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Food deliveries booming in pandemic while other parts of 'gig economy' not in demand

Sep 9, 2020 at 10:25 am
    CHOMP driver Abby Lorenzen arrives last Thursday for a delivery drop at a residence in Iowa City. The Eastern Iowa food delivery service has seen demand rise during the pandemic and now has about 120 drivers. (Liz Martin/The Gazette)

    Just like other sectors of the workforce, the “gig economy” hasn’t been able to navigate the coronavirus pandemic unscathed — but some independent contractors are far more in demand than others.

    Unlike a traditional job that pays a salary and benefits, gig workers are paid by the job — or the “gig” — and leverage technology to find and interact with customers.

    Uber, Lyft, Airbnb and Etsy are among the most common examples, but the pandemic has raised the profile of other gig economy services.

    Ride-hailing services like Uber and Lyft were hit hard by the pandemic starting last spring as people stayed home more and limited their travels.

    But other areas of the gig economy like food-delivery services have seen far more demand as people sought ways to have the outside world brought to their homes.

    CHOMP, a food-delivery service in Eastern Iowa, has seen a lot of company growth in 2020, founder Adam Weeks said. After the initial shock at the beginning of the pandemic with businesses shutting down rapidly, he said, the company has seen more business than before and now has about 120 drivers.

    “In March, we very quickly saw a huge increase in business,” Weeks said. “It was bittersweet then and it is now. It’s good to see our business grow and bring in revenue to restaurants, but it’s difficult to see other small businesses struggle.”

    Weeks said the “explosive” growth has continued to climb throughout the summer and into the fall as college students returned to the University of Iowa campus.

    He said there have been increases, too, in the company’s “outer regions” like North Liberty, Tipton and Coralville. CHOMP also has recently been operating in Cedar Rapids, but things slowed down after the Aug. 10 derecho, Weeks said.

    More restaurants including Iowa Chop House and Saint Burch Tavern have joined the service this year as delivery has become more common due to the pandemic and have instantly been popular on CHOMP, he said.

    Abby Lorenzen has driven full time for CHOMP for a few months, starting after the pandemic began.

    “It was really busy while people were locked down,” said Lorenzen, 33. “It kind of slowed down in the summer but that’s Iowa City. It’s just starting to pick back up. Every week is unpredictable.”

    Lorenzen said she has observed that the lunch crowd tends to be people working from home and UI students tend to order for dinner.

    “It’s mostly people in quarantine mode or people working from home,” she said. “There’s a lot of regulars and some people order twice a day. Those people may not really be going outside lately. It’s really interesting.”

    Business increases for app-based food delivery services aren’t just local, either. Jenna DeMarco, a spokeswoman for GrubHub, said the company ended its last quarter with 27.5 million customers nationally, up 35 percent since last year and up 3.6 million since the first quarter.

    “We sent 647,100 orders to restaurants on average each day, up 32 percent compared to the same time last year,” DeMarco said.

    In the company’s second quarter in 2020, GrubHub drove $2.3 billion in food sales to restaurants across the country from April to June, an increase of 59 percent from the second quarter of 2019, she said.

    According to a shareholder report from company founder and Chief Executive Officer Matt Maloney and President and Chief Financial Officer Adam DeWitt, the dramatic tail-wind the company experienced was sparked by COVID-19. But now the company is continuing to see higher numbers consistently.

    “Given the strength we continue to see in the third quarter, we now believe the pandemic has been less of a temporary demand spike and more of a permanent catalyst putting our business on a higher, sustained trajectory,” the report reads. “We had millions of new diners trying GrubHub for the first time, meaningfully improved diner retention and frequency for old and new diners alike.”

    Just like restaurant delivery, grocery delivery has seen an increase in demand as well.

    According to a Shipt spokeswoman, the company has seen an unprecedented rise in demand, including “several record-breaking weeks for orders delivered.”

    The company doubled the number of shoppers during the months of April and May, bringing the total number of shoppers for the company to 200,000 nationwide.

    Josie Pike has been a shopper for Shipt in the Cedar Rapids area for two years. She was one of the first shoppers when Shipt arrived in the area in 2018, starting part-time until she lost her full-time human resources job at the beginning of the pandemic and switched to Shipt full time.

    Pike said she loves the job and she’s definitely seen an increase in demand for her services.

    “We do always have our regulars and we love that,” she said. “But during the pandemic, we’ve seen an uptick of first-time users for people who aren’t comfortable going out right now. People out of state have also been ordering items for elderly parents in the area. We see a lot of that come through as well.”

    Pike shops and picks up items for Shipt customers at Target, Hy-Vee, Petco and CVS. She said she is doing about 12 to 15 orders a day now.

    “Even the evening hours are seeing more orders coming in,” she said. “When I was part time, it was crazy. There were backlogs in late March, early April. We just didn’t have the capacity to answer all the demands for the service.”

    Dave Swenson, an Iowa State University economist, said it’s difficult to measure the entirety of the “gig” sector of the economy because it “doesn’t quite fit in a standard category the census uses.”

    “You can measure them to a degree by linking them to different firms by seeing how many contractors a company has or how many participants they have,” Swenson said. “It tells us how many people, but we don’t know how many hours they’re putting in, their costs. There are a lot of things we don’t know.”

    Swenson said at the beginning of the pandemic, as people ordered delivery instead of going out to eat, food delivery companies were better off than other sectors of the gig economy.

    But he said some who work in the gig economy, like Uber or Lyft drivers, often make $8 to $12 per hour — often not enough to sustain that beyond a part-time sideline.

    “The gig economy is actually smaller than we thought,” Swenson said. “There’s initial enthusiasm, but people realize they’re not making enough money.”

    Swenson said the coronavirus pandemic initially “hammered” some sectors within the gig economy — like app-based drivers and Airbnb renters — but it’s still hard to know exact numbers.

    “They were massively unemployed,” he said, but, ”we’re in the dark. We don’t know how many people were part of that ‘alternative gig-economy.’”

    Looking at the national level from 2015 through the first quarter of 2020, he said, the percentage of all labor-based income by non-farm proprietors stayed nearly the same, about 12.5 percent — an indicator that the gig economy’s share of the entire economy was neither growing nor shrinking before the pandemic arrived.

    While the number of gig economy workers is unknown for sure, the federal Pandemic Unemployment Assistance program let states decide whether to allow these workers to receive unemployment benefits — for which there were typically ineligible before.

    Iowa, among the states that provide these benefits, paid out more than $4 million a week during August for gig workers, independent contractors, self-employed workers and others in the category, according to Iowa Workforce Development.

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