Using anonymized data provided by DoorDash, Instacart and Uber Eats, a new study by UC Riverside found app-based delivery services provided a $19 billion economic lifeline for California restaurants, grocers and other merchants during the height of the pandemic. While this only looks at one state, it’s a notable look at delivery volumes during the delivery industry’s COVID-driven sea change.
From the third quarter of 2019 to the third quarter of 2021, the numbers of grocers and restaurants using these platforms nearly doubled to 151,311 across California, and merchant revenues on the platforms tripled. From the third quarter of 2019 to the third quarter of 2021, restaurants and merchants earned $19 billion.
In early 2020, millions of Californians were forced to stay home due to the pandemic, creating unexpected hardship for restaurants, grocers and small businesses that were suddenly without customers. Merchants, grocers and restaurants across the state turned to app-based platforms to keep their businesses alive and continue providing their goods and products to Californians. As a result, the average revenue for merchants on app-based platforms nearly doubled to $21,000 during the pandemic.
Of course, any modern-day restaurant operator knows delivery services charge restaurants a significant portion of each order for customer origination, delivery fulfillment or both—meaning these new volumes coming through delivery apps also come with higher merchant expenses than orders not originating or being fulfilled through third-party providers.
“As a small business owner, you learn to adapt to things on the fly, which is what I’ve done for 10 years,” said Rahim Ali, owner of Green Olive restaurant in Los Angeles. “But when the COVID-19 pandemic hit, I didn’t know how we would survive. I worried about how we could pay our staff, how we could keep our order minimums with vendors who relied on us and frankly, how we could keep our doors open. Luckily, app-based delivery services were a lifeline that literally saved our business.”
The School of Business at UC Riverside study found:
- Over a two-year period, from the third quarter of 2019 to the third quarter of 2021, the number of restaurants, grocers and merchants who utilized the platforms nearly doubled, from 77,707 to 151,311, while merchant revenues on the platforms tripled.
- From the third quarter of 2019 to the third quarter of 2021, restaurants, retailers and other merchants earned around $19 billion through app-based delivery platforms in California.
- The biggest growth in the number of merchants who used the platforms over the two-year period came in relatively smaller regions within the state (such as El Centro, Hanford, Redding and Madera). Likewise, revenue growth was strongest in regions including Hanford, Merced, Visalia, Redding and Madera.
The report also details merchant revenue and growth across each of California’s metropolitan statistical areas from the third quarter of 2019 to the third quarter of 2021.
“The Latino Restaurant Association is dedicated to supporting and promoting restaurateurs, small businesses and the entire Latino restaurant community,” said Lilly Rocha, CEO of the Latino Restaurant Association. “We are proud to work with our community of innovative entrepreneurs during the COVID-19 pandemic to think creatively about how to keep their doors open. App-based delivery services have played a crucial role in ensuring that Latino restaurateurs are able to continue offering their services to communities across the state.”