Uber's CEO hints at delivery’s future
(But doesn’t talk specifics.)
Uber’s leader sees a bright future for the company as a delivery juggernaut.
During last week’s third quarter earnings call, Uber CEO Dara Khosrowshahi told analysts and investors that the company would keep growing its white-label delivery service, called Uber Direct. Actually, he said the company would continue to “invest aggressively” in the technology.
Restaurants and other merchants use Uber Direct to fulfill orders taken through their app or website, as opposed to Uber Eats’ online marketplace. It’s a way to take advantage of the robust global logistics built by a transportation company that’s now worth over $150 billion. It’s also a way for restaurants to avoid commissions associated with marketplace orders.
Khosrowshahi clearly sees lots of room to grow. He called Direct one of the fastest-growing parts of the business; Uber’s hiring more engineers to support more clients with more features, he said.
Then he offered a peek at the future: “We think the extension of Direct beyond just same-day delivery into more fundamental parts of the fulfillment ecosystem is a real potential opportunity for us going forward,” he said.
Uber’s leader didn’t elaborate on exactly which “fundamental parts” of the fulfillment ecosystem Uber might target, and I’m not enough of a logistics expert to speculate. But his point is clear: Uber plans to lean into its network to fulfill as many orders as possible, from restaurants or other merchants. As we’ve come to expect from the largest third parties, delivering food from restaurants was just the beginning.
Food delivery wasn’t Uber’s original promise.
Uber started as a taxi alternative in the unbelievably-hard-to-get-a-cab San Francisco of 2009. Its earliest delivery marketing efforts involved hauling on-demand Christmas trees, ice cream, and, for one particularly memorable day, puppies to play with for 15 minutes.
Uber’s delivery business has evolved over the last decade, building a marketplace and platforming huge enterprise restaurants. A push to grow its direct delivery business is a logical next step.
In September, Uber announced an exclusive deal with Olive Garden. The when-you’re-here-you’re-family chain had long resisted offering its food for everyday delivery (though it did accept online catering orders over $100; they were delivered by the restaurant’s staff).
“Guests have been asking us for home delivery options and they continue to show they are willing to pay for the convenience,” Rick Cardenas, president and CEO of Darden, Olive Garden’s parent company, said at the time. “As we continued to evaluate delivery, it was important for us to find a way to address this guest need state without disrupting the team member or guest experience and without compromising our competitive advantages and simple operating model.”
Paraphrased, he’s saying he doesn’t want Olive Garden to turn into a takeout restaurant, but can’t ignore diners who prefer to enjoy their (absolutely delicious) breadsticks at home — especially during a time when economic conditions haven’t exactly been kind to some of America’s once-beloved chains, including Red Lobster and TGI Friday’s. (On the same day it shared the Uber Direct news, Darden reported that Olive Garden’s same-store sales were down close to 3 percent in the fiscal quarter.)
In the third quarter, Uber posted $18.6 billion in delivery gross bookings.
Those bookings translated into close to $3.5 billion in revenue for Uber. Its overall revenue was up over 20 percent from last year, but Uber’s overall gross bookings missed Wall Street estimates and its stock price dropped 9 percent after reporting results.
Also speaking of the future, Uber is rumored to have explored an acquisition of Expedita, the online travel agency that Khosrowshahi led until joining Uber in the summer of 2017. Barry Diller, the octogenarian media executive and Expedia’s chairman, says “it’s not going to happen.”
“I don’t think Expedia should be sold,” Diller continued. “And I have enough voting shares that … I could stop something from being done.”
What else?
Shake Shack’s finally getting a loyalty program. The burger chain, now helmed by former Papa John’s CEO Rob Lynch, will develop the program next year. — Restaurant Dive
Wonder, the next-gen ghost kitchen-slash-virtual brand company, hired Amazon’s top grocery executive. Tony Hoggett started as chief operating officer this week. — Fortune
Food delivery company Swiggy will IPO in India. When it debuts next week, it’ll be the country’s second-largest listing of the year. — TechCrunch
Kwame Onwuachi is a whole new kind of celebrity chef. “With a wave of endorsement deals… he’s won fame and clout the stretch far beyond the kitchen.” — New York Times