UBER EATS

UBER EATS

STUART HIMMEL | Operation Department

Since its first market launch in Toronto in December of 2015, Uber Eats is available in 150 markets across the country and there are approximately 40,000 couriers delivering orders from 18,000 restaurants globally. Over the last 2.5 years, the service has seen an increase of more than 315% in Toronto restaurants on the platform and a 270% increase in monthly users in the city.

Janelle Sallenave, head of Uber Eats U.S. and Canada states that this is nowhere near close to the limit of where Uber wants to take food. She compared being in the first inning of a nine inning baseball game.

In recent months, Uber Eats has rolled out celebrity food partnerships delivering dishes from Rachel Ray and Popeyes meals inspired by the hip hop group Migos. Kim Kardashian West was used to promote Uber Eats for an Australian Ad and in Toronto; Uber Eats recently hosted a pilot of letting customers order food before arriving at a restaurant.

Not everything has been smooth sailing for Uber Eats. Food margins are already small and with Uber taking its cut – usually 30%, means less for the restaurants. Others are concerned about the conditions those delivering the meals have to endure. Drivers are compensated based on individual deliveries they make which give them flexibility to wok where and when they want but to also keep them off Uber’s payroll. Uber has long been fighting to keep delivery workers and drivers from being considered employees. California recently passed a bill that many believe makes it more difficult to recognize app based drivers and couriers as independent contractors. Uber maintains its workers still classify as independent contractors and says it will not reclassify drivers unless a judge forces it to. New Jersey has demanded that Uber pay $649 million (U.S.) in taxes and penalties. The state claims that Uber has misclassified workers for years. In Toronto, Foodora couriers are trying to become the first app-based workforce in the country to join a union – a move that has delved into whether the workers should be classified as independent contractors or not. Toronto Uber staff and

CEO have previously said the company will comply with any new laws cities are mulling over. Uber is committed to working with communities and regulators. The situation pertaining to the couriers comes as the company faces stiff competition from SkipTheDishes, Foodora and DoorDash and Postmates is rumored to be sniffing around the market as well.

The competition means that Uber has to lift its game which means rolling out new services, namely groceries. Uber is formalizing its acquisition of a majority stake in Cornershop, a Chile based on-line grocer with a presence in the city. Sallenave states that what attracted us to Cornershop is that they are equally obsessed with operational excellence. There is a way they approach actually doing the selection for you and getting the food to you which aligns itself with how Uber approaches the same kind of problems.

Aside from grocery, Uber wants to be able to deliver food from any restaurant in less than 30 minutes and extend the delivery model to every single local retailer. If Uber has an advantage, it will be brand awareness. People will think I’ve already got the app and I already trust them to drive me around town, I might as well trust them to carry my pizza and maybe my groceries as well.

Vince Sgabellone, a food service industry analyst at research firm NPD Group, believes the grocery and food services market is under penetrated especially for Canada and for digital ordering. Delivery makes up about 4% of total restaurant orders but represent about 40% of the market’s growth.

Uber Eats and their competitors comprise about 2/3 of all digital delivery orders, while orders through individual restaurants’ apps and websites have fallen by 1% in the last year. Sgabellone believes that domination won’t end anytime soon and that Uber Eats will continue to look for new ways to innovate. Uber, for example, has dabbled with bringing food to airport gates and making alcohol deliveries, but hasn’t delved into meal kits, catering or restaurant supplies just yet.

We, as a society, haven’t stretched too far out of our food delivery boxes yet as a customer base. Sgabellone says “I think there are lots of opportunities there”.