"Why Is the Food in This Condition? Let's Just Eat Out"…Closure of Delivery-Only Restaurants Increasing

NYT Reports US Delivery-Only Restaurant Market Withdrawal and Downsizing
"Order Surges During Peak Hours and Food Quality Decline Issues"

Online delivery-only restaurants in the United States, which experienced rapid growth during the pandemic, are withdrawing from the market or downsizing their operations.

According to the New York Times (NYT) on the 12th (local time), major U.S. foodservice companies are recently redesigning their delivery-only strategies in consideration of the increasing number of visitors who come directly to restaurants.

Person delivering food. [Photo by Pixabay]

The famous American hamburger chain Wendy's has withdrawn its plan to add 700 delivery-only stores announced in 2021, and the U.S. comprehensive retailer Kroger closed its "ghost kitchens" (delivery-only) last year.

The NYT cited that consumers avoid delivery food because most delivery orders come during the busiest times of the day at restaurants, making it difficult to handle, and the quality of delivery food does not meet consumer expectations.

In fact, the delivery application Uber Eats had to remove about 8,000 restaurants last year due to various customer complaints, and MrBeast (Jimmy Donaldson), a famous YouTuber with 250 million subscribers, launched MrBeast Burger in 2020 in collaboration with the "Virtual Dining Concepts," but filed a contract termination lawsuit in a New York court after a flood of customer complaints about food quality.

Virtual Dining Concepts is also countersuing, citing repeated critical posts made online by MrBeast's side as a problem.

Delivery-only businesses, called "virtual restaurants" locally, emerged as a new trend in the foodservice industry during the pandemic due to the advantage of not needing to rent large spaces or hire many employees.

Investors poured billions of dollars into this sector, and celebrities like Mariah Carey and Wiz Khalifa created their own brands using menus such as cookies and chicken nuggets. The commercial real estate firm CBRE predicted in 2021 that "ghost kitchens will account for 21% of industry sales by 2025."

However, as the pandemic subsides, customers have turned back to dining at restaurants in just three years, and these predictions are proving inaccurate.

Dorothy Kelba, a foodservice sector analyst at Euromonitor International, told the NYT, "Consumers are craving to go back to restaurants and have a relationship with the brand itself," adding, "Delivery-only restaurants have not been able to establish such relationships with consumers."