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Abstract:
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We assess the impact of the COVID-19 pandemic on customer purchasing behavior in the restaurant delivery category in the US, the mechanisms driving this impact, and the extent to which pandemic-driven shocks to customer behavior have persisted as consumers' lifestyles return to a "new normal." During the pandemic, we observe sizeable increases in customer adoption, active customers, order frequency, and order size. We find that this growth is primarily attributable to substitution away from restaurant dine-in; increased stay-at-home behavior has dampened sales growth. As the economy has reopened, customer adoption has fallen to below pre-pandemic levels, but existing customers continue to purchase at elevated rates, despite restaurant dine-in visits reverting to nearly pre-pandemic levels. These results suggest that, despite the initial shock of restricted restaurant dining wearing off, consumers' shifts towards restaurant delivery have been persistent. Individual-level analysis further reveals that customers with more regular purchasing behavior have stronger persistence, suggesting that habit formation plays a role in the persistence of pandemic-related lifestyle shifts.
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