Coronavirus Outbreak May Give Food And Grocery Delivery Sales, And Blue Apron, A Big Jolt

As American consumers hunker down to stem the rise of coronavirus outbreak, they may well add fuel to the already growing grocery and food delivery sales while give new hope for the struggling meal kit delivery service Blue Apron. 

Blue Apron saw its stock surge almost three quarters to $6.55 Tuesday as investors bet its service will regain some favor with social-distancing-minded consumers. That gain was noteworthy considering Blue Apron had seen its stock plunge to just $2 in late February, from $150 in June 2017, after it reported another year of loss and declining sales and customer count.

Blue Apron’s Germany-based rival HelloFresh also saw its shares surge 11%. 

In another telling sign consumers are changing their behavior in response to the outbreak, grocery delivery sales through Amazon Fresh and Instacart, which delivers for retailers from Costco to New York’s Fairway supermarket, almost quadrupled between March 12 and 14 compared to the same period a year earlier, according to the most recent data from Rakuten Intelligence in a study of online receipts.  That far outpaced the year-to-date growth rate of 85% these two delivery services saw. 

About a third of consumers said they used online grocery pickup or delivery service in the week through Friday, from services provided by grocers including Walmart, Amazon and its Whole Foods unit, as well as Target, according to analyst Chuck Grom of Gordon Haskett, which surveyed 300 American households on Friday. More than two-fifths of those consumers who used those services said that was the first time they tried online grocery orders. 

Consumers aren’t ordering just groceries online. Overall, total ecommerce sales have risen more than a third in recent days, double the year-to-date pace, according to Rakuten Intelligence. That growth rate may pick up even more with apparel and shoe retailers from Nike to Urban Outfitters shutting stores and encouraging customers to buy online. 

Amazon recently said it’s adding another 100,000 jobs at its fulfillment centers and delivery network as it’s seen “an increase in people shopping online” due to the outbreak. The biggest online retailer also said it’s sold out of some household items.

Shopping grocery online isn’t the only thing that’s set to become more mainstream. Restaurants’ push in delivery sales also will get a bigger spotlight with chains from Starbucks to Chipotle removing seats or closing dine-in areas to accommodate only delivery or take out orders. Fast food giant McDonald’s said it’s “encouraging” all restaurants, mostly franchisee-owned, to move to drive-thru, delivery and walk-in take-out orders. The company said it’s also stopping the use of self-service beverage bars and kiosks. 

More than a quarter of consumers said in the Gordon Haskett survey on Friday that they increased their use of restaurant delivery services including DoorDash, Grubhub or Uber Eats in the previous week because of growing coronavirus concerns. More than half of those surveyed said they believe drive-through reduces exposure. 

Between Thursday and Saturday, U.S. food and restaurant delivery sales jumped 52% from a year earlier, more than double the 22% year-to-date average growth rate, according to Rakuten Intelligence data. 

If that habit takes hold, that will speed up the already promising food delivery sales.

Before the outbreak that began in China spiraled into the current global healthcare crisis and consumer behavioral change, a UBS study has already forecast convenience-seeking millennials will drive food delivery sales to rise an annual average of more than 20% to $365 billion worldwide by 2030, from $35 billion in 2018.

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