Uber Eats experienced a 10 percent surge in United States-based ordering last week, reports The Information. The service saw a notable sales increase in areas recently placed under COVID-19 related government lockdown.
Though the segment’s gains won’t be enough to offset the downturn in the firm’s core business, a potential expansion of its services offers a possible way forward.
Uber Eats’ Very Good Week
Uber Eats’ good fortune last week extended beyond just an increase in bookings in the American market. The company also saw a 30 percent surge in driver applications. The firm also added a slew of new restaurants to its meal delivery service, including former Postmates mainstay Chipotle.
The corporation’s surge in orders, job applicants, and supply partners is due to the recent issuance of shelter-in-place orders across the U.S.
Indeed, the company’s sales in locked down large urban centers like New York City and San Francisco increased significantly last week. Likewise, temporary statewide closures of nonessential businesses probably caused the firm’s spate of driver signups. Also, American restaurants are facing declining guest visits because of consumer anxiety about contracting COVID-19.
Because of its extensive courier network, easy onboarding processing, and existing restaurant partnerships, Uber Eats has benefited from the new normal. However, the subsidiary’s recent success can’t offset the reported softening of its parent company’s ride-hailing revenue. The coronavirus outbreak caused the firm’s core business to decline by as much as 70 percent in some markets.
Despite being America’s second-largest meal delivery service, Uber Eats only contributed $4.37 billion to the conglomerate’s $18.1 billion in 2019 revenue. The segment is also something of a loss leader for the corporation as it only derives a tenth of the money generated by its food transportation bookings.
That said, meal delivery may become a bigger part of Uber’s earnings if U.S. COVID-19 lockdowns persist. A portion of the public might develop a permanent preference for ordering in from local eateries. The company is also developing a grocery delivery service expansion that could increase its sales significantly.
According to The Information, Uber is keen to expand its Eats service to include general food delivery. The firm signaled its interest in the market last year when it acquired Latin American online grocery provider Cornershop. However, the corporation has felt a new sense of urgency about the project given Instacart’s recent sharp upswing in orders.
Recently, the transportation company has searched for ways to interpolate food delivery into its existing platform. Last week, Uber repurposed a feature of its ride-hailing service to let grocery stores send orders to their customers. Since the firm’s British Eats business has suffered due to the closure of local McDonald’s, the corporation would be wise to diversify its service offerings in that region quickly.
If Uber wants to break into the American grocery delivery sector, it will likely need to initiate a hiring drive. Last weekend, the Philippines began a coronavirus quarantine which prevented local drivers from uploading the region’s restaurant menus. Consequently, about 800 staffers volunteered for extra work to manage the country’s data entry and customer service needs. A worldwide expansion of services would likely result in similar labor-intensive technical issues.
With the COVID-19 driven growth of its Eats segment and contraction of its ride-hailing unit, it’ll be interesting to see how Uber emerges from this global crisis.