Uber Technologies Inc. is preparing to go live with a full-scale meal delivery service across 10 cities in the U.S., an expansion that will test the company’s ability to use its drivers to move goods.
In the coming weeks, customers in such cities as Los Angeles, Chicago, New York and Austin, Texas, will be able to use a new, dedicated UberEats app to order from the full menus of dozens of local restaurants and have their food quickly delivered by an Uber driver, a company spokeswoman said in an interview.
Uber aims to build a new stream of revenue in food delivery, a highly competitive and still-speculative business where a range of venture-funded startups—from Postmates Inc. to DoorDash Inc.—already vie for customers. Some of these companies have struggled to demonstrate they can operate profitably, leading to difficulty raising new funding at high valuations and a slowdown in hiring.
One of Uber’s early ride-hailing competitors, Sidecar Technologies Inc., experimented with delivering food and packages over the past year before shutting down last month and selling its assets to General Motors Co. In a blog post on Wednesday, Sidecar co-founder and Chief Executive Sunil Paul said his company “out-innovated Uber but still failed to win the market…because Uber is willing to win at any cost and they have practically limitless capital to do it.”
The UberEats delivery service, an expansion of a lunchtime-only service Uber began offering in a dozen cities last year, will use its network of more than a million drivers to transport goods, in addition to people. In recent years, Uber has had mixed results when it tried its hand at local logistics, transporting everything from designer suits in New York to toothpaste in Washington, D.C.
he UberEats app, expected to launch in the mobile app stores of Apple Inc. and Alphabet Inc.’s Google by the end of March, also represents Uber’s first attempt to build a mobile app from the ground up in the five years since it launched its flagship ride-hailing service.
The app has been available for over a month in Toronto, where Uber has tested an expanded meal delivery service with more than 100 local restaurants. Customers there have been able to order any item from a full menu between 10 a.m. and 10 p.m., and have it delivered by an Uber driver in 30 to 40 minutes.
In the coming weeks, UberEats will work mostly the same way in all 10 cities in the U.S. where the lunchtime service is already available. Those also include Washington, D.C., San Francisco, Atlanta, Houston, Seattle and Dallas, the company said. The number of restaurants and the hours of operation may differ from city to city.
UberEats will work mostly the same way in all 10 cities in the U.S. where the lunchtime service is already available.
One challenge will be converting Uber drivers into delivery experts. Delivering food creates new challenges for drivers, who have to get out of their cars to pick up the food from a restaurant, quickly shuttle it to their destination and sometimes park illegally while they wait for customers to appear at the curb.
When a customer places an order, Uber will send it through to the restaurant and estimate how long it will take for the item to be prepared. When Uber predicts the item is ready for pickup, it will locate a driver close to the restaurant and let him decide if he wants to deliver.
If multiple customers in proximity order items from the same restaurant, Uber said, it plans to bunch those orders together and give one driver the opportunity to pick up multiple delivery fees. The Postmates delivery service has experimented with bundling orders together in this way, with the goal of reducing the delivery fee to $1.
Uber said it would give drivers the choice of being an UberEats driver or not. The company will charge customers a delivery fee of about $5 an order, a fee that will vary by city. Uber will share part of that fee with the driver. The company will also collect a fee from restaurants for every order.
Uber will continue to offer its lunchtime service for deliveries under 10 minutes, renaming it Instant Delivery. Some drivers who deliver for Instant Delivery are paid on an hourly rate and others are paid for every meal drop-off.
The company, which now offers its ride-hailing service in 375 cities world-wide, declined to comment on how soon its food delivery could expand to additional cities. On its website, Uber currently lists an opening for a general manager of UberEats in Paris.
Uber employs teams dedicated to UberEats in each city. They all plan to draw on what the company learned from its test in Toronto, including the discovery that typical customers prefer to rotate through about five of their favorite places. In Toronto, Thai food was the most popular order for dinner.
Curated News, Source WSJ, By Douglas MacMillan