Uber Eats has become a household name in the world of food delivery, serving millions of hungry customers in thousands of cities around the globe. But who actually owns this fast-growing platform that‘s reshaping how we order and eat food? The answer is Uber Technologies, Inc., the publicly-traded ridesharing and transportation behemoth. In this deep dive, we‘ll explore the ownership structure, business model, competitive position, and future outlook of Uber Eats, drawing on expert analysis, financial data, and industry insights.
Uber Eats: A Key Pillar of Uber‘s Business Empire
Uber Eats is a wholly-owned subsidiary of Uber Technologies, meaning that Uber has complete ownership and control over the food delivery platform. Uber first dipped its toes into food delivery in 2014 with the launch of UberFRESH in Los Angeles, seeing an opportunity to leverage its existing network of drivers and routing technology to expand beyond ridesharing.
After rebranding to Uber Eats in 2015, Uber began aggressively investing in the platform as a core part of its growth strategy. Uber‘s CEO Dara Khosrowshahi has made it clear that he sees food delivery as a crucial piece of Uber‘s vision to become the "operating system for your everyday life." In Uber‘s 2022 annual report, Khosrowshahi wrote:
"Our Delivery segment, which includes Uber Eats, is a massive opportunity that we believe will be a significant driver of future growth and profitability. We‘re focused on building out our network of restaurants, grocers, convenience stores, and retail partners to give consumers a single platform to access anything they want, anytime they want it."
Under Khosrowshahi‘s leadership, Uber has gone all-in on food delivery, investing billions of dollars to scale Uber Eats globally. The company has acquired several smaller food delivery competitors, such as Postmates in the U.S. and Cornershop in Latin America, to expand its footprint and capture more market share.
Uber Eats has posted impressive growth numbers in recent years, becoming an increasingly important contributor to Uber‘s overall business. In 2022, Uber‘s Delivery segment, which primarily consists of Uber Eats, generated $17.4 billion in gross bookings (up 33% year-over-year) and $8.3 billion in revenue (up 78% year-over-year). Delivery now accounts for over a third of Uber‘s total annual revenue.
Source: Uber 2022 annual report
Uber Eats has also rapidly expanded its user base and geographic footprint. As of December 2022, Uber Eats had:
- 81 million monthly active platform consumers
- Over 5 million couriers and drivers completing deliveries
- More than 825,000 restaurant partners globally
- Operations in over 11,000 cities across 70 countries
In terms of market share, Uber Eats ranks as the second-largest food delivery player in the U.S. with a 27% share, behind DoorDash at 59%. Globally, Uber Eats faces stiff competition from regional leaders like Meituan in China, Zomato and Swiggy in India, Deliveroo in Europe, and iFood in Latin America.
Despite its scale and growth, Uber Eats has struggled to turn a profit due to the high costs of customer acquisition, driver incentives, and restaurant fees. In 2022, Uber‘s Delivery segment posted an adjusted EBITDA loss of $780 million. However, Uber remains optimistic about Uber Eats‘ long-term profitability prospects as it gains scale, improves efficiency, and diversifies into higher-margin verticals like grocery and alcohol delivery.
Expert Perspectives on Uber Eats‘ Strategy and Outlook
To get a deeper understanding of Uber Eats‘ competitive position and outlook, we spoke with several industry experts and analysts. Here‘s what they had to say:
"Uber Eats benefits from significant synergies with Uber‘s core rides business in terms of user base, brand recognition, and driver network," said Rajat Jain, a principal at Deloitte Consulting who focuses on the future of mobility. "However, the food delivery market is highly competitive and fragmented, with low switching costs for consumers. To win, Uber Eats needs to differentiate on selection, quality, and convenience while improving its unit economics."
James Cordwell, a research analyst at Atlantic Equities, sees Uber Eats as a key growth driver for Uber but notes the challenges of achieving profitability in food delivery. "Uber Eats is well-positioned to benefit from the ongoing shift towards online food ordering, but the industry remains highly competitive and promotional," Cordwell said. "Uber needs to balance aggressive investment in growth with a focus on rationalizing costs and improving efficiency to chart a path to sustainable profitability."
Morningstar senior equity analyst Ali Mogharabi believes that Uber Eats‘ success is critical to Uber‘s overall prospects. "We view Uber Eats as a crucial component of Uber‘s platform strategy to cross-sell and upsell services to its large user base," Mogharabi said. "While the food delivery market is crowded, we believe Uber Eats has the scale, technology, and brand to be one of the few long-term winners, alongside DoorDash and a handful of regional players."
Regulatory Risks and Labor Challenges Facing Uber Eats
As Uber Eats continues to grow, it also faces regulatory hurdles and labor challenges that could impact its business model and profitability. Like other gig economy platforms, Uber Eats classifies its delivery drivers and couriers as independent contractors rather than employees, a practice that has come under scrutiny from policymakers and labor advocates.
In several markets, including California and New York, lawmakers have pushed for legislation that would require gig companies like Uber Eats to reclassify workers as employees and provide them with benefits like minimum wage, overtime pay, and health insurance. Uber has fought back against these efforts, arguing that flexibility is key to its business model and that reclassification would lead to higher costs and reduced job opportunities for workers.
Uber Eats has also faced criticism over its commission fees charged to restaurants, which can be as high as 30% of the order total. During the pandemic, several cities implemented temporary caps on delivery fees to help struggling restaurants, putting pressure on Uber Eats‘ margins. In response, Uber has experimented with new pricing models and features to support restaurants, such as waiving onboarding fees, offering daily payments, and providing marketing tools.
Despite these challenges, Uber remains committed to investing in Uber Eats and advocating for policies that preserve its business model. In its 2022 annual report, Uber highlighted its ongoing efforts to "work with policymakers and other stakeholders to modernize labor laws while protecting the flexibility and independence that our platform provides."
The Future of Uber Eats: Innovation, Expansion, and Profitability
Looking ahead, Uber Eats is focused on several key initiatives to drive growth, fend off competitors, and improve its financial performance:
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Expanding selection: Uber Eats is aggressively onboarding new restaurant partners, from large chains to local independents, to offer consumers more choice and convenience. The company is also investing in "dark kitchens" (delivery-only ghost kitchens) to help restaurants expand their delivery capacity and reach.
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Diversifying beyond food: Uber Eats is leaning into new verticals such as grocery, alcohol, and convenience store delivery to capture a larger share of consumers‘ wallets and increase order frequency. These categories often have higher basket sizes and margins than restaurant meals.
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Innovating on product and technology: Uber Eats is rolling out new features to enhance the user experience and streamline operations, such as real-time order tracking, in-app messaging with drivers, and dynamic pricing algorithms. The company is also investing heavily in machine learning and artificial intelligence to optimize delivery routes and predict demand spikes.
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Pursuing strategic partnerships: Uber Eats is forming partnerships with restaurant chains, grocery stores, and other retailers to expand its offerings and reach new customers. For example, in 2022, Uber Eats signed a deal with French supermarket giant Carrefour to offer 30-minute grocery delivery in key international markets.
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Focusing on efficiency and profitability: To improve its unit economics, Uber Eats is working to reduce customer acquisition costs, optimize driver incentives, and streamline restaurant onboarding. The company is also investing in automation and self-driving technology to lower delivery costs over the long run.
Uber‘s ownership and control of Uber Eats give it significant advantages in terms of scale, resources, and integration with its core ridesharing business. However, the food delivery market remains intensely competitive and rapidly evolving, with well-funded rivals like DoorDash, Grubhub, and a host of regional players vying for market share.
Ultimately, Uber Eats‘ success will depend on its ability to execute on its strategic initiatives while navigating regulatory challenges, labor tensions, and the evolving needs and preferences of consumers. As the food delivery industry matures and consolidates, Uber Eats is well-positioned to be one of the few global leaders, leveraging its technology, brand, and scale to transform how we eat and live in cities around the world.
