A hunger for UberEATS
Food delivery service deemed most profitable part of the ride-hailing app
From a sexual discrimination suit and the loss of its operating licence in London to reports that it’s pulling out of Quebec as of Oct. 14, Uber could use a good news story. And it’s found one in UberEATS. The food delivery service is the shining light of an otherwise unprofitable business, the New York Times reports.
UberEATS is now in more than 120 cities around the world, including eight in Canada: Calgary, Edmonton, Hamilton, Kitchener-Waterloo, London (Ont.), Montreal, Ottawa and Toronto.
According to the New York Times, the delivery service outpaces ridesharing in cities such as Seoul, Taipei and Tokyo. And as of July, “was profitable in 27 of the 108 cities where it operated.”
“There’s a global trend towards delivery,” Jason Droege, vice-president of UberEverything, told the New York Times. “As people use mobile phones more and more for everything in their lives, we’re starting to see a secular change in how people eat.”
The standalone UberEATS app launched in December 2015, in Toronto, and quickly joined other major players such as Grubhub and Just Eat. According to a 2016 McKinsey study, the global food delivery market is “fast-changing” and worth more than $120 billion (83 billion pounds); or “one per cent of the total food market and four per cent of food sold through restaurants and fast-food chains.”
“The No. 1 concern for all of these delivery companies is Amazon (which recently acquired Whole Foods),” analyst James Cakmak reportedly said. “How could Amazon use its network to crush our business? They have the logistical network and the balance sheet to be able to compete on the price side with all of these players.”
Despite strong competition, Uber representatives said that its vast network of drivers (upwards of two million), better technology, and extensive mapping of cities give them distinct advantages.
“What Uber has are the last-mile logistics, and that’s crucial,” Cakmak told the New York Times