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

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 long-run sustainability of the pandemic-fueled growth in delivery sales, should on-premise dining meaningfully recover after it returns to being a safe activity.