As food prices rise, DoorDash, the United States’ leading restaurant aggregator, is doing what it can to keep customers coming back despite the fees and higher menu prices associated with the channel.
The company shared in an investor letter Thursday (Aug. 4) discussing its second-quarter 2022 financial results that orders and revenue grew in that period despite inflationary pressures, in part due to DashPass, the company’s subscription program.
“We do not believe the [inflation-related] increase in subtotals had a meaningful impact on order volume in Q2, largely because of ongoing adoption of DashPass,” the letter stated.
Through the program, subscribers pay a flat monthly cost for fee-free delivery and a 5% credit back when they order for pickup. The company noted that adoption of DashPass in the quarter was the second highest it has been in the past two years and that the reduction of fees helps counter rising food costs, which has “improved our affordability compared to alternatives.”
Certainly, cost is a concern for consumers when it comes to ordering from aggregators, and any savings are welcome. According to findings from the 2022 edition of PYMNTS’ Restaurant Readiness Index, created in collaboration with Paytronix, aggregators’ prices as of April were 24% higher than prices on restaurants’ websites due to menu price markups, taxes, service fees and other surcharges.
Additionally, the study, which drew from a survey of more than 500 managers of quick-service restaurants (QSRs) and full-service restaurants (FSRs) across the country, found that the share of restaurants that offered order-ahead options via third-party aggregator was on the rise, growing from 62% in September 2021 to 65% in April 2022.
Additionally, the share of consumers adopting these options is significant. Research from the July edition of PYMNTS’ ConnectedEconomy™ study, “The ConnectedEconomy™ Monthly Report: The Rise of the Smart Home,” found that 43% reported having ordered from an aggregator in the previous month.
Granted, competitors offer similar programs, such as Uber’s Uber One membership offering, which includes savings and other perks for Eats customers, and Grubhub’s Grubhub+ membership program. Still, many consumers are going with DoorDash’s offering.
“Our DashPass subs have continued to grow, both on a year-on-year basis as well as on a quarter-on-quarter basis, to a record high,” DoorDash Chief Financial Officer Prabir Adarkar told analysts on a call Tuesday (Aug. 2). “So, we feel good that DashPass is a key component of driving better affordability for our consumers, and the growth has been consistent and reliable.”
Additionally, DoorDash Co-Founder, Chairman and CEO Tony Xu said he has not “seen an impact” on the company’s key performance indicators (KPIs) from “recent competitor announcements,” such as Grubhub+’s influx of new members related to Grubhub’s deal with eCommerce giant Amazon to offer free membership to Prime customers.