Uber is now a food delivery company with a substantial sideline in taxis

Uber last week revealed that it currently derives most of its revenue from delivery services. The company infamously rose to prominence as a scofflaw taxi-killer and later added delivery services and freight as substantial sidelines that in Q3 2019 delivered $863m compared to the $2.9bn won by ride-sharing services. One year …

[Stoneshop]

Once again, sidestepping laws

"One thing that hasn’t changed is Uber making losses, about $1.1bn in this quarter. But CFO Nelson Chai offered the caveat-laden comment that “we remain confident in our ability to achieve quarterly Adjusted EBITDA profitability before the end of 2021.”"

Which they're trying to achieve by cutting 25% of their 27k strong workforce[0], and halting their experiments with self-driving cars and trucks[1]. This is done the US way, even in NL, where employment rules are rather more favourable towards the employee than Uber would like. As 200 of the about 1000 employees have to go they pressure[2] them into taking an oprot-package, where otherwise Uber would have to obtain permission from the UWV benefits agency, properly[3] substantiating their need to get rid of the excess. Instead, Uber offered a separation package, 5 months salary plus tickets back home[4], and kept hammering those that hadn't yet signed to take it, allowing less than a week to decide. So not much time to check out one's position in the job market to gauge the feasability of staying. And nearly all of the 200 caved.

Once an asshole company, always an asshole company.

[0] That's developers, designers, marketing etc. Not the drivers; they're freelance and aren't included in that count.

[1] Bicyclists everywhere breathe a sigh of relief.

[2] https://www.nrc.nl/nieuws/2020/11/06/zo-gaat-het-als-uber-personeel-ontslaat-als-je-niet-tekent-dan-is-dat-jouw-keuze-a4019122 . Run it through https://www.deepl.com/translator if Dutch is not among the languages you master.

[3] Hah. Incomplete and incorrect, as well as insufficiently documented regarding Uber's financials.

[4] A good part of the workforce are expats.

[Anonymous Coward]

Re: Once again, sidestepping laws

This describes them perfectly

Once an asshole company, always an asshole company.

Uber (and Lyft) are regarded as Four letter words for crap around here especially the way they treat their employees. I regard their drivers as employees.

at least half the time when you try to 'get a Uber' nothing turns up. That is totally the opposite to the local Black Cabs and Minicab companies.

[John Brown (no body)]

Re: Once again, sidestepping laws

"Uber offered a separation package, 5 months salary plus tickets back home[4],"

Compared with the legal minimum redundancy packages, that's a pretty good deal actually, despite them being pressured to take it. It's probably a vastly superior deal top anything their US staff will get. Uber hasn't been around for 12 years, so none of the staff could have accumulated enough employment longevity to get the maximum 12 weeks/3 months salary redundancy package. I'm not trying to defend Uber in any way, b ut clearly they are prepared to spend real money to legally "by-pass" the redundancy process.

Also, 5 months pay while you go looking for another job. Using the proper redundancy path, it might be a month or two negotiations followed by the legal minimum notice period and the legal minimum redundancy pay, which for some people might be as little of 1 or 2 weeks notice plus 1 or 2 weeks pay.

PS, I upvoted you because I agree with you. I'm just looking at it from the employees point of view (not that I am one!!)

[Stoneshop]

Re: Once again, sidestepping laws

Also, 5 months pay while you go looking for another job.

For developers the job market isn't that dire that you'd still be out of work after those 5 months. Probably. But marketing and finance? Though it'd be less likely that those would be expats, so a different situation anyway.

[MrMerrymaker]

Corporate funding

Our not-obscure company just gave everyone a bonus of Uber Eat vouchers.

At £100 a head it does make me wonder how much businesses like this are giving to Uber to keep this nasty company afloat.

I'd boycott my own voucher, but my local Co Op is on Uber Eats, and they sell ale.

[Lee D]

Re: Corporate funding

When Uber are making losses of a billion dollars a quarter, it's really not worth worrying about. The entire company's premise is to basically throw money away to give you a cheap takeaway or ride, in effect, and virtually every such ride taken is *costing* them money.

It's therefore a good deal for all customers, because they're basically getting something for cheaper than it costs to actually perform that service. What they're hoping is that at some point loss-leader becomes leader, but there's no sign of that happening and there's actually no guarantee that as a leader people would continue to use them (i.e. if you're losing billions purely because you're the cheapest, when you're no longer the cheapest who's going to give you money?)

[John Brown (no body)]

Re: Corporate funding

"if you're losing billions purely because you're the cheapest, when you're no longer the cheapest who's going to give you money?"

They're also in competition with Deliveroo and others, so it's always going to be a race to the bottom. Also, if they try to increase their cut from the food providers, the food providers will likely just go back to their original model of doing their own deliveries anyway.

My local pizza shop uses Just Eat. But since it's only a 3 minute drive there, I go, they get the full cost of my order and I get a bit of social chat with they guys behind the counter while I wait, they know me, they know I'm a regular, I often get free extras, or samples of new stuff they are trying out. Their own delivery staff do both their own and the Just Eat orders. They could drop Just Eat in a heartbeat if the economics changed.

[Lee D]

Re: Corporate funding

Sure, if Just Eat disappeared.

But if they tried to leave themselves out of Just Eat, they would have to develop their own app (or lump in with others doing so) and make it popular enough even in the local area for people to use it by preference. That ain't gonna happen. All that will happen is that they won't be listed on Just Eat, etc. and hence won't get the business.

Just Eat isn't about the restaurants. It's industry-wide advertising done better than the industry managed to make itself in all the years it had the opportunity to. Pretty much the same as Uber vs Hail-o or whatever it's called.

And, sorry, but I pay for a pizza so I don't HAVE to drive out to it, or - to some extent - deal with people. Sometimes I even do it on my way home to arrive just as I get home myself.

I literally couldn't tell you where half the restaurants that I order for are actually based. And I wouldn't particularly care if they were a warehouse of some kind in an industrial estate, with no front-of-house at all. So long as my pizza arrives, tastes alright and their premises are inspected by the health inspectors, I'm happy.

Just Eat already consumed Hungryhouse and a dozen other such services across the world. I don't particularly care who they are, I just want all the takeaways on one screen and then someone to bring it to me. I don't even care if whoever brings it to me works for the restaurant. That's how Uber Eats works.

This is all stuff that the Internet era taught us - shopfronts are expensive, front-of-house staff are expensive, handling cash is expensive, even premises security, dealing with the public, etc. are expensive.

To be honest, I'd order from the local hot-chestnut salesman if they had to-the-door delivery for a reasonable charge. The whole economics of the industry changed quite a while ago, and if those sites ALL disappeared, of course they'd manage. But if just one survives, they better be onboard with that one and ready to go if they want to survive.

[Tom Chiverton 1]

Re: Corporate funding

Develop their own app? Most places here have some sort of outsourced Web ordering system, often cheaper than Deliveroo or Eats,which their also on.

But guess which gets advertised with a card in the bag...

[Lee D]

Re: Corporate funding

Cool. Because I Google takeaways in my area, and there's next-to-nothing available online compared to that available through UberEats. One kebab shop with a Wordpress/WooCommerce site (and I can't get through to completing the order without giving them my credit card details, no Paypal, Google Pay, etc.).

And like local council car parking, I don't WANT to sign up for 20 different things that only work for a portion of the available businesses, especially not if some of them are slapped-together junk that someone's sold to a bunch of takeaway shops under the pretence of "doing their website for them" and they want to take my credit card info.

It's like a website saying that they're not listed on Google, but they are listed on AskJeeves and their own proprietary search engine. I totally get that you don't want to have to deal with those large companies that are drawing in the majority of your customers. Good for you. Good luck with getting all those customers another way.

But if you're not on that service, I likely will never find you, and if that service ever disappears, I'll be looking for a replacement - not your particular shop's website necessarily.

Those apps provide me with info about who's delivering NOW (the above website I refer to lets you get all the way to the order stage before it tells you they don't start delivery until later tonight), what's available today, your full up-to-date menu, and that you'll bring it to my door, and let me track that so I can know what to expect, without having to spend 20 minutes on the phone explaining precisely what I want after having spent 20 minutes with my friends deciding what it is that we want.

[Fruit and Nutcase]

Re: Corporate funding

Now, how about a food delivery service that not only delivers your order, but has access to your home so they can come in and serve you the food as well - no need to get up off the couch to go to the front door - they have access to the "smart" lock on the front door, just stay on the couch watching TV/gaming - your takeaway pizza delivered right to you. For a premium, someone could even feed you

[MrMerrymaker]

Re: Corporate funding

"The entire company's premise is to basically throw money away to give you a cheap takeaway or ride, in effect, and virtually every such ride taken is *costing* them money."

You sure? Here's some prices of groceries from different local shops on their app.

Malteasers 102g bag - £4.29

Pepsi Max 2L - £5.49

1x Ginsters Pasty - £3.99

McVities Digestives - £4.19

Add a service fee AND delivery fee. And it still asks if you want to tip!

[Anonymous Coward]

Re: Corporate funding

And what about food?

[Anonymous Coward]

Re: Corporate funding

Indeed. This is Silicon Valley VC: we take a market, *any* market and because we've got the financial muscle, we fund someone to get into it on a planetary scale.

In theory, and provided that the business segment can be made profitable, that should work. We know that both taxis and home delivery services *are* profitable segments, and we know that this company are by and large past their growth phase, so the fact that they're losing so much money, to me, has to come down to either crap management, poor execution or systemic dysfunctionality within the company.

[Warm Braw]

Uber Eats delivery experience is integrated next to on-demand trips

Hi, mate. Sorry about the smell in the back, just got to drop off a load of Surströmming on the way.

[Dr_N]

Re: Uber Eats delivery experience is integrated next to on-demand trips

Grouper ®™

[Erix]

Uber eats

"Eats" - is it a verb, as in "uber eats your babies"? Or is it a noun as in "food leftovers from Germany"?

Either way that hipster name alone makes me want to throw up instead of ordering something from them

[Stoneshop]

Re: Uber eats

I invariably parse it as "rubbereats" initially.

(Icon: would probably be insufficiently discerning to care what flavour of rubber he's eating)

[Anonymous Coward]

Mistake?

> Delivery also topped ride-sharing when measured by gross revenue – before Uber gets its cut of the transaction.

Didn't the author mean "before the tax office gets its cut"?

Yes, I know about the corrections email address. Make it a web form and we'll talk.

[Charlie Clark]

Margins will fall

Even though Uber is currently burning money through the usual borrow from investors to buy customers ploy, any projections over future profits are assuming that margins will stay at whatever fantasy level they've currently come up with: they won't. Takeaway restaurants know all about margins and will be easily able to replace one service with another (with possibly the same driver), because exclusive contracts don't make sense for them.

[ExampleOne]

One problem I can see with the just-eats business model is it basically relies on a captive market of people who aren't locals or regular customers of their preferred eateries, and a lack of local word of mouth. I'm not sure that is sufficient to allow them to "rent collect" from the hordes of take-aways who also take orders directly, as in practice they can't monopolise the space.

[DS999]

How do they expect to be profitable next year?

When they have been losing $1 billion a quarter for years now? What will magically change by 2021? They assuming all the taxi companies will have gone out of business due to the pandemic and they can double prices for rides?

[Anonymous Coward]

Re: How do they expect to be profitable next year?

This whole losing money hand over fist thing bemuses me as well. I remember how much Amazon lost before finally turning a profit and I wonder how many investors went bankrupt or never made their money back, let alone a profit.

As for Uber, I hope this pandemic gets solved with the latest reports of a decent vaccine. Then their pivot to overpriced deliveries sees them go bust as people continue to work from home but shop in person rather than get groceries or so many takeaways delivered. No more overpriced journeys home from after work piss ups, which is the only use of their taxi service I see my acquaintances use them for.

[Charlie Clark]

Re: How do they expect to be profitable next year?

This whole losing money hand over fist thing bemuses me as well. I remember how much Amazon lost before finally turning a profit and I wonder how many investors went bankrupt or never made their money back, let alone a profit.

There are several things to consider but the main thing driving these platforms is the expectation of growth leading to monopoly or at least dominance of the market. Then, there is the financial engineering to consider: Amazon expressly pursued a growth instead of profits strategy, which many investors liked. Profits incur taxes and dividends in turn, at least in the US, incur higher taxes than share sales so many were happy to not to receive dividends and just see the share price rising. Nevertheless, it took a long time before initial investors saw a return on their investment. AWS and the other digital investments have redressed the balance somewhat. Though, while Prime fits in the strategy as guaranteeing long-term cashflow through long-term subscription, it's difficult to fit AWS into this model.

Higher share prices also mean that a company has a lower cost of capital than companies who borrow from banks. This is really skewing some markets as investors consider their bets "too big to fail": Tesla is being given far easier terms by investors than its competitors. If the money was coming from banks rather than from the capital markets, foreclosure would have had to happen long ago.