Black-car rides, paid memberships, and other offerings for affluent consumers are paying off for Uber, Instacart, and other gig-based services.
Despite rising gas prices and consumers trimming their budgets, many people are still spending on ride-hailing and food delivery, according to companies’ latest earnings results. Uber, DoorDash, and Instacart largely beat quarterly expectations this week and saw their stocks lift.
“We’re definitely seeing that not all consumers are under pressure,” said Brian Mulberry, chief market strategist at Zacks Investment Management. “Some are still very high earners and doing very well.”
The apps are finding ways to keep upper-income consumers spending on their apps. Paid memberships, which offer discounts or priority service for a monthly fee, are one example.
DoorDash said signups for its DashPass membership, which costs $96 a year, grew during its first quarter. Uber, meanwhile, has about 50 million members in its $96-a-year Uber One program. Those users make up about half of the app’s bookings, CEO Dara Khosrowshahi said on an earnings call Wednesday.
Uber also unveiled a slew of offerings last week that cater to high-earning urban dwellers, Mulberry said. Those include the option to order a beverage or snack along with an Uber Black ride, or to have a courier buy something on your behalf at a local mom-and-pop store.
In March, the company rolled out Uber Elite, an invite-only ride service that uses professional drivers and luxury vehicles to cater to business and other high-paying travelers.
Black car rides and other “high-value modes” have been a focus for Lyft as well over the last few quarters, CEO David Risher said on the company’s earnings call on Thursday.
DoorDash also gained traction last year among baby boomers, data from polling firm Morning Consult found. This generation tends to have more wealth, including disposable income, than younger generations.
A ‘barbell’ strategy
Not everything the apps are doing is aimed at affluent customers.
Instacart, for instance, found that retailers that offer the same prices on its app as in their stores perform better than those that mark up their prices, CEO Chris Rogers said on a Wednesday call.
“Customers are seeking value, and the retailers on our platform who are delivering it, they’re growing faster,” he said.
Uber CEO Khosrowshahi has said that his company uses a “barbell” strategy — one that caters to both customers trying to save money and those with more to spend.
For example, some cost-conscious customers use the app as an alternative to car ownership, Mulberry said, a pitch that Uber and Lyft have been making for years.
For those users, Uber looks more like a utility than the source for “a discretionary ride from time to time,” he said.
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