America’s obsession with pandemic-era food delivery appears to be over — and the companies’ stocks are taking a hit.
After hitting a high of $246 in November, DoorDash shares have plunged 62 percent to $89 a share. Over the same period, Uber shares have fallen 29 percent, from $45 to about $31.
Much of the decline can be explained by the leveling off of Covid-19 cases. While the apps saw explosive growth during the pandemic’s early stages as consumers stayed at home, analysts say such growth was ultimately not sustainable.
But the downturn for these companies has proved quite sharp, as some Americans have become increasingly budget-conscious amid rising inflation and higher fuel costs.
“It was inevitable that they were going to start to retract as people returned to dine in,” said Rich Shank, vice president of research and insights at Technomic, a consulting company that works with the food service industry.
There has also been a return to restaurants. Data from Technomic show the portion of meals consumed at in-person dining establishments hit a post-pandemic high in the first quarter of 2022, while the share of food-app deliveries fell to its lowest level since the fourth quarter of 2020.
The decline in app usage can also be attributed to fees, tips and higher food prices that are starting to turn off some customers, Shank said.
“The share shift toward off-premise ordering seems to have plateaued,” Shank said, referring to orders placed on food-delivery apps. “The odds of it slipping a bit further are pretty good given the inflationary pressures consumers face and the higher fees they incur via third-party apps.”