As states and cities across the U.S. shut down non-essential services, including dining in at restaurants and bars, eateries are turning to take-out and delivery as their only means to stay afloat through the coronavirus pandemic.
And that is leading many restaurants to sign up for on-demand delivery service Uber Eats (UBER).
During a March 19 investor call, Uber CEO Dara Khosrowshahi said that Uber Eats alone saw a 10x increase in the number of self-serve signups by restaurants between March 12 and March 19 than it does during a normal week.
The delivery service’s small and medium business sales team saw a similar uptick, adding 2.5x more restaurants for Uber Eats a day than it does normally during an average week, Khosrowshahi explained.
“I think this is the time when restaurants are saying, we need incremental demand,” JMP Securities analyst Ronald Josey told Yahoo Finance. “And right now the only way to get incremental demand, or a way to get incremental demand is through advertising and, or, being distributed on these apps.”
Restaurants are getting hammered
Restaurants and bars have been financially hammered by lockdowns from New York to California, and with states like Massachusetts, Illinois, Pennsylvania, Ohio, and Texas following suit, the establishments face an uncertain future.
According to data from OpenTable, eat-in diners across its network of 60,000 international restaurants saw a year-over-year decline of between 10% and 19% on March 9, which further collapsed to between 95% and 100% as of March 22. On March 16, New York, New Jersey, and Connecticut ordered the closure of restaurants to dine-in customers. California later followed suit, with several other states making similar moves in the days that followed.
Only restaurants in Australia were seeing declines of less than 90%, with dine-in customers falling just 66%. On March 24, however, Australia ordered the closure of dine-in restaurants and bars, allowing for take-out and delivery only.
Coronavirus shutdowns are hurting industries across the economy from car dealerships and salons to specialty retailers like Apple and Nike. But among the hardest hit are the travel and restaurant industries.
“Restaurants are the most exposed group, one of the most exposed small businesses out there,” Josey said.
“You have perishable items, and you have a payroll, and you have rent to pay, and if you don’t get the orders it’s really hard. And so I think that, with folks not going out, broadly speaking, and certainly the social distancing that’s happening, food delivery is just something that you’re going to see more and more of.”
The increase in business to delivery services hasn’t been lost on those companies’ CEOs, either. In early March, Uber’s Khosrowshahi told the Morgan Stanley 2020 Technology, Media & Telecom Conference in San Francisco that while the company’s ride-hailing business is likely to take a beating during the outbreak, Eats will likely see a boost.
“Certainly our rides business to the extent that people stop leaving their house will take a hit, while our business Eats will probably actually benefit,” he said.
Andrew Wiederhorn, CEO of FAT Brands (FAT), a franchising company that works with the likes of Fatburger and Ponderosa Steakhouse, told Yahoo Finance that franchise partners FAT works with are seeing an increase in the number of customers who get takeout.