Uber began its foray into London food delivery in June this year. Uber Eats is currently present in 24 cities in six countries, with plenty more added every month. Will Uber be able to dislodge Deliveroo as the market leader? Its UK general manager, Toussaint Wattinne, answers Courier’s questions.
2 Dec 2016
Why has Uber got into delivering food?
We’ve been operating a people transportation business for seven years now, and we’ve got to learn how the city works, how it operates and we’ve built a logistics system to move around the city quickly. Food delivery was something we could bring value and efficiency to, [using] what we had learned.
Is this just the beginning of Uber’s transportation ambitions?
We definitely have the ambition to put our technology to services, to explore where we can bring efficiency and service and bring that magic – the speed of delivery.
How many people are using Uber Eats so far?
Over 500,000 downloaded the app in the first four months and we have over 1,000 restaurants on the platform.
What share do you have in food delivery compared to Deliveroo?
People get too focused on share, when the reality is building overall demand for food delivery.
How challenging has it been to enter a market where Deliveroo has such a strong grip?
The first thing we look at is the potential in the market, rather than the competitive market. Obviously we’ve paid attention to Deliveroo.
What has impressed you most about Deliveroo?
Deliveroo do lots of good out of home advertising. We’re not quite ready for that as yet though.
How are you going to differentiate with Deliveroo to win customers?
Uber has been delivering people around cities for a few years now. We’re a key part of a city’s infrastructure and we know how cities move. Uber Eats uses this knowledge to help deliver people’s food more efficiently. We also bring additional benefits such as no minimum basket size. If you make a £7 order, that’s no big deal for us.
You’re also in the market for drivers. Has that been all about paying more than Deliveroo?
Drivers have a choice. The revenue [they receive] certainly plays a major role, but they massively appreciate the full flexibility of logging in and out on our platform. As long as drivers have up-to-date insurance, they are absolutely free to drive when they want as long, as their documents are in order.
Are you pushing for exclusivity from drivers and restaurants?
Absolutely not; we value the flexibility, and encourage them to have a few providers.
Is that because you’re the challenger in the space?
Uber Eats is all about choice and flexibility. Restaurants shouldn’t be tied to one company. It’s good for the restaurants to have more than one as it will increase their orders. Similarly we think couriers should be able to choose the best option for them.
How many hours does a driver do on average?
We’ve typically seen 15 to 20 hours a week.
But clearly, you’re not offering them the benefits of contracted employment?
All our surveys and conversations with drivers suggests they [employee contracts and benefits] are not something they want. We are happy about it and the couriers love the flexibility.
How much are drivers paid?
It’s about £11 an hour. The reality is the way couriers get paid is through achieving delivery. The more they do the more they make. The rate is for every mile, every pickup and an extra pickup.
What’s your fee to restaurants?
It varies, but we’re about 30%.
Is it fair to say, you and Deliveroo are losing money to establish a foothold in the market? Are the economics in food delivery ever going to be sustainable?
We make reasonable and rational investments to make the business work.
We’re not envisioning the business model we’re building will change. That’s Uber specific. That model is [based on] our assumptions and [designed to create] a revenue generating business through efficiency gains, more deliveries per hour, more density, more hours, all to decrease the costs. It’s all about making efficiency gains.
In short, as the platform gets better, the marketing costs decline.
Is food delivery likely to be a winner-takes-all market?
Neither food nor people delivery has winner takes all, but we see efficiencies over time. We see a few players likely to emerge. We envisage some consolidation, for sure.
There’s a lot of talk about Uber taking on supermarkets next.
We have Uber Rush in some US cities. Through Walmart in the US, we provide the delivery tech, the network and delivery.
When’s Uber Rush coming to London?
There are no immediate plans for having that up and running in London.