Uber Eats has an Uber problem.

As Uber’s stock has fallen below its offering price since it went public last week, some have touted Uber Eats’ rapidly growing revenue as a hopeful sign for the company, which expects to lose about $1 billion in the first quarter of 2019.

But like Uber’s ride service, its food delivery business still isn’t profitable. And Eats offers pretty much the same thing its numerous deep-pocketed competitors do: transporting restaurant food to customers in exchange for a fee. Making things even more challenging is that, similar to its ride-share customers, Eats users aren’t especially loyal.

While Uber is aiming to encroach on giant future markets — where people no longer own cars and where eating in has more substantially disrupted dining out — that goal is a long way off.

In the first quarter of 2019, 46 percent of people who ordered Uber Eats in the US also ordered from one or more of its competitors, according to new data from Second Measure, a company that analyzes billions of dollars in anonymized credit and debit card transactions. Nearly a quarter of Uber Eats’ customers also used DoorDash, while a fifth tried Grubhub and 12 percent opted for Postmates. That trend is worsening, as US customers are much more likely to use multiple food-delivery services than they were two years ago.

Meanwhile, the subsidized prices Uber Eats and competitors are offering customers are accelerating a pricing race to the bottom — something that’s already played out among ride-share services.

“Everyone is in land-grab mode,” Asad Hussain, Emerging Technology analyst at PitchBook, told Recode. “Uber Eats is having to do the same to keep pace.”

Uber does have a loyalty program that lets users earn rewards through both its ride-sharing and food-delivery platforms, but so far its customers are not more likely to stick with Eats.

This lack of loyalty is especially detrimental for Uber’s ambitions, given that Eats isn’t a market leader — unlike Uber itself, which beats its biggest competitor, Lyft, in the US.

Inevitably, Eats and its competitors, which all have similar offerings, will have to stop swallowing their losses and start charging more. And when they do, success will depend on which company has the most customers and restaurant partners.

In the US, Uber Eats is growing fast, but it is neither the biggest nor the fastest-growing food-delivery service, according to Second Measure. With about 22 percent of gross sales, it trails Grubhub (32 percent) and DoorDash (29 percent) in US customer spending.

DoorDash sales grew a whopping 216 percent in March of 2019 compared with a year earlier, while Uber Eats grew 58 percent according to Second Measure — so even Uber’s huge growth isn’t on pace with that of its bigger competitor. Grubhub, a profitable company, grew 4 percent in that time.

Like Uber before it, venture capital money is fueling the still-private DoorDash, which earlier this year received another $500 million in funding at a $7 billion valuation. Uber and DoorDash are both recipients of SoftBank’s largesse.

That money has enabled a price war that’s not good for anyone’s profits.

Back at the end of 2017, Uber said Eats was profitable in nearly 40 of its 165 markets. The company has since moved into about 500 cities and plans to expand to nearly 700, according to its IPO filings. Uber declined to provide updated figures on profitability or to comment on this article.

Uber Eats’ take rate — essentially its adjusted revenue as a share of what the customer pays — has declined in recent quarters and is lower than what Uber earns from ride-sharing.

Eats’ take rate was 6 percent in the fourth quarter of 2018, compared with 20 percent for ride-sharing — and that’s before a number of other costs, including driver incentives.

“You layer in all the marketing costs, administrative costs, and there’s no way they’re profitable,” Hussain, the PitchBook analyst, told Recode.

That’s due to its rapid expansion, which has involved charging restaurants lower fees, giving drivers bonuses and extending coupons to customers. This “may at times result in a negative take rate with respect to those transactions after considering amounts collected from consumers and paid to Drivers,” the company’s filings said.

This is all by design, Uber CEO Dara Khosrowshahi wrote in the company’s public offering prospectus.

“Because we are not even one percent done with our work, we will operate with an eye toward the future,” he wrote. “We will optimize for the happiness and loyalty of our customers rather than marginal trip or transaction growth. And we will not shy away from making short-term financial sacrifices where we see clear long-term benefits.”

But Uber Eats does have some advantages. Thanks to its main business, it can share technology and has an existing network of drivers. It is also hoping to capitalize on the companies’ 91 million unique ride-sharing, Jump scooter, and Eats customers, though it’s notable that regular Uber, Jump, and Eats all have separate apps.

Unlike many of its peers in both ride-hailing and food delivery, Uber is a global company that aims to be the “Amazon for transportation,” so its ambitions are expansive. Eats is just one of the company’s businesses. And beyond ride-sharing, Uber’s diverse revenue set also includes a shipping platform called Freight, which generated over $125 million in revenue in the fourth quarter of 2018 (total company revenue that quarter was $3 billion, or 24 times that amount).

“As the platform scales and continues to bundle in different services, Uber could see more stickiness with the consumer,” Hussain said.

But it’s going to cost a lot to get there.

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