Careem sees signs of recovery from COVID-19 hit as $50m Super App is set to lift earnings
SOURCE: The National
Ride-hailing company Careem said its business is beginning to recover from the impact of COVID-19 as it provides a broader range of services amid the easing of movement restrictions by regional governments.
Business began recovering last month, from a plunge of more than 80% in March and April, to register a slower pace of decline in the range of 50 and 60% year on year, Mudassir Sheikha, Careem’s chief executive, said yesterday.
“Since the first week of May, we started seeing a recovery and we’ve been growing in the double-digit [range] every week for the last five weeks now,” he said. “The rides business had the fastest recovery because it was down the most; things started opening up and, all of a sudden, a lot of the traffic started pouring back in. We’re still down significantly, nowhere close to our previous levels, but from a very low base we’re growing in the double-digit [range] week on week.”
Last month, Careem cut 31% of its workforce, representing 536 jobs, due to the impact of coronavirus-related restrictions on its business. The company’s core ride-hailing business fell by as much as 90% and its delivery business by 60% in some of the markets it operates in. It does not expect a recovery back to pre-crisis levels until next year.
Mr Sheikha said no further job cuts are expected during the pandemic, with the double-digit week-on-week growth recorded pointing to a faster recovery than initially projected. He said recovery was taking place at different speeds in each country as measures taken by governments to stop the spread of the virus varied. “For example, Saudi Arabia and Jordan were very sharp in their [restrictions and] our business disappeared in those markets. In other markets, the [restrictions] were not as rigid. So, for example, in Egypt there was always some activity,” he said.
The $3.1 billion (Dh11.3bn) sale of Dubai-based Careem to Uber was completed in January this year, and Mr Sheikha said the company has no immediate requirement to raise funding as it has the backing of its parent company.
Careem said the COVID-19 pandemic had hastened the introduction of its new Super App across 13 markets, which it expects to boost its bottom line. The company invested $50 million in the app, which was launched on Monday, and plans to spend more to develop it over time.
Alongside online grocery, food delivery, and pharmacy services, Careem plans to offer UAE customers access to its bicycle-rental service, as well as allow them to redeem points, buy gift cards and transfer credit through Careem Pay.
“The Super App is going to make the unit economics for Careem a lot more efficient,” Mr Sheikha said during a virtual press conference. “All in all, while the Super App is a significant investment for us, we do believe that this will help us emerge as a more sustainable platform with much better economics than the ones we’ve had in the past.”
Careem said it also plans to introduce more services on the app and is in talks with service providers. “We’ll also be improving our engagement of the user by offering [several] services on the Super App ... so we expect our retention rate to go up and that will also help our bottom line.”
Asked whether Careem would consider offering discounts to restaurants that use its delivery services, Mr Sheikha said the company had offered some discounts to small restaurants in the UAE, Saudi Arabia, and Pakistan to support them. He, however, said Careem needs to ensure it recovers its own costs.
While it is standard practice for third-party services to take a cut of restaurant orders, on top of a delivery fee charged, restaurateurs have spent weeks calling on owners of food delivery apps to revisit their percentages.
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