While Uber suffers massive setbacks in the United Kingdom's capital city London, Uber Eats, an Uber subsidiary company that specializes in food delivery, thrive and grows. In fact, is successful is UberEats that it now makes up 10% of all of Uber's Income.
UberEats is found in over 19 European cities and is growing globally. UberEats has a $68 billion valued backbone, and operations around the globe, reaching over 30 countries. The secret to UberEats success was explained to us by UberEats General Manager in London, Toussaint Wattinne.
UberEats London office directly employs 45 individuals, and the number of employees is expected to grow by 50% during 2018. Wattinne states that the key to success is a mix of successful partnership planning, which is the selection of restaurants that UberEats provides on its platform. In the UK, UberEats is found in over 40 cities, with London being one of the largest markets in the world. UberEats is now bigger than Uber in London, obviously due to the ruling that made Uber persona-non-grata in the city, but it is also larger then Uber in Madrid, Grenoble, and Milan.
Wattinne said that the first key to their success was that they had partnered with over 8,000 caterers and restaurants all around the UK and the most popular brands that helped UberEats grow was partnering with fast food chains such as MacDonald's. Amongst the many names they work with are Duck, Waffle, Pret, and Prezzo. Most first-time users were so happy with their ability to order a MacDonald's as well as the enormous selection of places to order from that they continued to use the app.
The second reason for UberEats success was their fantastic delivery time. With the use of their technology and fast communications, as well as their dedicated deliverers, UberEats manages to keep their delivery times under 25 minutes.
According to the Financial Times, UberEats made around $870 million in the second quarter of 2017, which is approximately 10% of Uber's gross income of around $8.7 billion. Based on incoming data, the decline of Uber in Europe and Asia, coupled with the rise of UberEats, it could double its impact by the end of 2018. Wattinne did not discuss financials but did state that UberEats income was healthy and promising.
UberEats main rival in London is Deliveroo, which has approximately 2,000 couriers around the UK. Deliveroo takes a 30% commission on all orders it accepts via the app. This figure has been contested by finance experts and asked whether it was profitable to work at such low rates.
Wattinne said that UberEats margin is balanced between the four partners in the delivery operation, the restaurant, the customer, the courier and app (UberEats). He states that the numbers are positive and that the UK is continuing to prove a lucrative ground for continuous expansion.
UberEats faces more competition than just Deliveroo; there is also Amazon Restaurants and other small delivery companies. One of the options that Wattinne has been considering is a "loyalty" incentive program, where customers would pay a monthly membership fee that would give subscribers free deliveries. Deliveroo introduced something similar during 2017, where customers pay a monthly £7.99 fee for free deliveries. Deliveroo also expanded into the kitchen lease business, it has bought up, and rents out kitchens to restaurants that need to expand their operations to provide door to door delivered meals.
Wattinne said that UberEats has no intention of leaving its focused scope of business, they are a tech company that provides a platform for couriers to deliver food to UberEats customers via the app. UberEats will never become a property development or restaurant equipment leasing company.
One issue that hangs like a constant shadow above UberEats is Uber rideshare. The rideshare side of the business has been going through quite a turmoil in Europe with the EJC, Europe's highest court ruling on the 20th December 2017 that Uber must be classified as "service in the field of transport" and must be regulated like any other taxi service in the European Union. This ruling means that the EJC dismissed Uber's app, its technology platform, and its independent contractors, recognizing that the actual act of picking up a passenger and transporting them from one location to another for a fee is basically a taxi service. The direct impact of the finding could lead all gig sharing platform "independent contractors" to be recognized as employees in Europe. Add to this decision the British employment tribunal reviewed the case of a group of 19 Uber drivers that challenged Uber's employment contract in November, which essentially put forward the case that British law does not mandate "independent contracting" status of drivers and that drivers are in fact employees of Uber. The ruling accepted this argument, and this means that Uber must now assure drivers of a minimum wage and paid off time. If this ruling rolls over to couriers, then UberEats might have to pay minimum wage to all their couriers.
Is UberEats Uber?
Uber has been distancing its corporate image from UberEats, while most people do know they are the same copay, for some reason the bad Uber image has not tarnished the good UberEats image. Something that both companies want to maintain and are doing so by changing its app design. This design change makes the new app seem un-Uber like and graphically distances the service from the ridesharing gig.
Wattinne said that they intended to maintain the fact that UberEats is a totally different operation. The technology is different, and the service is different. While both companies deal in logistics, one is about driving human passengers while the other is about delivering goods.
Wattinne states that UberEats is all about experiencing food, not just a quick take away but any kind of food you want. It's a foodie paradise where you can pick any delicacy from thousands of options, and it will reach your door under 25 minutes. This is why UberEats is successful and why it will continue to grow. If the minimum wage issue does come to play than delivery pricing will change in a way that does not affect the customer too much. He states, even if the minimum wage is enforced, it means everyone in the market has to pay it, so the completion will remain stable, the pricing will change for everyone, and people will continue to order food from UberEats. The challenge is to maintain a constant quality service, to keep delivery times under 25 minutes and to increase the food options available in the app on a daily basis.