COVID-19 and Digital Resilience: Evidence from Uber Eats
— July 8, 2020
Findings underscore the importance digital platforms have in ensuring business continuity and providing future resilience
Using data collected between February 1 through May 1, 2020 from five U.S. cities — Atlanta, Dallas, Miami, New York City and San Francisco — the research demonstrates how, facing a collapse in their dine-in business, restaurants increasingly relied on Uber Eats during the pandemic. It also documents a dramatic increase in the rate at which new restaurants joined the platform to weather the economic shutdown.
“All of these factors point to the heightened importance of platforms like Uber Eats in the economy of the future,” said NYU Stern’s Arun Sundararajan, the Harold Price Professor of Entrepreneurship, who co-authored the study with NYU Stern PhD student Manav Raj and Uber Technologies data scientist Calum You. “COVID-19 is dramatically accelerating the transition to online commerce. Platform demand has been central to riding out the economic shock, especially for small businesses.”
Specific findings include:
- In March 2020, new small- and medium-sized restaurant sign-ups on the Uber Eats platform increased 2.7 times compared to historical monthly averages.
- Restaurants already using the Uber Eats platform that remained open through the lockdown experienced an average of 43% more app-based orders, an increase which was as high as 60% in San Francisco.
- The authors uncovered evidence of both a demand-side shock (increased app activity) and a competitive shock (surviving restaurants benefit from competitors shutting down) as driving these increases.
- Daily order counts grew despite an overall reduction in restaurant operating hours per day. For example, the order velocity per hour more than doubled in Dallas and New York City, and increased by over two-thirds in each of the five cities.
“The connection between platform-sourced demand and survival will be indelible, likely leading the survivors to double down on digital, seeing it as a critical source of resilience,” write the authors. “Because of social distancing, enhanced cleaning protocols, and consumer hesitancy, the costs of dine-in will increase significantly, making a digital channel all but essential for restaurant survival.”