How Has COVID-19 Impacted Customer Relationship Dynamics at Food Delivery Businesses?

• Activity Number: 439 - Topics in Marketing
• Type: Contributed
• Date/Time: Thursday, August 12, 2021 : 4:00 PM to 5:50 PM
• Sponsor: Section on Statistics in Marketing
• Author(s): Daniel Minh McCarthy* and Elliot Shin Oblander
• Companies: Emory University and Columbia University
• Keywords: marketing; customer acquisition; customer relationship management; hazard models; COVID-19

Abstract

In this paper, we quantify the impact of COVID-19 on customer purchase behaviors -- customer acquisition, retention, ordering, and spending -- within the restaurant food delivery category in the United States and assess the mechanisms through which these effects have arisen using a unique collection of data sources. Our results suggest that pre-pandemic customer purchase trends were unfavorable, with falling acquisitions and weakening cross-cohort repeat purchase dynamics. COVID-19's impact has been significant, creating $19.3 billion in incremental sales for the category in 2020, or 69% of the overall year-on-year increase in sales. This increase was primarily due to higher purchase frequency from already-active pre-COVID customers and an increase in average order size, not due to changes in customer acquisition and retention. Turning to mechanisms, we find that this growth is primarily attributable to substitution away from restaurant dine-in; while increased stay-at-home behavior has increased customer adoption and order size, it has actually dampened overall sales growth. These results call into question the sustainability of recent growth in delivery sales.