When the pandemic shut down indoor dining and kept people at home for more than a year, food delivery apps like UberEats, DoorDash and GrubHub boomed. Now with COVID-19 curbed in the U.S., those companies are hoping that growth is more than a bubble.
Why it matters: The app surge has reallocated a vast amount of money and jobs to the delivery economy. If food delivery continues to grow, that means restaurants will have to keep forking cash over to the platforms and gig work will become even more common.
"The apps are definitely going to hold onto some of the gains," says Daniel McCarthy, a business professor at Emory who has studied delivery apps. "The question is how much."
- Economists were projecting a deceleration in food delivery app growth in 2020. Instead they grew by 122%, per McCarthy's research.
Between the lines: Analysts thought the delivery app market was fairly saturated before the pandemic, but companies picked up scores of new users as the lockdown pushed people from new demographics — such as suburban residents and older people — to download food delivery apps.
- Existing users also started placing larger and more frequent orders because many of them were quarantining, and therefore ordering dinner for the whole family, Doordash chief financial officer Prabir Adarkar tells Axios.
- Total monthly food sales across the app steadily increased and reached nearly $60 million in December 2020, McCarthy found.
- Hiring has also boomed — delivery driving job postings increased 43% between February 2020 and June 2021, according to data from the jobs site Indeed provided to Axios.
Details: Lots of the workers taking those jobs are people laid off from other service jobs at restaurants and in retail at the beginning of the pandemic.
- Sarah Dygert was working as a server in Columbus, Ohio, but went to Doordash full-time after her restaurant shut down. "I actually really did miss the serving aspect," she says. "Working DoorDash you’re pretty much on your own."
- Still, Dygert liked the perks of being able set her own hours and made good money. She ended up getting her boyfriend and other family members to sign up to work for the platform, too.
- Now she's got a new remote desk job, but Dygert says she still picks up some Doordash hours here and there for extra cash.
What's next: McCarthy's research shows that the apps' rapid adoption of new users has dramatically slowed.
- At the same time, restaurant traffic is roaring back to higher levels than before the pandemic. The number of reservations was 46% higher in April 2021 than April 2019, per Yelp data.
But, but, but: The apps are attempting to hold ontotheir pandemic-era glory with new offerings that wade into broader e-commerce
- Many are adding verticals through which customers can get alcohol or groceries or toiletries delivered, betting that they can own last-mile delivery and take on the Amazon behemoth.