SAN FRANCISCO — For years, Bob Gordon, owner of Footprints Cafe in Brooklyn, handled the delivery of his restaurant’s meals. So when he decided to work with an outside service — UberEats — he was nervous. Then, the orders started pouring in.
“We weren’t prepared for the volume that came in,” Gordon, 46, said. “I myself, as an owner, had to work three weeks straight cooking on the food line just to keep up.”
Uber has barreled into the crowded, cutthroat space of food delivery. Its top executives believe UberEats could generate enormous growth.
UberEats stands out even from the rest of the company’s fast-growing — and unprofitable — business. The delivery service, in more than 120 markets globally, sometimes eclipses Uber’s main ride-hailing business in markets like Tokyo and Seoul, the company said. The number of trips taken by UberEats drivers grew by more than 24 times between March 2016 and March 2017. As of July, UberEats was profitable in 27 of the 108 cities where it operated. Uber declined to reveal the service’s revenue.
“There’s a global trend toward delivery,” said Jason Droege, vice president of UberEverything, the division under which UberEats operates. “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.”
Uber came late to food delivery, which is a $100 billion-plus market, according to a study by McKinsey. Typically, food delivery companies fall into one of two categories. The first is aggregators like Grubhub, which collect restaurant options and menus through an online portal for customers, and which usually require restaurants to handle delivery themselves. The second is full delivery services like Postmates and UberEats, which take orders online and deliver the food for restaurants. The restaurants generally pay a fixed percentage of an order; customers also pay a fee to the delivery service.
The competition is stiff, including the threat of Amazon, which has tried food delivery in a few markets. Its recent acquisition of Whole Foods provides hundreds of potential bases for drivers to pick up prepared food for delivery.
“The No. 1 concern for all of these delivery companies is Amazon,” said James Cakmak, an analyst who follows the food delivery business.