Why Uber is experimenting with food delivery in NYC and Chicago

Uber is moving into the food delivery business. But is there too much competition for the venture to succeed?

Eric Risberg/AP/File
A woman leaves the headquarters of Uber in San Francisco, Calif. The Portland, Ore., City Council is expected to OK allowing Uber to operate legally while removing fare limits for traditional taxi companies with Uber drivers getting background checks and insurance.

After successful test runs in Los Angeles and Barcelona, ride-hailing service Uber announced Tuesday that it is launching UberEATS, a food-delivery service, in New York City and Chicago.

UberEats works in much the same way as requesting a ride. When a user is in an UberEats coverage area, an “Eats” button will appear as an option in the app. Users can view the menu, place an order, and pay for food within the Uber interface. Meal prices range from $9 to $12 for lunch and $10 to $15 for dinner. There is also an additional $3 delivery fee – $4 in New York City – but only a 10 minute wait time.

As for the food, Uber is pairing with local restaurants to offer a limited but curated menu that will change daily. The first menus will include a sandwich from American Cut; kale Caesar salad from Sweetgreen; the steak sandwich from Num Pang, in New York; the Pepito Torta from XOCO, in Chicago; and carne asada cemita from Cemitas, in Chicago.

With stiff competition in the food delivery business from companies like Seamless, Grubhub, Postmates, Instacart, and Foodler, Uber may be facing an uphill battle, but the company thinks that it will fill a niche market.

Rather than waiting for the customer to order, the restaurant will prepare the food in advance, and give it to drivers to carry in a temperature controlled bag. When an order is made, drivers only need to drop off the food. This is how UberEATS plans to follow through on its 10 minute delivery promise even on the congested streets of New York.

“We thought, ‘What can Uber bring to this field that’s special and magical?” Jason Droege, the head of Uber's "Uber Everything" experiments, told Wired Magazine. “And our delivery time is pretty magical.”

While there are only a select few food options, customers are no longer limited as to where they can have their food delivered – users can order from a park or the beach.

“Anywhere you can drop a pin you can get food now,” Droege told Wired. “That’s not something other delivery services can offer.”

Drivers collect the $3 delivery fee and Uber claims that its drivers "tell us they love having another way to earn more through the Uber platform," although Uber has had past difficulties in keeping its employees happy.

Despite some recent bad press, the company has continued to flourish and expand its business both geographically and conceptually.

UberPool allows for easy carpooling and UberCargo provides a vans to help movers. The company is also tested a programs called UberEssentials, which delivers household goods to customers, in Washington D.C., and UberRush, a courier service, in New York City.

“We're always experimenting and finding new, creative ways to leverage the Uber app and provide even greater value to our riders and driver partners,” Uber told Verge. “ [UberEssentials] allowed us to identify what our users valued about the service, as well as areas where we can make the experience even better. We look forward to continuing to innovate and providing users with new and valuable ways to leverage the Uber app.”

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