Chipotle And Domino’s Customers Begin Cutting Back On Delivery Orders

Mounting evidence shows consumers are dialing back their fast-food spending as they grapple with two years of negative real wages, maxed-out credit cards, and depleted personal savings. Last week, McDonald’s CEO noted that customers were starting to resist higher burger prices. Now, Chipotle Mexican Grill and Domino’s Pizza have reported that consumers are ditching delivery services due to high fees, opting instead for carryout to save on costs, as reported by Bloomberg.

Chipotle said delivery sales declined for the first quarter, while similar trends were reported at Domino’s. Chief Financial Officer Sandeep Reddy of the pizza restaurant chain with thousands of stores nationwide told analysts last week that carryout was “strong,” but “the delivery business remains more pressured.”

Restaurant data provider Black Box Intelligence said delivery sales across all the eateries it tracks only advanced 2.1% in the first quarter from a year ago. This is the fourth consecutive quarter of slowing growth. Consumers are starting to notice higher food costs plus delivery fees, in addition to tips, have made delivery too expensive. As a recession looms, consumers retreat:

“Many consumers have begun to watch their spending more closely,” Victor Fernandez, Black Box’s vice president of insights, told Bloomberg via email. 

Meanwhile, “Growth cooled as in-person visits to some eateries picked up compared to the first quarter of last year, when the omicron wave of Covid-19 kept people at home,” Bloomberg Intelligence analyst Michael Halen said. Domino’s Reddy said lower-income households are quickly moving away from ordering out to cooking at home.

Chipotle Chief Financial Officer Jack Hartung noted delivery is a “premium experience that comes at a premium cost.” As consumers come under financial pressure, ordering delivery will be some of the first services to cut.

Also, McDonald’s recently said consumers resist higher burger prices and are less likely to add extras to their orders.

All of this is more evidence consumers who frequent fast-food restaurants are pulling back on spending as economic storm clouds gather.

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