  Using order-level data from Uber Technologies, we study how the COVID-19
pandemic and the ensuing shutdown of businesses in the United States in 2020
affected small business restaurant supply and demand on the Uber Eats platform.
We find evidence that small restaurants experience significant increases in
activity on the platform following the closure of the dine-in channel. We
document how locality- and restaurant-specific characteristics moderate the
size of the increase in activity through the digital channel and explain how
these increases may be due to both demand- and supply-side shock. We observe an
increase in the intensity of competitive effects following the economic shock
and show that growth in the number of providers on a platform induces both
market expansion and heightened inter-provider competition. Higher platform
activity in response to the shock does not only have short-run implications:
restaurants with larger demand shocks had a higher on-platform survival rate
one year after the lockdown, suggesting that the platform channel contributes
towards long-run resilience following a crisis. Our findings document the
heterogeneous effects of platforms during the pandemic, underscore the critical
role that digital technologies play in enabling business resilience in the
economy, and provide insight into how platforms can manage competing incentives
when balancing market expansion and growth goals with the competitive interests
of their incumbent providers.
