Uber Eats Gains Momentum as Ride-Hailing Growth Slows
Uber’s food delivery service, Uber Eats, is gaining momentum as the ride-hailing giant bleeds cash after its initial public offering earlier this year.
The company said on Thursday that it had lost $1 billion in the first quarter, while growth in its ride-hailing business continued to slow. But in food delivery, Uber’s growth has accelerated over the past three quarters as the service expands globally.
“Some folks believe that the food category can be larger than the ride category,” Dara Khosrowshahi, Uber’s CEO, said during Thursday’s earnings call with investors. “If that’s true … that would be an enormous win for us.”
That’s because Uber Eats has an increasingly global footprint and is able to recruit drivers and customers that already use its ride-hailing service. In its first quarter, Uber Eats had $536 million in revenue, excluding the money it pays in driver incentives. That represents 89% more than during the same quarter last year and a 23% jump from the fourth quarter of 2018.
Uber’s total monthly active users rose to 93 million, up from 70 million during the same period last year, partially driven by Uber Eats, the company said.
Uber Eats still only represents a small fraction of Uber’s overall business. For comparison, the company’s ride-hailing service raked in $2.4 billion in revenue during the first quarter—more than four times as much. However, food delivery is among Uber’s fastest growing businesses and a tool it can use to market its other services.
The company has been experimenting with promoting Uber Eats to passengers using its ride-hailing service, Khosrowshahi said. It’s also considering loyalty programs and subscriptions that could include Uber’s ride-hailing service as well as Uber Eats.
“We are seeing some very encouraging early signals,” Khosrowshahi said.
In some cities, the company also lets restaurants use their own employees to deliver orders made through the Uber Eats app, giving eateries more flexibility.
Khosrowshahi said he’s aware that competitors are raising big money from venture capitalists—rival DoorDash raised $600 million last week, for example—but he isn’t concerned.
“We are very, very early in the stages of exploring the many, many ways in which our rides business can help continue to build our Eats business and vice versa,” Khosrowshahi said.