When Spain closes its doors on Uber, Uber finds a most delicious open window
Having a judge declare your company’s primary business illegal is a bracing motivation to try out a Plan B.
That explains why in Spain the prime business of Uber Technologies, best known for turning private cars into improvised taxis with its rider-driver matching app, is delivering salmon burgers.
“It’s a lot of effort to build a platform for the collaborative economy. Once you’ve gotten the chicken-egg things solved, you’ve got to use it,” says Sandra Sieber, an information systems professor at Barcelona’s IESE Business School.
Uber has had a difficult time with European regulators in general. The company’s Spanish squabble began last December, when a judge ordered the company to shutter its low-cost ride-share service, UberPop, because it did not comply with local laws.
At first, Uber looked to sign up more licensed car-service chauffeurs, like the kind who work for its UberBlack service in the U.S. But there are few such drivers in Spain’s two largest cities, Madrid and Barcelona, and a service named Cabify was already working with many of them.
And so, last Thursday, Uber announced the launch of UberEats, a curated food delivery service that lets users order a limited number of plates at lunch or dinner (now, one each) for delivery within 10 minutes. Available in most of Barcelona, each plate from the dozen or so participating restaurants costs about €10; delivery is €2.50.
Uber’s “burger pivot” isn’t that strange, as the company is less a ride-selling company than a technology firm that puts unused delivery capacity to use. That’s why investors valued Uber at $41 billion in its last funding round. They weren’t looking for a piece of the world’s largest gypsy cab service (even if it was in 250 cities); they wanted a share of a huge, multi-faceted logistics firm.
Indeed, as described by Pierre-Dimitri Gore-Coty, Uber’s general manager for Western Europe, UberEats is as much about testing another logistics business as it is about food. “We’re putting everything into pressing a button and getting food to you in minutes with a minimum of friction,” he says. “We’re all about bringing efficiency to market.”
This is not the first time Uber has tested non-ride services. Last year, the company launched a New York bicycle messaging offering called UberRush and a blast-from-1999 Urbanfetch-like corner store delivery service in Washington D.C. called UberEssentials. And the Barcelona food delivery is modeled on UberFresh, a service launched last August that now includes 50 restaurants in Los Angeles.
For IESE’s Sieber, UberEats is interesting because it is more complicated than delivering documents and the like—it has to comply with food safety rules like delivery temperatures, for example. If successful, it will help prove that Uber is up to dealing with difficult regulations. According to Uber’s Gore-Coty, the delivery drivers are professionals with free time to take on more work, not amateurs looking for a quick buck.
“Once you start doing restaurant delivery and convince people you can deliver food hot, it will be very easy to deliver other packages,” Sieber says. “Once I see this, when they ask me if I want to move other things, I will say, ‘Yes.’”
In Spain, UberEats faces some competition. La Nevera Roja already allows users to order delivery online from more than 4,000 restaurants. But by concentrating on a limited menu (as curated by Plateselector) and promising to deliver within 10 minutes, Uber is offering a different product to appeal to impatient consumers who want a speedy, guaranteed service.
“We believe that by making the experience frictionless, by getting hot food there in 10 minutes, we can create a new market,” says Gore-Coty.
UberEats is both a means to enter a new market and a way to keep Uber’s name in the Spanish public eye after its ride service was shuttered. “They couldn’t remain silent in Europe for more time,” says Sieber. Whether food delivery can make up for the lost ride-share revenue is questionable, but that’s not the end game.
As “collaborative economy” services like Uber and Airbnb expand, they will continue to face regulatory hurdles in places like Europe and China. So, to make use of their tech investments, they will have stay on their toes, adapt to regulations, and continue to pivot.