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More than just food: DoorDash, Grubhub, Uber Eats adapted to COVID-19, now plot next moves

Delivery apps, which have seen explosive growth during the COVID-19 pandemic, are continuing to adapt to consumer demands for food, grocery items and other necessities to arrive at their doorstep.

DoorDash (DASH), Grubhub (GRUB) and Uber Eats (UBER) are three platforms that have benefited from the online, stay-at-home boom. In keeping with the disruptive "Amazon (AMZN) effect," these digital platforms are shaking up the delivery business, and looking ahead as the mass vaccination effort hits its stride.

DoorDash, which acquired Caviar at the end of 2019, currently boasts over 20 million consumers on the platform, fielding 273 million total orders in 2020 — up a staggering 233% compared to a year prior as takeout skyrocketed during lockdowns. The company saw $8.2 billion in marketplace gross order volume — a 227% surge from a year earlier.

Grubhub — the app behind brands like Seamless, Eat24, and Tapingo — says 30 million diners spent more than $9 billion in food sales in 2020 and donated more than $21 million dollars to organizations and communities in need of support.

Uber Eats’ growth continues to outperform, even in the fact of a drop in its parent company's ride-sharing business. Gross bookings were up 130% year-over-year as customers, unable to dine out, sought delivery. To compare, gross bookings for Uber’s ride sharing business plunged 50% year-over-year.

Over the past year, Uber Eats, which also owns Postmates, scored exclusive partnerships with food giants like Shake Shack (SHAK), solidifying its growing momentum in the delivery wars.

(Source: Edison Trends)
(Source: Edison Trends)

In fact, DoorDash remains the top food delivery app as of February 22, capturing 53% of U.S. market share — up a whopping 16% from the start of 2020, according to Edison Trends. The company says it’s confident that restaurants are reaching new customers thanks to the platform’s accessibility.

According to data cited by a spokesperson, 75% of participating restaurants agreed that they were able to reach a new audience with the DoorDash platform. Meanwhile, 65% found they were able to increase profits during the pandemic by partnering with the app.

And while OpenTable has seen a boost in reservations as mass vaccinations get underway, DoorDash has linked its services to restaurant solvency. “The odds of staying in business are 8x better for restaurants on DoorDash, compared to all U.S. restaurants," a spokesperson told Yahoo Finance recently.

And the app's continued success may spell bad news for its competitors in the long run. Uber Eats and Grubhub — representing 32% and 14% of the U.S. market share, respectively — saw shares decline throughout the course of the pandemic.

Restaurants quickly adopting food delivery

The plethora of delivery options, however, is a boon for struggling restaurants and consumers. According to food analytics company Tastewise, 73% of all U.S. restaurants are on at least one delivery platform today, with 68% on Doordash, 61% on Grubhub and 47% on Uber Eats.

Although DoorDash has experienced the fastest growth in recent months, it is still right on par with competitor Grubhub when it comes to year-over-year expansion. Both platforms saw a restaurant increase of 6% verse May 2020.

Tastewise added that momentum for delivery continues to swing to the upside. According to the data, only 11% of all U.S. restaurants were available on all four major delivery platforms in January 2021, but that number quickly increased to 16% in early April.

Overseas, retail investors have fed into the hype of delivery giants, although performance has weakened. On March 31, shares of Amazon-backed Deliveroo opened for trading on the London Stock Exchange. Yet the stock quickly swooned, embarrassing the company and raising pointed questions about the future.

More than just food

In February, Uber announced it would buy the alcohol delivery service Drizly
In February, Uber announced it would buy the alcohol delivery service Drizly

One of the undeniable trends shaping the delivery business is the consumer's defining need to get what they want, when the want it, prompting industry participants to seek alternative ways to expand beyond food. Uber's $1.1 billion deal for Drizly back in February underscores how the brand best known for ride-sharing is branching out aggressively.

“In a world where a consumer can go to a centralized spot [for delivery needs], you're starting to see the other categories and the expectation from the consumer side that you should be able to get them instantly," Drizly co-founder and CEO Cory Rellas told Yahoo Finance recently.

Uber Eats also recently expanded its partnership with prescription delivery company Nimble to Chicago and Atlanta at the end of March.

But they're not the only ones moving beyond their core competency: DoorDash accelerated its convenience category at the height of the pandemic to include 7-Eleven, Wawa, Casey’s General Store, and Circle K. And last August, the app brought CVS (CVS) and Walgreens (WBA) into the fold — launching DashMart, a digital convenience store, to allow local businesses and restaurants to provide household essentials.

In March, DoorDash announced its plan to deliver at home COVID-19 tests with Vault Health and Everlywell. And The Wall Street Journal reported recently the company's plans to “launch its own rewards credit card” with offers from more than ten banks and financial tech companies to issue it.

“In many ways, this pandemic has sharpened our dedication to empower local economies, and deepened our obsession with serving the needs of our customers,” Liz Jarvis-Shean, DoorDash's VP of communications and policy, told Yahoo Finance in an email.

Community Support

DoorDash Partnerships
DoorDash Partnerships

Delivery apps have also strived to connect with individual communities by being more charitable, bridging the gap between local restaurants and socially distanced diners.

At the start of the shutdown, Grubhub created its Community Relief Fund that raised over $15 million to provide financial relief for restaurant partners and drivers. The platform also partnered with the Restaurant Strong Fund on a $2 million initiative to grant eligible restaurants $10,000.

“We’ve helped restaurants attract, retain and maintain customers during these challenging times, and we’ll keep working to earn their business and support them through the recovery and beyond," Kevin Kearns. Grubhub's SVP of restaurant network, told Yahoo Finance in an email.

Uber Eats launched a similar campaign in early February titled Eat Local. As part of the initiative, Uber pledged to spend $20 million to support local restaurants financially impacted by the pandemic.

DoorDash, using its social impact arm Project Dash that launched back in 2018, aimed to tackle the food insecurity crisis that was highlighted throughout the pandemic. Through partnerships with government agencies and nonprofit organizations, DoorDash delivered approximately 13 million meals to communities hit by food insecurity and emergency frontline workers in the U.S. and Canada.

Additionally, the company has pledged to provide 1 million deliveries in 2021 through Project Dash as part of its five-year, $200 million dollar Main Street Strong Pledge to uplift local communities.

Brooke DiPalma is a producer and reporter for Yahoo Finance. Follow her on Twitter at @BrookeDiPalma.

Alexandra is a Producer & Entertainment Correspondent at Yahoo Finance. Follow her on Twitter @alliecanal8193.


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