Indulging in food delivery without the debt

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They’re convenient, but left unchecked, food delivery services can spoil your budgett

By Tamara E. Holmes  |  Published: October 12, 2017

Personal Finance Writer
Writes regularly about personal finance and health


Indulging in food delivery without the debt

Many
Americans have begun to count on food delivery services to take the pain out of
mundane meal-planning. But much like going grocery shopping when you’re hungry, you may end up spending more when you are ordering food to be delivered than you if you had filled your cart yourself.

For
those who hate to cook or go to the grocery store, the booming food delivery
market may seem like a godsend. After all, it brings all your dining needs to your front door. However, food delivery services may spoil your budget or
cause your credit card balance to boil over if you aren’t careful.

Food
delivery is revolutionizing both the restaurant and grocery industries.
According to 2017 research from Morgan Stanley, the restaurant
food delivery market could grow from the $30 billion it is today to $220
billion by 2020, which explains why an increasing number of startups such as
Uber Eats and GrubHub are racing to deliver food to your door.

Meal delivery services are also transforming the grocery
shopping experience, as services such as FreshDirect, Blue Apron and
AmazonFresh will deliver ingredients and recipes so you can make your healthy dishes
at home.

There
is no question that having food delivered to your door can change the way you
eat (hopefully for the better!), but if left unchecked, the opportunity is ripe
for overspending. Here’s how to indulge
in food delivery without going over budget, or worse, going into debt.

Risk: Maxing out your food
budget.

If
you’re on a tight budget, food delivery is probably not a good idea.

According
to Lux Research, consumers are willing to pay 11 percent more on average for the convenience
of online grocery delivery and restaurant takeout. Some services require you to
spend either a fixed or a minimum amount in addition to any delivery fees, plus
the food prices tend to be higher than what you’d pay at your local grocery
store. For example,
FreshDirect has a $40 minimum order and a $6.99 delivery fee, not including any
delivery tips.

“Don’t forget that ordering takeout from a food delivery service
is in the same spending category as dining out at a restaurant in person – it’s
a luxury, not a necessity.”

Katie
Ross, manager of education and development and housing for American Consumer Credit Counseling, based in Auburndale, Massachusetts, experienced this
firsthand when she tried out meal delivery services. “I think the
concept is pretty neat, but I spent more than what I would have at the grocery
store,” she says.

Remedy: Calculate the difference in
cost.

Compare your weekly grocery bill to the amount you would spend
when using meal delivery services or having restaurant food delivered.

A study
of meal delivery services by comparison-shopping site Consumer Affairs found
that the average cost
was $8 to $10 per person per meal. In comparison, the U.S. Department of Agriculture states that a moderate weekly grocery budget for a
person aged 19-50 would run between $59-$69 – roughly $2 to $3 per meal.

You
may decide the extra cost of meal delivery is worth it, but make sure you’re
not stretching yourself too thin.  Also,
“don’t fall for upselling,” Ross advises. “Many of these meal service sites
upsell consumers with wine and kitchen gadgets.”

Risk: You underestimate your discretionary spending.
Every budget consists of “needs” and “wants.” However, some people mistakenly lump restaurant delivery
services into the “needs” category because they are a source of food, says
Avery Breyer, author of “Your Road to Wealth Starts Here: A Simple Plan for
Everyone to Get Out of Debt and Stay Debt-Free Forever.”

Remedy: Keep restaurant delivery in perspective.
“Don’t forget that ordering takeout from a food delivery service
is in the same spending category as dining out at a restaurant in person – it’s
a luxury, not a necessity,” Breyer says. That doesn’t mean you shouldn’t
indulge; it simply means you should budget for it out of the money you have set
aside for extras.

“A budget isn’t sexy, but it’ll free you to
completely enjoy yourself when you do indulge in using a food
delivery service, since you’ll know for a fact that you can afford it,” Breyer
says. You might also designate certain days that you utilize the service, such
as your busiest day at work, so you are buying yourself the gift of time.

Risk: Food deliveries bloat your
card balances
.  
Some meal delivery services require a weekly or monthly
commitment to a subscription plan that is automatically renewed.

If you put
your plan on a credit card and don’t pay off the balance at the end of the
month, you could be paying interest on your meals long after you’ve consumed
them.

Remedy: Switch to debit if food delivery costs are adding up.
Paying for food delivery
services with a credit card can give you a way to rack up rewards or points,
but if you tend to carry a balance, use a debit card instead,
says Ross.

Risk: You may be stuck paying for meals you don’t eat.
A meal delivery subscription
can be convenient, but if you have to go out of town or end up working late all
week, you may not be able to make a last-minute change to your delivery
schedule. Many of the services require advance notice of scheduling changes.
Some even charge restocking fees.

For example, Fresh Direct charges consumers
100 percent of the cost of perishable goods and 25 percent of the cost of
packaged goods for orders canceled after a specified deadline that is emailed
to clients detailing their orders.

Remedy: Read the fine print, and plan ahead. 
If a
lot of travel is in your near future or your schedule is likely to fluctuate, it
might be prudent to cancel a meal delivery service subscription. 

“Call or email the company, and
they will take you off your plan. This keeps you from paying for a service
you don’t want,” says David Chandler, a research expert from Consumer
Affairs. However, make sure you understand the cancellation policy, and know
how much notice you must give before changing or canceling your order. 

Food
delivery services can enhance the lifestyle of those too busy to cook or who
don’t like spending time in the grocery store. But use them with the discretion
that you would apply to any luxury, experts say. 

“Figure out how much money you can
afford to spend on treating yourself each month,” Breyer says.

See related: 7 tips to use budget apps safely, Which cards maximize rewards at grocery stores?


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