through the pantry and assemble dinner, you jump on your smartphone, peruse through UberEats and DoorDash, then select a popular restaurant nearby. Just 30 minutes later, you’re half an episode down and happily enjoying your Pad See Ew.
The added $6 service fee and $4 tip seem momentarily worth this not-so-little convenience. But, when repeated over time, is that food delivery service worth it?
According to Forbes, the food delivery industry is likely to grow into a $200 billion industry by 2025. Additionally, consumer surveys from Mintel report that in 2016 “87 percent of Americans who use third-party food delivery services agree that it makes their lives easier, and nearly one third (31 percent) say they use these services at least twice a week.”
If you are one of the many individuals that want your favorite restaurant meal delivered right to your door with no Netflix interruptions, have you considered the overall costs? Is this habit not only busting your budget, is it slowing your overall financial goals?
First, let’s take a look at some surprising statistics on the US third-party food delivery service industry.Then, we’ll see if the convenience of that UberEats and DoorDash order is busting your budget, and your financial savings and goals.
Food delivery service website and app statistics
- The average UberEATS customer spent over $220 per year
- 41% of consumers have used a food delivery service website or app in the last 90 days
- Of those that have used a service in the last 90 days:
- 50% used have only used it once or twice
- 25% have used it 3-4 times
- 12% have used it 5-6 times
- And 7% have used it more than 11 times
- Percent of people by age group that have used a delivery service in the last 90 days:
- 63% of 18-29 years old
- 51% of 30-44 years old
- 29% of 45-60
- 14% of 60 and over
- Percent of people by income to use a delivery service in the last 90 days:
- 51.6% earn less than $10k/yr
- 44.6% earn $10k – $24.9k
- The lowest group, 25.3% earn $150k – $174,999/yr
- Of those earning greater than $200k/year, 39.6% have used a delivery service in the last 90 days.
- The average American has 2 food delivery apps and uses them 3x/month
- The average delivery fee was $8.50
- 37% will spend $6-$10 on overall fees
- 35% will only spend up to $5
- 28% are willing to spend up to $15
- 95% tip the driver regularly
- On average, $4 is considered a good tip
- 54% of drivers say that the smell of the food is really tempting
- 28% of drivers actually give in a take a bite of your food
- In 2019, food delivery services are used by 38 million people in the US, an increase of 21% from 2018
- By 2021, over 20% of US smartphone users will use a food delivery app
- According to research from Edison Trends:
- DoorDash 27.6%
- Grubhub 26.7%
- UberEATS 25.2%
- Percent of overall users by age group
- 20.6% of 18-24 years old
- 31.5% of 25-34 years old
- 23.6% of 35-44
- 15.3% of 45-54
- 9% of 55-64
- Percent of overall users by income
- 37.3% are low income
- 38.2% are medium income
- 24.5% are high income
- The number of overall users is expected to grow to 62.3 million by 2024
- Overall revenue from online meal delivery service amounts to $23,991 million
- While growth continues, it is slowing down.
- Projected revenue growth of 7.4% for 2021
- Average revenue per user in 2021 will be $189.36
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Third-party food delivery service app statistical highlights
The takeaway message here is that the average American has 2 food delivery apps and uses them almost once a week. This has likely grown over the 2-3 years since this survey was conducted. Typical spending is over $220/year and the most frequent users are young adults in the low to medium income range.
Overall convenience is considered the most important factor in deciding to use a service and the overall market continues to increase year over year.
Is the convenience of using a food delivery service worth it?
According to Zion & Zion data, typical spending on UberEats in 2017 was over $220 per year. Since the market grows every year, I’ll assume that the average user is spending around $250 per year in service and delivery fees and tips.
Note: Since the average user has two apps on their phone and base their choice on delivery time and restaurant choice, actual spending could be double this amount.
This alone doesn’t seem like much. Convenience is the driving force that keeps these companies in business. And to a certain extent, it’s worth the extra spending. This only accounts for an increase in monthly spending of $20.83, which alone won’t bust the budget.
But if we look beyond the added expense of using the food delivery app, what can we learn about the overall spending on ordering these take-out meals?
If the average delivery fee is $8.50, and the average annual spending is $220 (working within the boundaries of when the data was acquired), this means that about 26 meals were ordered over the course of the year. That’s just over 2 per month.
However, the problem with statistics is that they are easily misinterpreted, skewed or altogether inaccurate.
Estimated spending according to Statista
According to Statista’s data, in 2021, the average revenue per user will be $189.36. This hints that the actual user spending is significantly higher, since companies like UberEats have to pay fees to the restaurant and the driver. Revenue only accounts for roughly 18%, meaning average spending is likely around $1,053 a year.
For the sake of convenience, I’ll assume an average annual spending of $1,000 on the convenience of ordering take-out through a food delivery service.
If instead of ordering food, you spend about ⅓ less and make a quick meal at home. This would mean an annual savings of $667.
If we now invest that money, how much would we have after 5 years?
Using a compound interest calculator, like the one at The Calculator Site, assuming 8% interest rate and 3% inflation every year, you’d have just over $5,300 after 5 years of investing this added savings.
After 25 years of this, you’d have $73,800.
The overall cost of eating out
In reality, Americans are eating out multiple times a week. Just how often varies by the statistics you dig up, but overall it’s more often for people between the ages of 18-44. Millennials seem to eat out up to 5-6 times a week.
To be more accurate, according to census data in 2018, the average spending on food cooked at home was $4,464, while food away from home accounted for $3,459. Since restaurants mark up the cost of their meals by around 300%, a typical $15 meal really only costs $5 to make.
Which means that an average American household spending $3,459 a year on dining out could be saving over $2,300 by making those meals at home.
And what if you’re one of the many people eating out 5-6 times a week? Assuming the average meal out costs $20, that’s about $110 spent a week on food, or around $475 a month.
This might not actually seem like a huge dent to the budget, but it does add up over time. Over the course of the year it adds up to $5,700. Going back to the 300% markup on restaurant food, you could instead be saving an extra $3,800 a year.
Is the convenience of eating out worth it?
As I combed through all the online stats I could find on this topic, the main inferences I was able to make include:
- Third-party delivery apps are commonly used. Well, duh. I already knew that since over half my friends and acquaintances use them on a weekly basis. I have also personal experience with just how common these services are. I’ve learned to avoid eating out at any restaurant that contracts with one of these apps because their overall workflow and customer service take a hit as they try to accommodate both in person, phone and third-party orders.
- They cost more than eating out alone. Again, this is obvious. The only way they stay in business is by charging service and delivery fees, and you still have to tip the driver. Who, by the way, may or may not be sampling your food during the drive to your doorstep.
- Not only are food delivery service runs common, so is the habit of eating out. The cost of conveniently ordering your food via smartphone app while binge watching Netflix, then running to the door to grab your food with hardly an interruption, may not be the straw that broke your budget’s back. Not cooking your own food is what is costing you dearly.
So the real question remains, is eating out worth spending an extra few thousand a year? Or would this money be better put to use, say, paying down your debt or growing your retirement fund?
