Uber Sees Doubling in UberEats Operations as Ride Hailing Business Stays Low: Comments from The Freedonia Group & Packaged Facts Analysts

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Aug 07, 2020, 13:01 ET

ROCKVILLE, Md., Aug. 7, 2020 /PRNewswire/ -- On August 6, Uber Technologies Incorporated (San Francisco, CA) announced its quarterly earnings results. The company's UberEats unit remains the bright spot for the company, seeing revenue doubled to $1.2 billion as Americans continue to stay at home despite changes in restaurant operation across various states since April. This is in contrast to the ongoing sharp declines in the company's flagship ride-hailing unit as fewer riders and drivers in the US returned to the platform despite improvements in other countries where coronavirus effects are currently more muted.

UberEats continues to move toward profitability. The company has made a number of changes from exiting certain smaller markets to improving route planning. Uber's CFO Nelson Chai noted that the unit will be profitable in the majority of countries where it operates within a few years.

One thing moving the business ahead was noted by Uber CEO Dara Khosrowshahi said, "The Covid crisis has moved delivery from a luxury to a utility."

Jennifer Mapes-Christ, consumer and commercial group leader for the Freedonia Group, notes "As more people try delivery options, they integrate it into their daily life and choose to retain this convenience even after the time of necessity has past. For instance, before the pandemic consumers were already getting used to having household goods and other items delivered to their doorstop by Amazon and Walmart. Now, large numbers have become accustomed to having groceries and prepared restaurant meals delivered to their home as well."

According to The Freedonia Group's National Online Consumer Survey conducted in May 2020, 30% of adults note that they are using restaurant delivery more because of the coronavirus pandemic and 51% note that they are using restaurant curb-side pick-up options more.

According to Packaged Facts analyst Cara Rasch, "The shift to more convenience options via carryout and delivery precede even the COVID-19 outbreak which caused dine-in services at restaurants to be widely shuttered. The advent of apps and web portals allowing users to order from local restaurants and stores via the internet or a mobile application has caused carryout, and especially delivery, of restaurant food to expand rapidly."

Furthermore, she notes, "Online order services can be offered by third parties or proprietary, in-house applications. However, third-party apps – such as UberEats and Postmates – have a number of advantages, including consumer convenience of being able to order from a variety of restaurants using one app. While some restaurants consider the commissions that third-party online delivery companies charge to be a burden, they allow a restaurant to participate in delivery without investing in their own app or delivery staff."

However, Rasch notes, "Profitability difficulties and labor issues have challenged the third-party delivery industry, which is still in its infancy. In the longer run, third-party digital delivery operators will be faced with more foodservice operators developing their own delivery services. Foodservice companies may also combine with other local foodservice providers to offer the service at a lower fee level and to have more control of the delivery process."

Mapes-Christ comments, "It is that increasing competition with the restaurants themselves that is leading companies like Uber to think more broadly about on-demand delivery. Last-mile delivery in e-commerce more broadly is a challenge but quick service continues to be an increasing consumer priority."

For more information, see the following data-rich market analysis reports from The Freedonia Group's off-the-shelf research catalog, including US Foodservice Single-Use Products, Pouches, Global Foodservice Single-Use Products, Global Foodservice, Global E-Commerce, Retail Bags, and Global Single-Use Packaging Regulations.

Additional analysis of the food delivery industry can be found in Food & Beverage reports from Packaged Facts, The Freedonia Group's sister publisher. Key titles include Food Carryout & Delivery, Food Carryout and Delivery: Special COVID-19 Consumer Insights, Food Market Outlook 2020: Home Cooking, Grocery Shopping, & Food Trends in the Coronavirus Age, Office Coffee Service, Online Grocery Shopping, Meal Kits, Eating Trends: Restaurant Use, and Global Food E-Commerce.

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SOURCE Packaged Facts