Food delivery boom last forever

Will the food delivery boom last forever?

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Think back to the end of last year, when the word “fabulous” described your rideshare business. You were busy with riders all the time, and times were good … better than we realized at the time.

If you worked for Uber, you might have been annoyed on occasion, such as when the app “accidentally” defaulted to include Uber Eats. You’d get these calls to deliver, and think to yourself, “WHY would I do that??”

The idea of going through all the extra work of delivery—the parking, the pickup, the delivery (more parking), and the less than satisfactory compensation—was probably enough to make you cut off all those Uber Eats calls.

That was then.

Along came COVID-19, and away went all the interesting passengers you used to get. Bars and restaurants were closed, and no one was going to work in an office or needing a ride to the airport anymore.

Suddenly, delivering food seemed way more appealing. You could still make money, you could remain comparatively safe from the virus with no people in your car, and … there were TONS of delivery requests. There were also more companies than you knew about, all ready to pay you to drive for them.

There’s no mystery as to why there’s been an upswing in the delivery business. 

People under orders to stay at home are much more likely to pay extra money to get their favorite restaurant food and groceries delivered when there’s a pandemic raging outside.

The question is, will this delivery boom last? And beyond that, can drivers make money in delivery, or use delivery as an add-on to the slowly growing rideshare business, at least for now?

In this post, we’ll cover these questions and examine:

  • The shift toward delivery in the gig economy
  • What drivers are making
  • What might happen to delivery after the pandemic
  • What part delivery could play in your future

The shift toward delivery in the gig economy

If the business community is any indication (after all, it is about the money), delivery companies are hotter than ever at the moment. 

On June 10, after being in negotiations to buy Grubhub since mid-May, Uber learned that the deal had fallen through. Within a day, Grubhub got scooped up by Just Eat Takeaway, a Netherlands-based delivery company that paid $7.3 billion to acquire the All-American delivery outfit. 

The next day, there was more news. The umbrella company for KFC and Taco Bell, Yum! Brands, Inc., sued Grubhub in an effort to get back $200 million in stock that Grubhub had agreed to give Yum! in a 2018 contract. 

If you want to read more about that, you can check the details here. Warning: Those details are NOT pretty. It turns out that delivery companies are just as hungry for money as rideshare giants.

As the delivery companies vie to buy one another and go out of their way to punish restaurants with exorbitant fees for delivery services, these companies are proving to be just as mercenary and conniving as any other gig economy company. But … are they as successful as they are shark-like?

The answer is yes. The COVID-19 crisis has made it so. 

According to the consumer analytics company Second Measure (www.secondmeasure.com), the food delivery apps collectively experienced a 100% year-over-year increase in their gross income. 

Gulp. That’s a lot of meal deliveries. This graph from a June 15th Second Measure blog post shows just how quickly the companies’ business multiplied during the pandemic. 

The delivery companies’ income is expanding, but so are their costs. A May 8, 2020 article in Motley Fool reports that Grubhub had a 24% increase in “active diners” during the first quarter of 2020, but still had a loss of $33 million. Like Uber and Lyft (as well as all businesses), these companies have to figure out how to turn a profit. 

Let’s hope they do, so they remain a viable source of income for us drivers.

What drivers are making?

Paying drivers is part of the delivery companies’ costs, but since it can also be our way of earning income, let’s look more closely at it. 

Like we said before, delivery driving is different and, in many ways, more challenging than rideshare. Probably the worst aspect is the poor return of money for time spent working.

Yet even with all the waiting in restaurants, searching for places to park, and fumbling with heavy and leaking delivery bags, delivery drivers have been making some nice cash lately. 

We collected data from our drivers, and found the hourly rate creeping up to a point where it reaches or exceeds rideshare rates, depending on where you drive. Take a look at the graph and you’ll see what we mean. 

Those annoying Uber Eats calls you dreaded back in the day probably didn’t earn you this much, but it’s different now. Delivery companies need drivers more than ever. You’ve undoubtedly noticed tons of job postings urging people to drive for delivery apps, and they’re trying to lure us in. 

Look at what’s happened to the sheer number of delivery drivers working in the US. According to this article from QZ:

“From January 2018 to January 2020, the number of workers in the “courier and messenger” industry jumped from 690,000 to 850,000, according to recently released data from the Bureau of Labor Statistics.”

Delivery companies have even managed to entice more than a few rideshare drivers to ease over the Great Divide into delivery, and they really want to keep those workers with real-life experience. 

So … they entice us with bonuses and surge pricing, just like rideshare does when they’re desperate for drivers..

As you can see from our data, the end result of delivery’s efforts to woo us has turned out to be a pretty sweet arrangement for drivers. The hourly rate, as of late May 2020, was up to $17.79. For a figure that’s based on a wide selection of markets nationwide, that’s rather substantial. 

But before you get too attached to your Grubhub bag or DoorDash card, let’s think a few steps ahead.

What might happen to delivery after the pandemic?

The next few months will be interesting, as the general population emerges from those stay-at-home orders. Bars and restaurants will slowly reopen, and companies may drag people out of their sweatpants and suit them back up into their business casual office attire. 

Will people still rely on delivery after the pandemic? It looks that way. People have innumerable opinions about what life after COVID-19 will look like, but most agree that there will be a new normal and delivery will be a huge part of it. Why?

  • People have grown accustomed to spending more time with family, at home, and getting their favorite foods delivered is extremely appealing. Most analysts project that groceries, as well as restaurant food, will continue to be delivered to customers to a much greater degree than before.
  • Delivery companies are going out of their way to make themselves seem indispensable to both the eateries and their customers, in some cases even waiving their fees during the pandemic. It’s unlikely that will continue for long, but they might hook people in just enough so they’re willing to pay for the convenience.

Whether the soaring demand for grocery and food delivery will continue depends on a number of factors, such as how strong consumer earnings are, and whether the desire for delivery exceeds the need to economize.

In the meantime, there’s still a high demand for drivers. And in case you’re wondering, even as delivery companies struggle to become profitable, it’s unlikely that they’ll cut driver pay, at least not right away. 

They really do need drivers now, and they know their business model won’t work without them. Drones and autonomous delivery vehicles aren’t available yet, and won’t be for some time. So there’s plenty of room for you to make your mark, and some cash, as a delivery driver.

What part will delivery play in your future?

After more than three months of being locked up, the world must be eager to emerge, or so we hope. But the unfortunate truth for purists among rideshare drivers might not be easy to face. 

Lots of large corporations plan to keep employees working from home for some time, at least until fall. Some have even stated they won’t welcome back on-site employees until 2021. Restaurants and bars are starting to reopen throughout the country. According to a June 15, 2020 article in the restaurant news publication Eater, 44 states have allowed restaurants to reopen for dine-in service of some kind, or intend to do so soon. 

Most states are only allowing restaurants and bars to open at limited capacity. No one knows when these establishments will be back to shoulder-to-shoulder, Uber and Lyft-loving levels of crowdedness. This will mean the delivery business will continue to thrive, but the rideshare side of things will recover rather slowly.

As reopening gets rolling, drivers (and passengers!) have noted there are more surges than before. This has been and always will be driven by a lack of drivers and a growth of demand, and we’ve got both during this delicate period. 

While this is a benefit, it’s probably also a temporary enticement, as companies try to get drivers off unemployment and back behind the wheel. Also, in this new and strange world, the surge prices only barely make up for the long drives in between rides. Rideshare, while now becoming almost viable, still isn’t the same.

What can you do?

If you want to earn at the same levels you did before COVID-19 descended upon us, you’re going to have to get creative. You’ll still get rideshare trips, for sure, but there probably won’t be as many as there used to be. Here is our recommendation:

Create a hybrid gig—do both delivery and rideshare!

Good drivers are like scouts: “always prepared.” Making a living in the gig economy is about much more than whether you prefer passengers or are digging delivery driving. The smartest strategy is to do both, on as many platforms as you want.

You might hear or read that Postmates does better in your area than Uber Eats or Doordash. Or, it might be Grubhub that’s huge in your area … or that rideshare on Lyft is way hotter than Uber right now.

The performance of these services is going to vary depending on where you live, what time you work, and how many hours you can put in. Don’t take anyone’s word for it; try it for yourself. It doesn’t cost you anything to join the different platforms. You can experiment with as many as you like, and test out the results.

As you do this, though, don’t just choose your favorite platforms based on which one gives you the least hassle or the coolest-looking delivery bag. Track your earnings for each platform, and see which one is bringing you the highest return in terms of your hourly rate. That’s the best way to sustain yourself in this or any economy—going where it pays to spend your time.

So, with all these choices and all that activity, how can you track your earnings? We’re glad you asked because we have the perfect answer: GRIDWISE.

Gridwise to the rescue

With the Ultimate Rideshare and Delivery Assistant riding right there with you, it’s much easier to track earnings, mileage, and deductions from all the driving and delivery apps you use. 

You’ll also get announcements about events, airport info, and weather bulletins. On top of that, you’ll be well-supplied with all the latest news for drivers from our blog and J and Brandon’s podcast, plus tons of traffic-stopping benefits on our Perks tab.

Wait—what? You don’t have the app? Well download it now, because it’s a must for making the most out of your gig-driving life.

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