By Stephanie Stamm, Preetika Rana and Heather Haddon 

Diners and restaurants alike flocked to delivery apps in record numbers when the pandemic forced establishments to close their dining rooms. The surge in business has driven huge revenue growth for companies like DoorDash Inc., Grubhub Inc. and Uber Technologies Inc., which owns Uber Eats and Postmates. While the apps' growth is expected to slow from last year's levels, the companies say they expect people to order in more frequently than they did pre-pandemic.

Wonder why delivery orders have become more expensive during the pandemic? Want to know what share of your money restaurants are getting? Here's a breakdown of several identical orders from the same New York City restaurant.

Why your prices are rising

In many markets, the price of food ordered via delivery app has gone up since the pandemic began. Since apps' service fees are partly determined by food prices, that means a higher bill overall.

Other costs also fall on customers. In California, for example, apps began charging customers a fee related to benefits that they promised drivers. In Philadelphia, where the city capped the amount apps can charge restaurants during the health crisis, DoorDash is charging a "regulatory response fee."

To illustrate this, The Wall Street Journal compared otherwise identical pre-pandemic and 2021 orders from three Philadelphia-area restaurants using DoorDash, Grubhub and Postmates. In each case, this year's orders were more expensive.

Why that delivery burrito is more expensive

Many restaurants -- including big chains -- are encouraging more-profitable pickup orders and raising delivery menu prices on apps.

Chipotle Mexican Grill Inc. said in April that its delivery prices now average 17% higher than those in stores. Similarly, Del Taco Restaurants Inc. raised delivery prices by around 20% last year to improve margins and is testing further increases.

Restaurants believe that customers who want the convenience of delivery will keep paying for it. Many are investing in pickup and drive-through services to make those options more appealing.

Yasufumi Saito contributed to this article.

Write to Stephanie Stamm at Stephanie.Stamm@wsj.com, Preetika Rana at preetika.rana@wsj.com and Heather Haddon at heather.haddon@wsj.com

 

(END) Dow Jones Newswires

May 08, 2021 05:44 ET (09:44 GMT)

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