Home / Companies / Uber Eats plans foray into more towns and cities

Bengaluru: Uber Eats, the online food delivery service owned by Uber Technologies Inc., is growing at 50% month-on-month in India, a top executive said, revealing plans to expand into more tier II and non-metro cities.

Launched in India in May 2017, Uber Eats is now present in 13 cities—Mumbai, Delhi, Gurgaon, Bengaluru, Chennai, Chandigarh, Hyderabad, Pune, Kochi, Jaipur, Kolkata, Coimbatore and Vizag.

Bhavik Rathod, head of Uber Eats in India, said in an interview that the delivery platform currently has more than 12,000 restaurants with at least 40 new restaurants being added daily. It recently launched in two new non-metro cities: Coimbatore and Vizag.

To be sure, in 2016, online food delivery firm Zomato had paused online ordering in four cities including Coimbatore due to a shortage of orders. However, Rathod said that tier II and non-metro cities have witnessed a growth in the number of new restaurants and hotel chains, opening up new business opportunities for online food delivery platforms.

“As urbanization picks up in India, we are going to see more cities like Vizag, Coimbatore, Surat, Nagpur and others offering a great business potential for us. While there might not be immediate the long run, these cities will grow significantly in terms of users and orders…it is really important for us to be the early entrants there, and tap into the growth potential," he said.

Rathod refused to share figures on the number of orders and active user base the company has. He, however, said that Uber Eats charges up to 30% commission from its restaurant partners depending on factors such as menu rates, delivery costs and rental prices.

Additionally, Uber Eats will look at expanding deeper within its current cities. Citing an example of Bengaluru, Rathod said that the platform recently went live in Whitefield, a suburb, and that it plans to launch in areas like Yeshwantpur and others in the coming months.

Uber Eats is also leveraging data generated from its core ride-hailing platform to streamline its delivery service, and to decide on new markets and sub-markets. In India Uber’s cab business is present in more than 30 cities.

Rathod said that both Uber Eats and the cabs business utilize the same back-end and engineering team. Uber Eats uses data points such as cab rides and booking density in a certain geographic area and combines it with publicly available restaurant data to estimate potential demand in that area.

“It has taken us by surprise, what the potential the market shows. Since our rides business is already there in these markets, anyone who has a smartphone, and uses Uber for rides, is a potential Uber Eats customer…so we already have access to a consumer base to target," he said.

The online food delivery segment in India turned fairly competitive after the entry of Uber Eats. Apart from homegrown companies like Zomato and Swiggy, Uber’s immediate rival Ola also signalled its entry into the food delivery segment with the acquisition of Foodpanda in December 2017.

Investors are also pouring funds into the segment as competition picks up. Swiggy raised $100 million from Naspers in February, which was its largest round. Less than two months later, Mint reported that Swiggy is looking to raise as much as $200 million, as the company plans expansion into the grocery delivery segment.

In March, Zomato raised $150 million from China’s Alibaba, valuing the company at well over $1 billion.

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