Instacart (CART) , which surged in popularity during the COVID-19 pandemic because of its contact-free grocery delivery, missed the bar on its sales during the holiday season in 2024.
Instacart’s fourth-quarter earnings report for 2024 revealed that it earned $883 million in total revenue during the quarter, which is a 10% increase compared to the same time period in 2023, but it fell short of analyst estimates of $891 million.
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The amount of revenue the company earned totaled $616 million, up 10% year-over-year, however, it missed analyst estimates of $623.4 million.
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In addition, the average amount of money that Instacart customers spent per order (average order value) also declined by 1% year over year.
Instacart unveils a grim outlook amid changing consumer behavior
During an earnings call on Feb. 26, Instacart Chief Financial Officer Emily Reuter said the company expects the average order value to decrease during the first quarter of 2025.
“We also expect average order value to decline year over year, primarily driven by restaurant orders and our new $10 minimum basket feature, resulting in orders growth outpacing GTV (gross transaction value) growth in the period,” said Reuter during the call.
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Shortly after Instacart released its latest earnings, its stock fell by 12% on Feb. 26, the worst stock decline it has faced so far.
Instacart’s disappointing revenue and decrease in average order value comes during a time when many consumers are drastically changing their shopping habits as they face inflated prices for groceries.
The Consumer Price Index (CPI), which measures the monthly change in prices U.S. consumers pay, increased 0.8% for groceries between December 2024 to January 2025.
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According to a new survey from LendingTree, 61% of Americans said that they have stressed about paying for groceries in the past month. Also, 88% said that they have adjusted their grocery shopping habits, an increase from the 85% from the same survey in 2022.
In an effort to keep their grocery bill low, 44% said that they are buying more generic brands, while 38% said they are sticking to their food shopping lists and 29% said they are keeping a sharper eye on prices.
Consumers are growing sick of delivery fees
Consumers are also starting to change their attitude about delivery services as they face higher delivery fees and more pressure to automatically tip drivers. This trend poses a threat to the future of grocery delivery.
Some Instacart users have even taken to social media to express frustration over being charged high service fees for their orders.
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It is important to note that Instacart, Uber Eats, DoorDash and Grubhub offer paid memberships to reduce these fees.
A new survey from Gridwise found that 46.8% of consumers believe that grocery delivery prices are too high, while 55% said they reduced their grocery delivery orders due to cost concerns.
Also, 58.2% of consumers said they are likely to return to shopping at physical store locations if delivery becomes more expensive.
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