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Delivery services are getting a boost during the COVID-19 recession

The impact of COVID-19 is devastating. Now, it is not a question of whether the coronavirus pandemic will cause a global economic downturn. The damage has made. It is about how much the economy will shrink.

The numbers are depressing

The Dow’s closed at 19,173 points last Friday, the lowest since December 2, 2016. A few weeks ago, in mid-February, the Dow’s was still at its highest level, reaching close to 30,000 points.

There seems no hope for a quick rebound. More states are joining California to pause non-essential businesses and urge/order residents to stay home, adding more shutdowns and layoffs. Hotels, restaurants, airlines, and retailers, for example, warned they might have to lay off millions of workers unless they received hundreds of billions of dollars in emergency funds.

On Sunday, the highly-anticipated emergency economic rescue plan failed to move forward in a 47-to-47 vote in the Senate. In response, the Asian markets and the U.S. stock futures plunged on Monday.

By estimations, the U.S. economy might see the worst slowdown on record in upcoming months:

·      Oxford Economics predicts the U.S. economy will shrink at an annual rate of 12% in the second quarter of 2020.
·      JPMorgan expects a contraction of 14% in the second quarter.
·      Goldman Sachs warms a stunning 24% drop.



Restaurant delivery gets a boost

While states might take different measures as they order a “lockdown,” residents are generally expected to follow the social distancing order to avoid close contact with others. Even though people are expected to work from home except for essential personnel, in most cases,

·      Residents may go to grocery stores, convenience stores, gas stations, and pharmacies.
·      Restaurants are closed for dine-in services but can deliver food to homes.
·      Residents may pick up take-out orders from restaurants.
·      Mail services, including USPS and FedEx, will continue operations.

Even before lockdown, the restaurant delivery business has already been doing well. Usually, restaurants partner with one or more of the four dominant food delivery companies, namely UberEats, Grubhub, Postmates, and DoorDash, for food delivery.

McDonald’s, for example, added DoorDash as a new partner for food delivery in July last year. Before that, McDonald’s had an exclusive partnership with UberEats, which serves about 64% of McDonald’s U.S. stores. Delivery makes up about 2-3% of the chain’s business, totally about $3 billion.

When restaurants are not allowed to offer dine-in services, they are making extra efforts to promote their take-out or delivery service. To many restaurateurs, that is really the only way to prevent them from closing down.

Meanwhile, not every resident is a good cook at home. Or they may simply want to try a variety of restaurant food during a lockdown. The restaurant delivery business gets a boost.



Grocery delivery, too, is doing better 

Grocery stores are categorized as an essential business and will remain open during the pandemic lockdown. When everyone shops at the grocery stores, they become a dangerous place for the vulnerable. To cope with the coronavirus outbreak, many grocery stores have already cut store hours while adding designated hours for the seniors.

Today, some high-end grocery stores have already offered restaurant service to shoppers. People may find it easier to purchase restaurant-quality food at grocery stores now than before. To avoid human contact in a public place like grocery stores or restaurants, some residents may choose to have their groceries delivered to their homes.

Grocery stores have been making long-term efforts to encourage shoppers to place delivery orders. Amazon, for example, is making ways to provide fresh-food delivery service in its Whole Foods Market. Amazon Prime Pantry, which offers Prime members nonperishable grocery items and household essentials, shut down last week due to a sudden surge of the online orders.    

Drome delivery has a bright future

While there are still concerns about drone delivery, the advantage of drone or robot delivery is that it minimizes human contact. Some people believe drones or robots can be used in fighting the coronavirus outbreak. In China, the agricultural drone markers see a rise in demand during the coronavirus outbreak because more drones are needed for delivery.

The future of delivery business
  
The coronavirus will probably change how people shop, travel, and work for years. People may likely rely more on delivery service. Such demand will help boost the delivery business even when everybody is having a tough time fighting the pandemic.

What do you think about the outlook of the delivery business? Are there other businesses that will have a positive outlook?

Note: This post is also available at multibriefs.com; the picture was downloaded from WDBJ7.com

Comments

  1. The delivery business is a great tool but also exposes the same people that deliver the goods. As they say, its only when you lose something, or in this case, when you are in dire need of a service that you realize how important those roles/associates are to the well being of the community. I do hope that those thriving businesses continue to do well and reap profits, but I also believe its time to start a dialogue on rewarding those associates by higher wages that have been pushed for way before this pandemic. Another business that is thriving are companies that provide PPE’s for the medical field, personal protective equipment is a very high commodity that is needed by all health professionals that are in the front line of this pandemic. PPE’s should be increased but not at the cost of human life. HRT 3020 Section 1, Anthony Serrano

    ReplyDelete
  2. Miu Hishii – HRT 3020 Section #03
    I sometimes feel that not only restaurants but also hotels, airlines are suffered terribly due to this pandemic of COVID19 as this article said. If they increase price or refuse refund, it can be the trigger to lose reliability from customers. Then this situation makes the condition of companies worse. On the other hand, I can agree that this pandemic give some opportunities to spread delivery services. The number of people who notice the convenience of delivery services such as Uber Eats increases because even those who hadn’t used those services have to use them to keep the standard of their daily life.

    ReplyDelete
  3. I think delivery service for the most part is providing people with great relief during these times. It provides at risk people with the option to stay within their home and get what they need. I think its an especially good service because it also now provides the vast unemployed population with an option to make at least some type of income. The only downfall I see coming from this is the uncertainty of the health of the drivers or delivery people. With many people being asked to stay inside to avoid spreading the virus, is it not still possible to spread through these services even though human interaction is limited? Maybe drone and robot deliveries would be a more sustainable idea during such delicate circumstances such as COVID 19.
    HRT 3020 section 1, Diana Pesqueda

    ReplyDelete
  4. I am not sure if I fully agree that this would be considered a boost. Only because the dependency of delivery isn't due to high demand but because of necessity. In some aspects this is good but since businesses are getting no relief in these times it only makes things harder. There was an article I read about Gordon Ramsay relieving 500 employees from his many restaurants. Which isn't something to brag about but it really can be a double edged sword during this quarantine I would say.

    ReplyDelete
  5. Heather Kingsbury HRT 3020 Section 01
    I think this article is pretty interesting. Since the whole covid-19 coming into light and having reduced hours at my current job at a Marriott Property by Disneyland, I had to look for another job. I ended up getting a job at Walmart in there online grocery department. While speaking to the manager, she told me that since everything happened they had a surge in online/delivery orders. It got to the point that she had to hire 15 people to make her team double the size of it before the virus. The service was an under used option that people recently discovered and it gave them comfort knowing they did not have to have much contact with others during social distancing. I think that after we get out of the experience of Covid-19, they will start to experience with human less delivery/pick up option. It is a market that is growing drastically now. I think it will continue to grow even after we come out of this pandemic.

    ReplyDelete
  6. Kodi Tang- HRT 3020 Sec 3

    I believe that this boost in delivery services is both and good and bad. It is good for those businesses that are more oriented toward fast service, deleveries, and takeout. However, it does not benefit a majority of mom and pop shops and other establsihments which soley are dine in. It also does not benefit the industry as a whole. As our industry backbone is providing hospitality and personal connection these boost in delivery service might shift permanently or temporarily the perspective of consummers on hospitality establisments as this personal connection and service is lost.

    ReplyDelete
  7. Tiancheng Zhou HRT3020 section 3April 12, 2020 at 10:28 PM

    This pandemic will dramaticly change people’s way of living. The food service will improve a lot i believe. And a lot of restaurant which have no outdoor delivery will suffer and get promoted. Becuase we will live with this coronavirus for maybe a long time. The food market system will definitely change through this event. Maybe the they will change how to keep the food delicious about outdoor delivery or they will update their to go system. My father do restaurant business so I know how hard the restaurant right now. A lot of restuants can’t make it through this pandemic. We need to think what should the future restaurant look like. Also people are getting changing their lifestyle. Indoor activity become majority, How will this become in the future.

    ReplyDelete
  8. Janelle Rae Salem HRT 3020 Section 3April 13, 2020 at 11:10 AM

    It truly is unfortunate how COVID-19, worldwide, has affected our lives, and how many industries are not likely to have a quick rebound. I believe the outlook of the delivery business, especially after the shelter-in-place procedures being held throughout the nation, will stay relatively prominent. The pandemic has brought about one of the most drastic economic downfalls in history. Many people may still be very hesitant to get out of their houses as often as before when quarantining is no longer enforced. I also think that other businesses within electrical engineering and computer science may see a positive outlook, as countries like China are already implementing drone delivery and robots to limit person-to-person contact. The hospitality and tourism industry may see an increase in the use of technology after the pandemic.

    ReplyDelete
  9. Victoria Macias - HRT 3020.01

    The delivery business has been a fantastic service that has provided businesses to now reaching their consumers in the comfort of their own homes. The delivery service allows the guest to experience their favorite meal from their favorite restaurant. When considering the current events around the world and how the COVID-19 has affected day to day living, the delivery services can take the stress off the guest by delivering right at their doorstep. Other companies that will benefit under these conditions will most likely be restaurants which their only way from closing down is relying on delivery service. Overall third-party delivery services such as DoorDash, Grubhub, Ubereats, and Postmates will continue to thrive during this time.

    ReplyDelete
  10. Anonymously HRT 3020 Section 1

    I think that this is an overwhelming time for restaurant operators, whether it’s for take-out or delivery. Restaurant owners are concerned over the safety of their employees and customers, while those of us at home are concerned as well about how the food is handled. For restaurants, a coronavirus pandemic puts increasing importance on developing a plan that helps employees to prevent the spread of the virus, which should already be in effect, such as sanitizing areas at all times. Like the article states, the restaurant delivery business has already been doing well, and it has put a spotlight on restaurants and delivery services.

    ReplyDelete
  11. Bianca Medina - HRT 3020 Section 2

    I believe the outcome of the delivery business would only increase as time goes on with people staying indoors. Considering that dine-in is no longer an option as well as people limiting the amount of grocery store trips, I believe that individuals will be limited with take-out and delivery. Cooking may stay strong during the first few weeks of quarantine, but as time goes on I believe that people will be less motivated to do things especially cooking and resort to delivery - at least I feel like I have. As for other businesses, I don't believe that they will have a positive outlook. Humans are centered around food, whether through travel, visiting friends and family, or just going out, food is simply what connects humans together. Therefore, if people are not allowed to go out, then at most they have to bond over food while of course finding other sources of entertainment and survival.

    ReplyDelete
  12. David Barillas 3020-02April 19, 2020 at 7:53 PM

    I believe that the increment of the delivery business is one good thing that is coming out of this pandemic. This is because it will cause people to like this new service, and may set a new precedent for all restaurants to deliver if necessary which may lead to increased sales. This is also good currently due to its ability to maintain some restaurants afloat when they have been forced to close their dining areas. This is the most intelligent way of going about business currently due to risk of contagion, and the hysteria that is going on.

    ReplyDelete

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