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Uber Eats is an online food ordering and delivery platform launched by Uber in 2014. Users can read menus, reviews and ratings, order, and pay for food from participating restaurants using an application on the iOS or Android platforms, or through a web browser. Users are also able to tip for delivery. Payment is charged to a card on file with Uber. Meals are delivered by couriers using cars, scooters, bikes, or on foot. It is operational in 32 countries.
|Industry||Online food ordering|
|Headquarters||San Francisco, California, U.S.|
|45 countries, 6,000+ cities|
|Dara Khosrowshahi (CEO)|
|Revenue||$2.51 billion (2019)|
Uber Eats' parent company Uber was founded in 2009 by Garrett Camp and Travis Kalanick. The company began food delivery in August 2014 with the launch of the UberFRESH service in Santa Monica, California. In 2015, the platform was renamed to UberEATS and the ordering software was released as its own application, separate from the app for Uber rides. Its London operation opened in 2016.
In August 2018, Uber Eats changed its flat $4.99 delivery fee to a rate that is determined by distances. The fee ranges from a $2 minimum to an $8 maximum. In the UK and Ireland, the delivery fee is based on the value of the order. In February 2019, Uber Eats announced that it would reduce its fee from 35 percent of the order's value to 30 percent. As part of its expansion into foreign markets, the company announced its intention to open virtual restaurants in the UK. Sometimes called cloud restaurants or cloud kitchens, these are restaurant kitchens staffed to prepare and deliver food, either for existing brick-and-mortar restaurants wishing to move their delivery operations offsite, or for delivery-only restaurants with no walk-in or dining room service.
In November 2018, the company announced plans to triple its workforce in its European markets. As of November 2018, the company reported making food deliveries in 200 cities in 20 countries in EMEA markets.
In 2019, Uber Eats said it would deliver food to customers by drones from the Northern Hemisphere summer of 2019, and partnered with Apple on the release of the Apple Card. In July, Uber Eats began offering a dine-in option in certain cities that allowed customers to order food ahead of time and then eat in the restaurant.
In September 2019, Uber Eats said it would leave the South Korea market, with Reuters attributing this to the amount of competition for food delivery companies in Korea. In October, the company launched a pick-up option. On October 15, 2019, the company said it would deliver Burger King fast food throughout the United States.
On January 21, 2020, Zomato said it would acquire all of Uber Eats's stock in India. As part of the deal, Uber would own 10% stake in Zomato and Zomato would gain all the users of Uber Eats in India. At the time of the deal, Zomato was valued at roughly $3.55 billion.
On January 28, 2020 it was reported that Uber Eats no longer had exclusive delivery rights for McDonald's in the United Kingdom, as the fast food company had partnered with British-based food-delivery company Just Eat. The company had already lost its exclusive delivery rights with McDonald's in the United States the year before.
On May 4, 2020 Uber Eats announced they were exiting the United Arab Emirates and that the service would now be through Dubai based vehicle for hire company Careem. The same report stated they were also exiting Saudi Arabia and Egypt.
Controversy and criticism
Uber Eats drivers
Uber Eats has been criticized[by whom?] for its model of driver compensation. In most regions, drivers are not considered employees of Uber, so in some cases they may legally make less than minimum wage.
Allegations of monopolistic behavior
In April 2020, a group of New Yorkers sued Uber Eats along with DoorDash, GrubHub, Postmates, accusing them of using their market power monopolistically by only listing restaurants on their apps if the restaurant owners signed contracts which include clauses that require prices be the same for dine-in customers as for customers receiving delivery. The plaintiffs state that this arrangement increases the cost for dine-in customers, as they are required to subsidize the cost of delivery; and that the apps charge “exorbitant” fees, which range from 13% to 40% of revenue, while the average restaurant's profit ranges from 3% to 9% of revenue. The lawsuit seeks triple damages, including for overcharges, since April 14, 2016 for dine-in and delivery customers in the United States at restaurants using the defendants’ delivery apps. The case is filed in the federal U.S. District Court, Southern District of New York as Davitashvili v GrubHub Inc., 20-cv-3000. Although a number of preliminary documents in the case have now been filed, a trial date has not yet been set.
- Costa Rica
- Dominican Republic
- El Salvador
- Saudi Arabia
- New Zealand
- South Africa
- Sri Lanka
- United Arab Emirates
- United Kingdom
- United States
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Frank points to a clause in the contracts restaurants and the food delivery apps agree to that prohibits owners from charging delivery customers more than people who dine in, even though delivery costs more. "By not forcing those purchasing on apps to bear the whole amount of the fees, instead forcing all menu prices to rise together, in-restaurant diners are effectively subsidizing Grubhub's high rates," said Frank, who argues such an arrangement is anti-competitive and illegal.
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Each of the firms uses “monopoly power” to prevent competition, limit consumer choice and force restaurants to agree to illegal contracts that have “the purpose and effect of fixing prices,” the suit claimed. ... The four companies give restaurants a “devil’s choice” that requires them to keep dine-in prices the same as delivery prices if they want to be on the app-based delivery platforms, the suit claimed. And restaurants must pay commissions to the delivery firms ranging from 13.5% to 40%, the suit alleged. ... Establishments are forced to “calibrate their prices to the more costly meals served through the delivery apps,” the suit alleged.
- Stempel, Jonathon (April 13, 2020). "Grubhub, DoorDash, Postmates, Uber Eats are sued over restaurant prices amid pandemic". Reuters. Archived from the original on April 17, 2020. Retrieved May 19, 2020.
GrubHub, DoorDash, Postmates and Uber Eats were sued on Monday for allegedly exploiting their dominance in restaurant meal deliveries to impose fees that consumers ultimately bear through higher menu prices, including during the coronavirus pandemic. In a proposed class action filed in Manhattan federal court, three consumers said the defendants violated U.S. antitrust law by requiring that restaurants charge delivery customers and dine-in customers the same price, while imposing “exorbitant” fees of 10% to 40% of revenue to process delivery orders. The consumers, all from New York, said this sticks restaurants with a “devil’s choice” of charging everyone higher prices as a condition of using the defendants’ services.
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The New York customers, who seek class-action status, say the delivery services charge “exorbitant fees” that range from 13% to 40% of revenue, while the average restaurant’s profit ranges from 3% to 9% of revenue, making delivery meals more expensive for eateries. “Restaurants could offer consumers lower prices for direct sales, because direct consumers are more profitable,” the plaintiffs said. “This is particularly true of dine-in consumers, who purchase drinks and additional items, tip staff, and generate good will.”
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