Uber’s food delivery service UberEATS starts in Mumbai

Ride-hailing platform Uber is now getting into the food delivery business in Mumbai, under UberEATS and has partnered over 200 restaurants


UberEATS follows the food delivery business model, charging restaurants a service fee to use its platform, and uses third-party delivery. Photo: Indranil Bhoumik/Mint
UberEATS follows the food delivery business model, charging restaurants a service fee to use its platform, and uses third-party delivery. Photo: Indranil Bhoumik/Mint

Bengaluru: Uber Technologies Inc. has started its food delivery service UberEATS in Mumbai, the company said in a statement on Tuesday, four months after announcing the launch of the service in India in January.

The company has appointed Bhavik Rathod, earlier the general manager for south and west for Uber’s ride-hailing business, as the head of the food delivery vertical. Rathod will report to Allen Penn, the Asia-Pacific head of UberEATS.

“The introduction of UberEATS in India, with Mumbai as the first city, is a major step in our global expansion and showcases our commitment to the region. The app brings the perfect pairing of amazing restaurant partners, innovative technology, and the efficient Uber delivery network at a tap of a button to people in India. The wide selection of meal choices delivered at Uber speed will open new economic opportunities for delivery partners, enable restaurants to connect with more consumers and make eating effortless, everywhere and for everyone,” Rathod said in a statement.

UberEATS, a separate app, was first piloted in 2014 in Los Angeles. The service has since been expanded to 78 cities in 26 countries, including New York, Paris, Seattle, Bangkok, Singapore, Tokyo and Hong Kong.

Apart from on-demand food delivery, UberEATS will also allow consumers to schedule a delivery up to a week in advance. The company has also launched an analytics tool called Restaurant Manager for the eateries that provides the businesses with insights into service quality, customer satisfaction and sales among others.

According to industry experts, the average order value for food in the US is around $20, about four times more than the average Rs300 (about $4-5) in India. As a result, delivery firms in India, which charge clients a commission of 10-20% of the order value, end up losing money as each delivery costs more than Rs50.

Unlike most food delivery apps that either deliver for free or charge a fee for orders below a minimum threshold, Uber will charge a delivery fee of Rs15 irrespective of the order value. This essentially means that Uber will earn a commission from restaurants, as well as a delivery fee from consumers.

To begin with, Uber has partnered with about 200 restaurants in Mumbai and allows payment only through Paytm, the digital wallet it partnered with in 2014 for cab payments.

Uber’s entry into food delivery in India comes at a time when home-grown food start-ups, barring a few, are cash starved and have put expansion on hold. Food delivery was one of the worst-affected segments following the funding slowdown since mid-2015, forcing the likes of Spoonjoy, Dazo, Eatlo and Tinyowl to shut shop.

Uber’s food delivery service will primarily compete with Swiggy (Bundl Technologies Pvt. Ltd), which has raised $75 million from investors, and Zomato Media Pvt. Ltd, which has raised about $224 million.

According to documents available with the Registrar of Companies, Swiggy’s revenue rose to Rs23.59 crore for the year ended 31 March from Rs11.59 lakh a year earlier. But losses bulged to Rs137.18 crore from Rs2.12 crore in FY2015. Total expenses stood at Rs160.77 crore, implying that Swiggy burned about Rs13 crore per month in FY2016.

Ola, Uber’s biggest local competition in the ride-hailing segment, started a food and grocery delivery business early in 2015. The company shut both verticals in March last year, after they failed to meet expectations.

More From Livemint