Uber Eats users say food delivery apps had made it easier to discover new restaurants. Photo / Michael Craig
Business Reporter
A new report conducted by Uber estimates that the ridesharing giant contributed $1.2 billion to the New Zealand economy last year.
The San Francisco-based company says that represents 0.3 per cent of the country’s GDP, and it produced an additional $1b in consumer surplus, $560 million from Uber Eats alone.
In the latest Uber Economic Impact Report, Uber claims its Uber Eats platform alone has encouraged Kiwis to support local restaurants to the tune of $88m in additional revenue, with a gross impact of $930m for the overall New Zealand economy.
Dr Lindsay Neill, senior lecturer at Auckland University of Technology’s school of hospitality and tourism, said those numbers were believable given Uber’s dominant position in the market and within the restaurant business.
“I am not surprised that they claim a contribution to the New Zealand economy that is substantial. You’ve only got to look at the Covid situation, the convenience that Uber brings to people by way of food delivery, taxi services,” Neill told the Herald.
“We’re all feeling a bit insecure – that hasn’t gone away – the restaurant industry has opened up, but there is still a reluctance for some people to dine out, so they could be still getting their restaurant meals home delivered. It’s about time and place and space, and I think Uber fills a wonderful need.”
Neill said controversy that surrounded the fees companies such as Uber charge for delivery was taken in users’ “stride” and that the issue needed to be viewed “in a holistic way”.
“It’s a bit of a double-edged sword. Food costs are rising, labour costs are rising – it’s a hugely competitive labour market, it’s very hard for restaurants and hospitality businesses to turn a profit and here is another expense to add to the list. But we need to offset that and think of it in more holistic ways,” Neill said.
“We can either sell some meals through Uber or write it off and not use it, and I think many people choose the former over the latter as it just makes good business sense.”
Any good business should be able to absorb the cost of merchant fees, he said.
“Consumers are prepared to pay more for convenience and if restaurants and hospitality businesses do their costing correctly, that can be immolated not only throughout Uber delivery but slightly offset by in-house dining as well – a bit of creative accounting, perhaps.”
Uber’s report, which looked at its impact across both its rides and Uber Eats marketplace, found that almost 70 per cent of users said that they felt the app had encouraged them to order from restaurants they had never tried before.
Over 85 per cent of Uber Eats users said food delivery apps had made it easier to discover new restaurants, and 52 per cent said it had helped “improve their quality of life” when they weren’t allowed to eat out.
Neil said the Covid-19 pandemic had made it increasingly hard to be a successful hospitality business without using a delivery platform such as Uber or rival companies such as Menulog or new market entrant Delivery Easy – and while restaurants may not be sold on the idea, it was what their customers wanted.
“The marketplace decides, I think, not necessarily the restaurant.”
American food delivery firm DoorDash expanded into New Zealand in June, joining market leader Uber, Menulog and a handful of locally owned and operated startups.
Neil said growing competition within the space was good – and was recognition of “where the market was at”. He said having more players made it more price competitive, which was good for both consumers and businesses.
He described food delivery firms as another “avenue of opportunity” for the hospitality sector and said he thought these businesses were sustainable and here for the long term, as demand for home delivery continued to grow.
“They are here for the long haul … there might be a lessening of their presence as people recover from Covid and we celebrate that by going out directly. However, the quest for convenience overrides that, and many people who have developed an Uber habit will continue it.”
Other findings in Uber’s report, which used a mix of consumer polling, driver surveys and new economic modelling to generate its results, outlined that Uber estimates its drivers make an additional $68m last year in earnings – an average of 3 per cent more than they would with rival ride-sharing companies.
