Grubhub, Seamless, UberEATS and other food delivery applications have become a staple of modern living. Yet for all the convenience those services offer, how much do consumers really pay for having their culinary indulgences delivered at the touch of a button?
According to a new report, the price is much higher than some think.
Recent data from Lux Research report shows businesses like Blue Apron and UberEATS are developing business models that show just how much diners are willing to pay for not having to prepare or pick up their own meals. Lux's research shows that, on average, consumers are willing to pay 11 percent more for each added layer of convenience in the food chain in anything from online grocery delivery to restaurant take-out.
The premium consumers are willing to pay a premium varies according to the service provided, Lux said, which means grocery delivery costs are different from a takeout order, which differs from a meal kit that requires some assembly.
"Meal kits are saying we are going to take away the hassle of some of the steps that you don't like," said analyst Camila Stice, "Maybe you don't like going to the grocery store, thinking about how many carrots to buy, wash them, how much you need. All of that is taken care of but you still get the experience of cooking a meal."
'The same is happening with food'
Acquiring food online is a relatively recent concept, but goods from groceries to fully prepared meals have become available at the tap of a finger. The future could be an extension of those trends.
Lux's figures—and consumers' increasing willingness to shell out money for convenience meals—are the latest signs of the far reaching effects of the on-demand economy.
"Every other retail category has been disrupted by e-commerce, and the same is now happening with food. It's interesting to see all of this innovation happening," Blue Apron Fonder and CEO Matt Salzberg told CNBC recently.
Salzberg said his company's main objective is to "grow higher quality food at a better value, by taking out the tremendous waste and inefficiency that exists in the current supply chain."
The change in consumer's habits is in part due to a lack of trust in the large processed food companies of past generations, Salzberg added. In that vein, Blue Apron works directly with farmers and cuts out the middlemen. However, Salzberg cautioned the company isn't trying recreate a brick and mortar experience.
It's a point that other analysts and food purveyors say helps to boost the evolving model of food service. Delivery of goods has now become the standard rather than a point of differentiation, said Lux's Stice.
"There's this shift towards making your life more efficient and being able to access more of your city to find different places." said Kristin Schaefer, a senior vp of strategy and finance at Postmates, a food delivery service. Success also hinges on how much consumers have to spend on such luxuries, she added.
"The vast majority of discretionary income is spent in cities. To us, the value is in making that local inventory more accessible to people. That's been a really difficult problem to crack for a long time," she stated.