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Food Delivery Platforms Lose $20 Billion as Diners Cut Back

Food delivery platforms have reportedly seen more than $20 billion in losses since going public.

As the Financial Times (FT) reported Wednesday (May 29), shares in the four biggest, publicly-traded U.S./European delivery apps — DoorDash, Delivery Hero, Just Eat Takeaway and Deliveroo — are trading below the peaks they enjoyed during the pandemic.

Back then, the report notes, those companies were fueled by growth during the lockdown; now they find themselves grappling with a cutback in consumer spending.

With these companies now pushing to show profitability to investors, their combined annual operating losses have now reached $20.3 billion, the report said, citing calculations by the FT and industry analyst theDelivery.World.

Giles Thorne, an analyst at Jefferies, told the FT that consumers had continued using the platforms in recent years “despite having less money and despite being charged more” — because of fewer discounts and rising inflation — which he argued supported the sector’s long-term prospects.

The report notes that sales growth has slowed since the pandemic boom, with companies now trying to cultivate new sources of revenue such as grocery delivery and online shopping.

For example, when touting its first-ever profit in March, the UK’s Deliveroo noted the success of its grocery and shopping business.

In the case of DoorDash, that’s meant partnerships like the one the company’s recently expanded collaboration with Ulta, allowing for delivery of beauty products in all 50 states.

PYMNTS took a closer look at the company’s shift from just restaurant delivery to on-demand fulfillment in categories such beauty in a conversation earlier this year with Fuad Hannon, vice president of new verticals at DoorDash.

“Consumers come to us today for a need-it-now use case. ‘I’m out of mascara. I’m out of lipstick. How can I get it delivered?’ And the core of DoorDash’s platform has been an on-demand 30-minute delivery,” Hannon said. “… We’re really excited about what beauty offers our consumers in terms of beginning to think about DoorDash for not just consumption categories like grocery or alcohol or restaurants, but increasingly non-consumption categories.”

And many consumers want to be able to have their restaurant and grocery needs met by a single, unified digital platform that covers a wider range of their daily activities.

The PYMNTS Intelligence study “Consumer Interest in an Everyday App” found that 35% of Americans showed a strong desire for an everyday app, with 69% saying they’d want to purchase groceries from such an app, and 65% reporting that they wanted to make purchases from restaurants.