Insights into Uber Eats Business from Uber's CEO

Last week, Uber's CEO Dara Khosrowshahi shared 3 great insights about the Uber Eats business on the Acquired podcast:

(1) Uber Eats gets more traffic from Uber as compared to any other source 🤯

— Rahul Mathur (@Rahul_J_Mathur) June 23, 2023

- This is true for both demand (customers wanting to order) and supply (riders wanting to deliver orders) acquisition
- Remember the Uber Eats ad placement in your Uber app? that's the trick!

💸 Uber Eats is a complimentary biz to rides - great way to grow LTV from an Uber user.

— Rahul Mathur (@Rahul_J_Mathur) June 23, 2023

(2) Nothing is free from Uber
- Uber Eats has to pay an internal CAC for using otherwise chargeable ad slots on Uber app (from an accounting perspective, there is no cash moving)
- Classic opportunity cost calculation since the ad inventory contributes to the core Uber rides P&L

— Rahul Mathur (@Rahul_J_Mathur) June 23, 2023

😑 If you run a business unit inside a large company, everything is chargeable (including the corporate office rent)

(3) Uber Eats versus Doordash ⚔️
- Uber Eats had previously focused on city centers where the core Uber Trips business was active

— Rahul Mathur (@Rahul_J_Mathur) June 23, 2023

- Hence, Eats was optimized for short delivery time and cost hence Eats prioritized nearby & urban restaurants
- Whereas, DoorDash focused on suburb i.e. larger family placing orders and customer is okay with longer delivery time

— Rahul Mathur (@Rahul_J_Mathur) June 23, 2023

💡 Fundamentally, Uber & DoorDash were in same local restaurant food delivery category but catering to different audiences - urban v/s suburban.

But, things are changing:
(a) Uber Trips is entering the suburban segment; which means Uber Eats is coming to DoorDash's home ground

— Rahul Mathur (@Rahul_J_Mathur) June 23, 2023

(b) Uber is thinking beyond restaurant food to alcohol delivery via Uber Eats (high margin & highly regulated hence acquired Drizly for $1.1bn)

(c) Uber is investing in its B2B freight business (grown x7 in 2 years from $1bn to $7bn revenue)

— Rahul Mathur (@Rahul_J_Mathur) June 23, 2023