Purdue hospitality experts: Competition fuels food delivery apps in race to serve consumers

Alei Fan

Written by: Tim Brouk, tbrouk@purdue.edu

Among the many changing consumption patterns caused by the COVID-19 pandemic was the rise of food delivery apps such as DoorDash, UberEats and GrubHub. Years after the pandemic status of the coronavirus was lifted, these apps continue to grow.

Most major fast-casual chain restaurants have entered this competitive market of fast online ordering and delivery by developing their own apps and eliminating the middleman. The online competition between the restaurants is fierce and ever-evolving.

This energy only spells faster, more convenient meals for the consumer. Kevin So and Alei Fan, researchers in the Purdue University White Lodging-J.W. Marriott, Jr. School of Hospitality and Tourism Management, foresee apps and in-person dining at fast-casual restaurants co-existing, for now.

“The current relationship between the fast-casual restaurants and delivery apps is complex: part symbiotic, part competitive and often economically tense,” Fan explained.

Kevin So

Other trends in fast-casual dining have also come forward post-pandemic. Touchscreen kiosks and drive-thru lanes for online/mobile app orders are available for consumers’ convenience.

Both So and Fan predict restaurant chains and third-party delivery apps will continue to find ordering innovations that enhance the customer journey and incentives such as discounts, promotional codes, and point systems to lure consumers who hunger for a Big Mac via the fastest, most cost-effective means.

What are restaurants doing to get customers to use their own apps instead of DoorDash, etc.?

So: All these companies — many of them have a global footprint — are providing online- or mobile app-only deals or promotions — traditional tactics, such as loyalty programs to give their customers points so that they can utilize the points after certain purchases. The accumulation of points can be redeemed for a deluxe chicken sandwich at Chick-fil-A, for example.

Consumers are seeing they’re getting additional benefits. It is an advantage to use the app, and they’re likely to continue their adoption in future purchases. These brands are constantly finding new ways to get their customers to utilize their own mobile application directly, rather than going through a third-party platform because for the longer term, for financial benefits, it’s in their best interest to get customers to do that. Most importantly, doing so helps build direct relationships with customers, which are becoming increasingly critical in a hyper-competitive market.

Fan: Many restaurant chains are investing in omnichannel strategies, that is, leveraging both third-party platforms and their own in-house capabilities to balance growth with sustainability.

Some major chains, such as Starbucks and Chick-fil-A, have started adding app ordering drive-thru lanes. Is this necessary forward-thinking by these chains? What other innovations are they doing to keep up with online demand?

Fan: Some fast-casual restaurants operate delivery-only kitchens or virtual brands to serve app-based customers more efficiently and expand to new markets without opening full-service locations.

So: These brands are really competing against each other for the primary purpose that consumers want to have convenience, save time. They are enhancing these touchpoints of the customer journey by coming up with innovative options to save consumers time and at the same time, increase the firm’s operational efficiency.

Many fast-casual restaurants have touchscreen kiosks for in-house customers. Are customers embracing these new “contactless” options?

So: We are seeing more and more companies are providing these options to customers. Initially, customers may not have been eager to undertake a task that was intended to be performed by the service provider or the company’s employee.

These kiosks work best in fast-casual restaurants because they are primarily utilitarian experiences. Customers are hungry, and they want to fill that hunger.  In hedonic experiences like those often provided by restaurants with higher price points, customers are buying an experience with the feeling of pleasure and enjoyment being an important part of the experience. They are still expecting to be served, to be greeted, to give orders to a service employee.

Fan: Customers are increasingly embracing touchscreen ordering and other contactless technologies in fast-casual restaurants, particularly as a result of shifting consumption behaviors following the pandemic and the rising expectation for speed, customization and minimal friction. Fast-casual brands have been at the forefront of adopting such innovations as their business model blends convenience, technology and casual dining efficiency. Touchscreen ordering has become mainstream in fast-casual settings, but it’s just one part of a broader digital transformation aimed at contactless convenience.

What are the demographics of typical delivery app users?

Fan: The demographics of food delivery app users skew toward younger, urban and higher-income consumers, but the user base is broadening. While millennials and Gen Z remain the dominant users, adoption is growing across all age groups due to convenience and post-pandemic behavioral shifts.

So: We are seeing that, based on research, the millennials — people ages 25-39 — are the most frequent users of food delivery apps. Then we have Gen Z — 18-24 — and Gen X — 40 to 54. These two groups follow very closely behind. The last one, not surprisingly, are the baby boomers.

How else will convenience culture increase for restaurant customers? What other trends are coming?

So: I think the increasing disposable income, emerging technologies and changing consumer preferences are going to continue to drive the consumer market. Looking at 20 years ago, how did most people wash their cars? Well, they put in coins and then they spray and do a lot of work by themselves. Now we use drive-thru automatic facilities. It’s the same in the food service sector where new technologies and evolving consumer preferences have redefined the meaning of convenience. I think you will continue to see innovations that are going to significantly reduce the time that people need to spend on various tasks, including feeding themselves.

Fan: The future of convenience in restaurants lies in blending digital, automation and hyper-personalization to minimize wait, friction and physical effort. From app-only drive-thru to AI-assisted menus and grab-and-go lockers, the restaurant industry is moving rapidly toward a digitally native, customer-first model where convenience is the key.