UberEats expanding food delivery to 100 cities in Canada
Demand has grown in a country where inclement weather can keep people indoors
Less than three years after launching in Toronto, UberEats plans to expand its food delivery service to 100 cities and towns across the country.
“We’ve come to a pretty interesting realization about food delivery,” said Jason Droege, vice-president of UberEverything, visiting Toronto on Friday in advance of the announcement. “We found that the desire for food delivery goes outside of urban centres and even outside of adjacent suburbs into smaller markets.”
UberEats chose to launch in Toronto back when it debuted in 2015, and the service has grown to 50 cities nationally and 280 locations globally.
“What we’re finding with food delivery is that in some places it’s actually more popular than our rides business,” Droege said. The ride service remains larger — launched in 2010, Uber is offered in 750 cities globally.
But demand for food delivery is growing in leaps and bounds, Droege said, especially in Canada, where inclement weather keeps a lot of people indoors many days of the year.
Social media is another driver of demand.
“If you think about Instagram and Facebook — the number of food (photos) people are sharing is driving demand for selection,” Droege said.
“If I am sharing all the interesting, exotic things I am eating, what delivery does is it connects you to all of that more easily.
“I think the younger generation expects to be able to hit a button and get a ride, food, access to their friends, to be able to communicate. They want everything in that experience and convenience has value for them.”
Millennials, he points out, are cooking less and eating out more.
UberEats booked $6 billion in food and delivery costs last year, Xavier Van Chau, a company spokesperson said.
The field is rife with comp etition, including Just-Eat, DoorDash, Skip the Dishes and Foodora, owned by Delivery Hero, a publicly listed company based in Berlin. Foodora is only available in nine cities in Canada, but worldwide delivered 300 million orders last year.
“We’ve barely scratched the surface. The majority of people are still picking up the phone and ordering pizza. The bigger opportunity lies in changing consumer behaviours,” said Matt Rice, Foodora’s head of marketing.
Demand will grow as people become more accustomed to ordering food via mobile phone apps, Rice believes.
Will Mitchell, a professor of strategic management at the University of Toronto’s Rotman School of Management, says ride-sharing and food-delivery services are classic cases of network markets: The more people that use the service, the more value it has to the people in the network.
“They’re often called winner-take-all markets — there’s really only room for one or two players,” said Mitchell, pointing to Windows and Apple and to Bell, Telus and Shaw as examples.
“The simple mantra in network markets is to get big, fast.”
How long it takes for one service to prevail depends to some extent on investors.
“It really depends on how long the big players are able to raise money and lose it,” Mitchell said.