Domino's and Chipotle Diners Halt Delivery to Save Money

There is a slowdown in the delivery of food as consumers seek savings and return to in-store dining, according to Chipotle Mexican Grill Inc. and Domino's Pizza Inc.

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It has been reported by the burrito chain that delivery sales declined in the first quarter compared to the previous quarter. On a call with analysts recently, Domino's Chief Financial Officer Sandeep Reddy said that despite a "strong" carry-out business, "the delivery business continues to be more challenging." According to brands tracked by research provider Black Box Intelligence, the first quarter of 2017 saw a decline of 2.1% in delivery sales at limited-service restaurants compared to the same quarter last year, marking the fourth consecutive quarter of slow growth in delivery sales.

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The growth of the food service industry has slowed down due to increased in-person visits to some eateries compared to the first quarter of last year when the omicron wave of Covid-19 kept people at home. Reddy said that some households with less disposable income are moving away from ordering into cooking at home because of a lack of disposable income. 

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It is becoming increasingly apparent that the delivery fees and tips are becoming even more noticeable as menu prices are already higher. Victor Fernandez, Black Box's vice president of insights, recently wrote an email in which he discussed the fact that many consumers have begun watching their spending more closely. "This is due to the fact that the total cost difference for the consumer is usually substantial, and we believe that it has been a driving factor in many cases that restaurants are moving away from delivery."

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During Covid-19, delivery services boomed as diners stayed at home and ate at home, but the trend subsided as vaccinations spread and people returned to their normal routines, said Peter Saleh, an analyst at BTIG. "There has been a positive impact on sit-down restaurants such as Texas Roadhouse as a result of this," he explained.

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Furthermore, Chipotle Chief Financial Officer Jack Hartung said in an interview that delivery is a "premium experience that comes at a premium cost," which leads to consumers cutting delivery services from their budget in the future. 

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There is a possibility that McDonald's Corp. Chief Executive Officer Chris Kempczinski will not be able to drive growth as much as he did previously, due partly to the comparison with previous growth rates as well as due to pressure on consumer budgets as well. The diners are also adapting in other ways, such as ordering fewer items per transaction, for example, skipping fries as a side dish.

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