The opening slide of Uber's first pitch deck featured a Blackberry phone. The name was UberCab, and the big idea was a "next-generation car service." That was nine years ago. My Uber, how you've changed since 2008.

Over the last several months, we've all read the blog post that went viral. Seen the PR meltdown. Watched founder and former CEO Travis Kalanick resign.

Now Uber's under new leadership with the former Expedia CEO Dara Khosrowshahi taking the head honcho roll. Once again, the ride-sharing app is on rocky waters by losing its license to operate in London.

But what if doesn't even matter? Because what if ridesharing isn't the future of Uber? What if it's something else entirely?

These are the questions posed by a New York Times piece about a growing piece of the unicorn startup's business: the UberEats food delivery service. What's more, a source told the Times that Khosrowshahi said UberEats has been a "wonderful surprise."

A few stats from the piece that speak to what's so wonderfully surprising about UberEats:

  • The food delivery service is sometimes more popular than Uber's ridesharing offering in cities like Tokyo and and Seoul.
  • Between March 2016 and 2017, the number of trips UberEats drivers took increased by 24.
  • In July 2017, UberEats was profitable in 27 of the 108 cities where the service is offered.

Food delivery is a tough market to crack, as the piece goes on to explain. But, Uber has a few key advantages that other players lack.

The big brand name endorsement

In May 2017, UberEats and McDonald's announced a partnership, aptly called McDelivery. If you live in Los Angeles, Chicago, Columbus or Phoenix, you can order McDonald's through the UberEats app.

People (myself included) scoffed when it was first rolled out. Doesn't the McDonald's drive thru already make it easy enough?

But the results appear to have been positive, and UberEats appears to be rolling out the offering to more locations. And it's a smart strategy to get more people on board. By aligning themselves with the most-loved and biggest fast food giant in the world, Uber has positioned their food delivery service for massive adoption.

The built-in network of drivers

As UberEats rolls out to other cities and restaurants, they already have a built-in network of drivers. Those drivers are already registered with Uber, so it's a relatively seamless transition to have them deliver food instead of people. According to New York Times, cars being driven for UberEats need not pass the same inspections required if you're toting around people. With UberEats, Uber may be able to bypass some of the regulatory and legal battles plaguing their ridesharing offering.

The "last-mile" logistics technology

Most food ordered through UberEats doesn't go very far. My downstairs neighbor is the perfect case study. He likes getting McDonald's delivered through UberEats. Our nearest McDonald's is half a mile away. My neighbor alone has proven there is a market for this.

These short-distance driving logistics are precisely where Uber excels. Uber has been toting passengers around for almost 10 years, and most aren't going too great of distances. According to the Sherpa Share blog, the average national distance is 6.4 miles. The same technology Uber has built to get passengers to destinations more quickly is incredibly valuable when it comes to getting food to homes quickly, before it gets cold.

Though UberEats is profitable in several cities, that's not to say food delivery will be a a slam-dunk success for Uber. The market is already crowded with technology competitors (think Grubhub and Postmates), and they're all competing for a relatively small slice of the delivery pizza pie. Traditional takeout like Chinese food and pizza takes up 90 percent of the food delivery market share, a McKinsey study found. Seventy-five percent of those orders are placed by phone.

That said, there's opportunity in the food delivery market for sure. Uber is reportedly investing hugely talent and technology to make UberEats succeed in a big way. And if it does? Hailing a car through Uber could one day be a thing of the past. And hailing a tasty delicious burger to your couch a thing of the future. ​

Published on: Sep 25, 2017
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