Is UberEats Profitable?

In 2014, Uber tried breaking into other transportation sectors and experimented with a number of services, one of which was UberEats.

They started off by offering a fixed menu in Santa Monica, California. Soon, more local restaurants joined the platform and they were able to deliver to other areas which included Beverly Hills and West Hollywood. UberEats expanded its services within a year to other cities like New York, Barcelona and Chicago.

Although UberEats has had to end its services in several countries over the last few years, they still have managed to hold the number one position in food delivery service in many countries. They ended service in South Korea and India in 2019 and in several Eastern European countries in 2020. It also entered into an agreement with Russian search engine Yandex to leave Russia.

In USA, UberEats has been in strong competition with DoorDash, which beat Grubhub to become the most popular food delivery service in 2019. Uber was able to rise above their competitors in July 2020 with the acquisition of Postmates for $2.65 billion.

UberEats has been in business since 2014 but it wasn’t only until recently has turned profitable for the first time, the company said on Wednesday, in an earnings report that revealed it may be bouncing back after a rough run during the lockdown.

Uber takes a huge chunk of money from 20%-30% on all orders yet it has had a difficult time to maintain a steady stream of profitable revenues. Things do not generally seem great for Uber and its investors. Uber claims that it will be able to draw stable profits once they have expanded enough and the market has stabilized. Statistics show that UberEats revenues soared high during the pandemic years but on the other hand the ride hailing service saw a huge decline which has made it difficult for Uber to generate profits even with rising revenues.

Currently, UberEats are trying to cut costs on some fronts such as implementing the use of ‘dark kitchens’ which are set up by partner restaurants in cheaper locations and are only used for delivery. This may help bring in more profits. In 2020, Eats became central to sustaining the business, as Uber’s ride-hailing platform saw 50 percent less revenue than a year ago. However, as the world has finally resumed to normal pre-pandemic stability, Uber’s ride hailing service is expected to regain traction and start bringing in lost revenues.

Let’s have a look at some of the key statistics on UberEats.

• In the early stages of the coronavirus pandemic, when many people were forced to stay indoors, food delivery sales rose to record heights. As a result of which, UberEats has increased its revenue rapidly over the past two years. It generated $8.3 billion in revenue in 2021.
• Uber Eats food delivery service has surpassed the company’s Uber ride-hailing service in size. UberEats annual gross bookings from 2017 to 2021 increased from $3.1 Billion to $58 Billion.
• UberEats is the most popular food delivery service internationally and has a whopping 81 million users. The number increased from 5 million in 2016 to 81 million in 2022.
• UberEats annual revenue increased from $0.6 Billion to $8.3 Billion from the years 2017 to 2021.
• Uber Eats is available in over 6,000 cities in 45 different countries. It started from 120 cities in 2017 and expanded to 6000 cities in 2021.
• Uber Eats had 80,000 restaurant partners in 2017 and now has approximately 900,000.

Despite the numbers, as we are settling in after post-Covid, Uber’s ride-hailing and food-delivery services seem to get back in business. The future seems promising for the company as both ride-hailing and food-delivery services have started operating at their full capacity and have started bringing in revenues.

Outside of food delivery, the company is focused on grocery, convenience, and alcohol in its marketplace, which will be supported by the addition of Cornershop and Drizly to its platform. Uber Eats’ ability to use profits from restaurant delivery to add new verticals will help it become more competitive against DoorDash, which has been making major plays to expand into alcohol, grocery, convenience stores, and other areas of retail.

But, does that mean Uber will be profitable for drivers as well? Well, the situation is hard to comment on. Unlike in ridesharing, where drivers get paid by miles and minutes, UberEat has an amount fixed for its drivers. For example, if they get a $5 cut for a certain food delivery then it’s not affected by the restaurant’s distance or wait time. In rideshare, passengers sometimes go 15 to 20 miles which can generate good earnings. But in UberEats, the delivery is always within 2 to 3 miles so UberEats is not profitable for drivers unless they do a huge volume of deliveries every day.