Uber is launching its food delivery app in 10 cities - and it could pose a huge threat to food delivery startups




Uber is preparing to launch UberEats, its standalone food delivery app, in 10 US cities, The Wall Street Journal's Doug Macmillan reports.


Los Angeles, Chicago, New York, and Austin are among the cities Uber is bringing its food delivery service to, a company spokesperson confirmed.

The first standalone app from the company since the launch of the general Uber app, UberEats will be live in the Apple App Store and the Google Play store by the end of March.

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Uber has been testing the food-delivery service inside of its main app for the better part of the past 18 months, but it then launched as a standalone app available in Toronto, Wired reported last month.

Uber launched UberEats in Los Angeles in 2014 and has since expanded those services to New York City, Toronto, Austin, Chicago, and Barcelona.


In each of its participating cities, Uber partners with a couple restaurants each day to offer meals to its customers, which the company delivers via courier within just a few minutes.

Just like when you're waiting for your Uber to roll up, you can track your food's progress on your smartphone as it travels to you. Drivers can choose whether they want to be an UberEats driver, and they receive the ~$5 delivery fee from each UberEats order they deliver.

Emphasizing food

Starting earlier this year, Uber began to emphasize food delivery just as much as its regular ride-hailing services.

In a new app update the company rolled out in August, users were shown two options at the top that they could toggle back and forth between: a car-hailing option, which includes UberT, UberX, UberBLACK, UberPool, and, interestingly, UberRush, along with a food-delivery option.

Uber's emphasis on food delivery not only marks it as Uber's second major category, analysts at Cowen said in a note in August, but it could also pose a huge challenge to food-delivery stalwart GrubHub Seamless, the company which owns two of the most popular food-delivery apps, as well as smaller competitors in the food delivery space.


Standing out from the crowd

You could argue that food-delivery startups are a bad move because it's a crowded space. You have services like Blue Apron, Plated, and HelloFresh, and then you have a whole category of on-demand or plan-ahead meal-delivery and food delivery startups like Munchery, Caviar, Maple, Tapingo, Postmates, and DoorDash.

But unlike the majority of the onslaught of food-delivery startups, Uber started with a reputation for immediacy, which could give it a leg up.

In Q4 2014, GrubHub's order growth was at 33%; by Q2 2015, this slowed to 25%. Cowen's analysts say that UberEATS - along with a bunch of competitors in the food-delivery-startup space - could capture 50% of the food-delivery industry's growth in the 2015 fiscal year. In 2015 alone, food-delivery startups (not counting Uber) have raised a collective $500 million.

A long-term vision

Perhaps the next move is for the company to begin to silo each service it creates in separate apps, testing them first within Uber's main app to see how they perform. If this sounds similar, it's because it's not unlike what Facebook has done with Messenger, Wired notes.

In the future, Uber could expand to other verticals beyond food delivery. UberRUSH, its courier service, remains contained within the Uber app for the time being, for example. Spinning out UberRUSH would let Uber dive headfirst into logistics, allowing it to take on companies like Postmates and Shyp, and bigger guys like FedEx and UPS.


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