Dive Brief:

• Uber reported a 103% year-over-year revenue increase for Uber Eats as part of its Q2 earnings Thursday, according to a company release. Comparatively, Uber's ride-hailing business saw a revenue decline of 67%. 
• Active partnered restaurants on Uber Eats crossed the 500,000 mark in June, up 50% year-over-year. The company added enterprise accounts including Baskin Robbins, Chopt Creative Salad, Dave & Busters, Del Taco and Yum Brands. Additionally, its small-medium business restaurant additions grew over 70% year-over-year during the quarter. 
• "Our team continues to move at Uber speed to respond to the pandemic's impact on our communities and on our business, leading our industry forward with new products and safety technologies, and harnessing the strong tailwinds driving exceptional growth in Delivery, with Gross Bookings growing 122% year-over-year excluding exited markets," CEO Dara Khosrowshahi said in the release. "We are fortunate to have both a global footprint and such a natural hedge across our two core segments: as some people stay closer to home, more people are ordering from Uber Eats than ever before."

Dive Insight:

This quarter marked the first time Uber's food delivery revenues outpaced its signature ride-sharing business, reflecting how the novel coronavirus crisis has been a boon for on-demand food delivery. That has especially been clear during this latest go-round of earnings calls. Uber's report comes on the heels of Grubhub's earnings, which included a 40% year-over-year increase in regular orders in June, and a daily order increase of 35% for Q2. 

Smaller on-demand food delivery company Waitr reported an 18% increase in revenues during its Q2 report Thursday, as well as a profit of $10.7 million, versus a loss of nearly $25 million during Q2 2019.  

That's not to say there haven't been some pain points in the past few months, however. These companies have increased their customer acquisition costs by providing restaurant partners with marketing and promotional support during the crisis, and corporate businesses have suffered as many workers shift to a remote model. 

Still, most customers aren't quite ready to return to dine-in. This bodes well for the delivery business, at least in the near term. Operators may have more near-term loyalty, too, as 81% of restaurants credit third-party delivery companies with helping them avoid layoffs during the crisis, according to a survey by Uber Eats and Technomic.  

How delivery fares in the long term is still an open-ended question, however. But it's clear customers' habits are swiftly changing toward online ordering, which will no doubt accelerate the delivery trend. 

"In many markets, we've seen that restaurants with their own couriers actually end up calling Uber Eats couriers about 30% of the time, demonstrating the unique advantages that we bring and one that we believe will hasten the shift towards a delivery model," Khosrowshahi said on Uber's earnings call. Papa John's, for example, added third-party partnerships last year to supplement its drivers during busy times and this channel, which now makes up 5% of its sales mix, helped boost overall sales performance during Q2 2020. 

These delivery companies are also rapidly innovating to stay relevant, which could help sustain their business in a post-crisis environment. Uber, for example, expanded its delivery verticals during the quarter to include grocery and piloted partnerships to deliver home goods, pet supplies and pharmacy items, Khosrowshahi said. It also added a restaurant loyalty program and priority delivery option and additional tools for restaurant partners. Just this week, DoorDash launched a new online convenience store called DashMart. 

"The COVID crisis has moved food delivery from a luxury to utility. And as we add more use cases, our service will move from a utility to daily need," Khosrowshahi said. "As such, we’re ramping up our subscription efforts, including nationwide allotments of Eats Pass, which combines free food and grocery delivery; and eventually, Uber Pass, which combines both Rides and Eats benefits in one monthly package. All of these activities has resulted in new customer acquisition, monthly active eaters, orders per eater, basket size and eater retention, all being up year-on-year and quarter-on-quarter, both globally, ex[cluding] India, and in the U.S."

Arun Sundararajan, a professor of business at New York University, told Bloomberg that over 90% of the nearly $1 trillion spent at U.S. restaurants every year used to be spent dining in. He expects a "significant double-digit percentage of that" to shift online, no doubt intensifying competition between DoorDash, Uber Eats and Grubhub. Grubhub CEO Matt Maloney and CFO Adam DeWitt called the pandemic a "permanent catalyst" that will put its business on a "higher sustained trajectory."

Emma Liem Beckett contributed to this report.