It has never been easier to get dim sum or cheesesteak delivered. Whatever cuisine you’re craving can be at your front door in less than an hour. From GrubHub, to Caviar, to Door Dash, to Uber Eats, food delivery startups are a booming business.
But no delivery service is growing as fast or is as popular with customers as Uber Eats.
Customers love Uber Eats
Uber Eats has a nearly perfect rating on the App Store and Google Play. It also doubled sales from August 2017 to February 2018, fueled mostly by rapid expansion into major cities and partners like McDonald’s. These moves have helped Uber Eats close the gap that exists between them and industry leader GrubHub. In August 2017, there was a 48% difference in market share between GrubHub and Uber Eats. By March, that difference had dropped to 28%.
Living in a major metropolitan area, I’m a big fan of services like Uber Eats and GrubHub - and I use both. Uber Eats gets my vote for the better service for a number of reasons. First, there is no minimum order amount. With GrubHub, I’m often required to spend $20 to get my Gyro or Calzone. That can be way too much food for one person. Then there’s often a delivery fee on top of that minimum order. With Uber Eats, I can order my favorite sandwich from the Italian deli in Santa Monica and it doesn’t matter if it is $4.25 or $6.75 or $12.50. Uber Eats will deliver it for a flat-rate booking fee (it's not always cheaop, though: the booking fee for my latest order was $5.99). Sometimes, the company discounts or waives this fee altogether.
Then there's the Uber Eats “Free Food” setting. Every once in a while, you’ll find a deal there. I got a burger delivered for free recently—completely free—they didn’t even charge a booking fee. It's a great way to attract new customers, and who doesn't love free food?
Finally, Uber Eats doesn't charge restaurants for delivery. Instead, it charges customers. This is good for the restaurant industry, which is struggling with America's growing obsession with food delivery.
Challenges Remain
While Uber Eats rates well with its merchants and customers, the company does face an uphill battle to reign supreme over all the food delivery services. For instance, GrubHub used acquisitions to build a network across the U.S., acquiring 11 companies since 2011.
Uber Eats has taken a different strategy. In fact, it has only acquired one company. Instead, Uber Eats leans into its Uber network of drivers. When you place an Uber Eats order, you can track it, exactly like when you’re ordering an Uber car. There is a familiarity there that puts the customer at ease.
How does that perfect rating in the App Store translate to business for Uber Eats? In nine of the 22 most populous cities where Uber offers the service, people are spending more on Uber Eats than on any other food delivery service.
Uber Eats still faces stiff competition for market share. GrubHub is a behemoth while Door Dash and Postmates have reportedly decided to merge. This will make the resulting company larger than Uber Eats, giving them 24% of the market share compared to Uber Eats’ 21%.
It is not hard to conclude, however, that a service with a nearly perfect rating from customers and merchants is doing something right. Is Uber Eats primed to shock the industry with its future growth?
Uber has the network and the happy customers. As it adds more territory and merchants, it should only become more popular.
