Why is dining out less affected by rising costs than food delivery?

Question

Accepted Answer

Dining Out Remains More Resilient Than Food Delivery Amidst Rising Costs

Malaysian consumers are more inclined to reduce spending on food deliveries rather than dining out when faced with increasing prices. This trend is consistent across multiple surveys, indicating a fundamental difference in how consumers perceive value and substitutes between these two food consumption methods. Specifically, 56 per cent of consumers surveyed indicated they would cut dining out first if prices rise further, in stark contrast to the 31 per cent who would reduce spending on food deliveries first. This pattern has held true through March, April, and July editions of the Malaysia Cost Pressure Pulse (MCPP) survey, where dining out consistently ranked as the top expenditure to be reduced, while food delivery services ranked fourth.
Visible Extra Costs Discourage Delivery Spending

A primary reason for the greater impact of rising costs on food delivery services lies in the layering of additional fees. Unlike dining out, where the cost is primarily the price of the meal itself, food delivery services add explicit charges such as delivery fees, service fees, and potential surge pricing. These visible extra costs make any price increase immediately apparent to the consumer, thereby increasing their sensitivity to further hikes. In contrast, dining out presents a consolidated price for the dining experience, making incremental cost increases less obvious.
Lack of Easy Substitutes for Dining Out Experience

Furthermore, the availability of low-effort substitutes plays a significant role. While consumers can easily opt to cook at home as an alternative to food delivery, there isn't a direct, equally convenient substitute for the experience of dining out. When consumers desire the social or experiential aspect of eating at a restaurant, simply ordering in does not fulfill that specific need. This lack of an easy substitute makes consumers more willing to absorb some level of price increase for the dining-out experience compared to food delivery.
Convenience Factor Diminishes When Budgets Tighten

The core value proposition of food delivery and ride-hailing services is convenience. However, survey data from March indicated that convenience ranks low, at only 13 per cent, as a driver for consumer purchases when budgets are constrained. This suggests that when money is tight, consumers prioritise factors like price and promotions over convenience. Since convenience is the primary appeal of food delivery, its reduced importance during periods of economic pressure makes consumers more susceptible to cutting back on these services.

Reading history

Hide →

This history is cleared when the page is closed.

Why is dining out less affected by rising costs than food delivery?

Loading

Was this article helpful?

Helpful

Not helpful

Report an issue

2

0

0

Share with friends