As COVID-19 cases decline and pandemic habits fade, demand for food delivery services has remained surprisingly robust. After booming during the worst of the pandemic, analysts and executives alike expected a significant slowdown for food delivery providers. However, impressive earnings from DoorDash and Uber’s food delivery business, UberEats, shows that there are still plenty of growth opportunities for the sector.
The shift in consumer behavior has also opened the door for retailers to dive deeper into grocery delivery. Food delivery apps have taken advantage of the opportunity, striking partnerships with giant grocery chains to diversify their businesses and capitalize on the growing demand for delivery within the food industry. Exponential growth experienced during the start of the pandemic is unlikely to be matched, but consumer purchasing behavior toward food services has likely shifted enough to stick around in a post-pandemic-environment.
Related Stocks: DoorDash, Inc. (DASH), Uber Technologies, Inc. (UBER), Just Eat Takeaway.com N.V. (GRUB), The Kroger Co. (KR), Albertsons Companies, Inc. (ACI)
DoorDash, UberEats in a Post-Pandemic Environment
Despite expectations of a post-pandemic slump for major food delivery providers like DoorDash and UberEats, recent performance in the sector illustrates the fact consumer behavior has gone through a permanent shift and there are plenty of growth opportunities for the industry moving forward.
DoorDash reported earnings that beat estimates and sent shares soaring 24% after the market close. In the fourth quarter, DoorDash saw higher-than-expected consumer retention and new customer growth that helped boost revenue 34%, per Reuters. The company also projected earnings in the break-even range of $500 million for fiscal 2022, higher than forecasts of $455.1 million.
The number of active monthly DoorDash users climbed to a record 25 million, up 22% year-over-year according to MSN. Further, the number of orders rose to 369 million, 35% higher than the fourth quarter in 2020 and the value of those orders rose 36% to $11.2 billion compared to the same period a year prior.
Uber’s food delivery business, UberEats, is also showing signs of growth in a post-pandemic environment. The service posted the its first adjusted EBITDA profit of $25 million, which indicates the company is able to scale the once-loss making operation against strong competition like DoorDash, writes The Guardian.
As demand for travel plummeted during the depths of the pandemic, delivery emerged as a key segment to keep Uber afloat. Steady delivery bookings signal that a rebound in traditional rides has not come at the expense of food delivery, with consumers sticking to the service even as the economy reopens.
The New York Times reports that Uber Eats users rose to 118 million in the fourth quarter, a 27% increase from the same quarter last year.
It appears these delivery companies will continue to experience steady growth…
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