Uber Eats eyes bigger share of Australian online food pie

Uber Eats is adding more restaurants and meal choices to its platform to increase its share of the online food delivery market as major retailers Coles andWoolworths accelerate investment online to claw back sales.
Two years after launching in Australia, Uber Eats is now the largest player in the online food delivery market ahead of Menulog and Deliveroo and its food sales are growing faster than ride-sharing revenues.

Jason Droege, vice-president of Uber Everything (which runs Uber Eats), and Jodie Auster, Uber Eats’ general manager Australia and New Zealand, say the company, which is considering an initial public offering in the US next year, must continue to invest and innovate to take advantage of the rapid shift in consumer eating habits from cooking home-cooked meals to ordering fully prepared meals online.

“We’ve only just scratched the surface,” Ms Auster told The Australian Financial Review on Tuesday.

Uber Eats estimates the Australian online takeaway food market is worth at least $1.5 billion, just 8 per cent of the wider $18 billion takeaway food market.

“We have captured a lot of market share since we entered the market,” said Mr Droege. “If the market is big enough and people differentiate all players can operate quite successfully.”
Uber Eats has 16,500 restaurants, cafes and food outlets on its platform in Australia and New Zealand and operates in 24 cities covering two-thirds of the Australian population.

About 500 restaurants and cafes have created “virtual restaurants” or new brands on the Uber Eats platform to reach new customers and grow sales (the average growth is 30 per cent) while using existing facilities.

The incremental sales growth and operating efficiencies help restaurants and cafes offset Uber Eat’s service fee, which is about 35 per cent.

Plans for dark kitchens

Ms Auster and Mr Droege believe one of the next major developments in the evolution of online food will be restaurants establishing or sharing dark kitchens to improve food preparation and delivery efficiency – emulating Deliveroo, which has established several dark kitchens in Melbourne.
“The customer doesn’t care which kitchen (the food) comes from as long as it arrives fast and the food is good,” said Ms Auster.

Mr Droege played down a recent report that Uber Eats would soon start using drones to deliver food.

According to The Wall Street Journal, Uber is hoping to make delivery drones functional as soon as next year and commercially operational in multiple markets by 2021.
“When the technology works it will have pretty big benefits,” said Mr Droege. “But it’s very early days. This isn’t something that’s going to launch next year and all of a sudden food will be flying down the highway.

“There are many technical challenges and many logistical challenges not the least of which is where does it land.

“We make a lot of investments because it’s hard to know where the future is going to go, the world is moving very, very quickly.”