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

55 Pages Posted: 29 Apr 2021

See all articles by Elliot Shin Oblander

Elliot Shin Oblander

Columbia Business School

Daniel McCarthy

Emory University - Department of Marketing

Date Written: April 26, 2021

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 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.

Keywords: customer acquisition, customer retention, customer relationship management, marketing-finance interface, COVID-19

Suggested Citation

Oblander, Elliot Shin and McCarthy, Daniel, How has COVID-19 Impacted Customer Relationship Dynamics at Restaurant Food Delivery Businesses? (April 26, 2021). Available at SSRN: https://ssrn.com/abstract=3836262 or http://dx.doi.org/10.2139/ssrn.3836262

Elliot Shin Oblander (Contact Author)

Columbia Business School ( email )

New York, NY 10027
United States

HOME PAGE: http://elliotshinoblander.com

Daniel McCarthy

Emory University - Department of Marketing ( email )

Goizueta Business School
1300 Clifton Road
Atlanta, GA 30322
United States

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