How delivery services like Uber Eats could keep the 'most exposed' small businesses afloat

coronavirus pandemic. “data-reactid =” 16 “> As states and cities in the United States shut down non-essential services, including dining at restaurants and bars, eateries turn to takeout and delivery as their only means of keeping their heads above water. coronavirus pandemic.

UBER). & nbsp; “data-reactid =” 17 “> And that’s why many restaurants sign up for the on-demand delivery service Uber Eats (UBER).

Speaking to investors on March 19, Uara CEO Dara Khosrowshahi said that between March 12 and March 19 alone, Uber Eats saw the number of restaurant self-service registrations increase 10x more than in a normal week.

The delivery service’s small and medium business sales team saw a similar increase, with 2.5x more restaurants for Uber Eats per day than usual during an average week, Khosrowshahi explained.

Uber Eats sees an increase in the number of restaurants signing up for its service amid city and state closings in the United States (Photo by Jaap Arriens / NurPhoto via Getty Images)

“I think this is when restaurants say we need rising demand,” Ronald Josey, an analyst at JMP Securities, told Yahoo Finance. “And right now, the only way to get increasing demand, or a way to get increasing demand, is to advertise and / or spread across these apps.”

Restaurants and bars have been financially hammered by closings from New York to California, and with states like Massachusetts, Illinois, Pennsylvania, Ohio, and Texas, the establishments are following an uncertain future.

According to OpenTable data, diners in the network of 60,000 international restaurants dined on March 9 from 10% to 19% year-on-year, dropping further on March 22 to between 95% and 100%. On March 16, New York, New Jersey and Connecticut ordered that restaurants be closed for customers to dine. California followed later, with several other states making similar moves in the days that followed. “Data-reactid =” 43 “>According to OpenTable data, diners in the network of 60,000 international restaurants dined on March 9 from 10% to 19% year-on-year, dropping further on March 22 to between 95% and 100%. On March 16, New York, New Jersey and Connecticut ordered the closure of restaurants to allow customers to dine. California followed later, with several other states making similar moves in the days that followed.

Only restaurants in Australia saw declines of less than 90%, while dinner customers declined only 66%. However, on March 24, Australia ordered the closure of restaurants and bars with dining options, allowing for only takeout and delivery.

Coronavirus shutdowns hurt industries across the economy, from auto dealerships and salons to specialty stores like Apple and Nike. But the worst hit are the travel and restaurant industry.

“Restaurants are the most visible group, one of the most visible small businesses out there,” said Josey.

An Uber Eats delivery person with a protective face mask rides a bicycle while the spread of coronavirus disease (COVID-19) continues in Amsterdam, the Netherlands, March 25, 2020. REUTERS / Eva Plevier

An Uber Eats delivery person with a protective face mask rides a bicycle while the spread of coronavirus disease (COVID-19) continues in Amsterdam, the Netherlands, March 25, 2020. REUTERS / Eva Plevier

“You have perishable items, you have payroll and you have to pay rent, and if you don’t get the orders, it’s very difficult. And so I think with people who don’t go out, generally speaking, and especially the social distance that is going on, food delivery is just something you will see more and more of. “

Probably eat see a boost. “data-reactid =” 68 “> The increase in business to delivery services has also not been lost to the CEOs of those companies. In early March, Uber’s Khosrowshahi told the Morgan Stanley 2020 Technology, Media & Telecom Conference in San Francisco that although the company’s riding company is likely to receive a blow during the outbreak, Probably eat see a boost.

“Certainly, our trips to the extent that people stop leaving their homes will become a hit, while our company Eats will likely benefit from it,” he said.

FAT), a franchise that partners with Fatburger and Ponderosa Steakhouse, among others, told Yahoo Finance that franchise partners with which FAT is partnering are seeing an increase in the number of customers getting takeout. “data-reactid =” 70 “> Andrew Wiederhorn, CEO of FAT Brands (FAT), a franchise company that works with companies like Fatburger and Ponderosa Steakhouse, told Yahoo Finance that franchise partners with FAT are seeing an increase in the number of customers getting takeout.

“We are seeing an increase in delivery with our fast casual brand,” said Wiederhorn. “Normally we do 40% of our business on the way or delivery, and today that’s probably 10 points, which is strong.”

While delivery services are booming, they often have a controversial relationship with restaurants and bars.

Delivery and processing costs of companies ranging from DoorDash to Uber Eats have become a major bottleneck for restaurant owners and regulators alike. Such fees can go up to 15% to 30%, depending on the service a restaurant works with, and can lead to unprofitable deliveries.

10% limit on delivery costs. Business groups in other states including Chicago also push back against delivery costs, which they consider to be onerous. “data-reactid =” 79 “> Dining options have pressed these fees as delivery services have risen steadily. In New York City, councilors have called for a 10% limit on delivery costs. Business groups in other states including Chicago also push back against delivery costs, which they consider to be onerous.

Credit: David Foster / Yahoo Finance

Credit: David Foster / Yahoo Finance

Delivery service entrepreneurs, meanwhile, say they help showcase restaurants they might not otherwise see, and take advantage of the ads offered by their apps.

However, in a dramatic, albeit temporary shift, delivery services are increasingly abandoning or delaying their normal delivery and processing costs to enable restaurants to remain solvent.

waiving fees for independent restaurants in the United States and Canada, while DoorDash says it will waive or cut fares until April. Grubhub (FOOD), meanwhile, said it will suspend collection of up to $ 100 million in fees, although restaurants will eventually have to pay them back. “data-reactid =” 102 “> Uber Eats said it will take a while, waiving fees for independent restaurants in the United States and Canada, while DoorDash says it will waive or cut fares until April. Grubhub (FOOD), meanwhile, said it will suspend collection of up to $ 100 million in fees, although restaurants will eventually have to pay back.

However, not all restaurants will be able to lean on delivery in the long run. Wiederhorn explained that some sites simply do not have the cash flow to remain open under the current circumstances.

For those who can survive, the question remains: will the bump of the coronavirus linger for delivery services?

“I think when you have such times of crisis, any service that can minimize any friction will have lasting power,” said Josey.

$ 4.4 million as of Q4 2019. “data-reactid =” 107 “> Delivery services are huge in their own right. As of the fourth quarter, Grubhub had 22.6 million active diners ordering through the service last year. Uber Eats, meanwhile, recorded a 73% year-over-year increase. from gross bookings, jump to $ 4.4 million as of Q4 2019.

And those numbers are only expected to increase as a result of the virus. In other words, the days of using the delivery menu filled in the kitchen’s messy drawer can finally end.

@DanielHowley.“data-reactid =” 115 “>Do you have a tip? Send an email to Daniel Howley at [email protected] or [email protected], and follow him on Twitter at @DanielHowley.

Twitter, & nbsp;Facebook, & nbsp;Instagram, & nbsp;Flipboard, & nbsp;SmartNews, & nbsp;LinkedIn,& nbsp; YouTube, andReddit.“data-reactid =” 116 “>Follow up on Yahoo Finance Twitter, Facebook, Instagram, Flipboard, SmartNews, LinkedIn, YouTube, and reddit.

Leave a Comment