CNBC’s Jim Cramer on Thursday analyzed why food delivery companies are seeing success while many of their consumer discretionary peers suffer as users continue to feel the burden of inflation.
He said food delivery is a habit consumers don’t want to break — something they seem more willing to spend on than other luxuries.
“DoorDash and Uber Eats and Instacart can only put up numbers like these because food delivery has become a calcified habit for so many consumers, people who value their time as much as they value their money,” Cramer said. “No wonder people don’t have excess cash to throw around — they’re spending it all on DoorDash.”
DoorDash, Uber and Instacart parent Maplebear all beat Wall Street’s expectations in recent earnings reports. During the conference call, DoorDash CEO Tony Xu said retention and frequency were as good as, if not better than, they were during the pandemic.
Uber CEO Dara Khosrowshahi concurred in an interview with CNBC that food delivery has turned out to be a sticky habit for consumers. He added that when the labor market weakens, more people want to drive for Uber or Uber Eats, which helps improve service.
Meanwhile, Cramer noted that Maplebear’s earnings indicate that consumers appreciate the Instacart services, even though the grocery delivery business is generally a tough market.
Although food delivery doesn’t always offer great value, consumers built a robust habit of it during the pandemic which has continued and even grown, Cramer said. He added that many of these services have rewards programs that help customers save money, with the food delivery players trying to be more attractive in an inflated economic landscape.
“People seem to see delivery as a necessity rather than something discretionary, which is why these companies can put up great numbers when the restaurants are struggling,” Cramer said.
