Oppenheimer: Survey on Restaurant and Grocery Delivery Shows Increased Spending

A recent survey involving 1,451 participants indicates promising growth potential in the restaurant and grocery delivery sectors, highlighting increases in consumer spending and opportunities yet to be explored.

Conducted by Oppenheimer, the survey reveals that 64% of restaurant delivery users and 70% of grocery delivery users are spending more than they did six months ago. This rise in spending is attributed to enhancements in service, notably faster delivery times and reduced order mistakes.

These positive trends have led to greater confidence in the market, resulting in a 2% increase in estimated gross transaction volume (GTV) and gross order value (GOV) for delivery services in the coming years.

In the restaurant delivery arena, there remains a significant potential to boost order frequency. Despite the ongoing spending trends, 40% of restaurant delivery users still classify themselves as infrequent customers, signaling an area ripe for growth.

The survey emphasizes that product enhancements are key drivers of frequency, with 60% of respondents attributing their increased spending to improved delivery speed and fewer errors. Additionally, 23% of users appreciate the convenience of using delivery apps and the option of avoiding cooking.

Overall, the finding that 40% of users are infrequent indicates substantial opportunities to encourage more regular use among existing customers, according to Oppenheimer.

On the other hand, macroeconomic factors have affected cost-sensitive consumers. Approximately 33% of non-users cite cost as a barrier to using restaurant delivery apps. Notably, 71% of these consumers are unaware of the cost-saving potential of monthly subscriptions, indicating a significant marketing opportunity to attract new users.

Conversely, grocery delivery services display lower market penetration compared to restaurant delivery, with figures at 57% and 67%, respectively. Notably, 73% of non-users still prefer to shop in person.

Despite these challenges, grocery delivery services demonstrate strong customer retention, with only 7% of respondents reporting a decrease in spending over the last six months. Enhanced delivery speeds and accuracy have contributed to increased spending among existing users.

Additionally, findings indicate that the partnership between Uber Technologies and Instacart has been successful, with 82% of online grocery users utilizing Instacart for restaurant orders, while 38% of restaurant delivery users access the app.

These results not only bode well for Instacart but also suggest that the partnership has expanded Uber’s existing user base, making it a potentially attractive acquisition prospect in the eyes of analysts.

In light of this data, the investment bank has raised its price targets for Uber and DoorDash stocks, adjusting them from $90 to $95 and from $145 to $160, respectively.