An Uber Eats executive reveals the company’s surprising strategy for moving beyond taxi rides

REUTERS/Jason Reed

Uber Eats is aggressively targeting areas outside of urban cores, especially suburbs, as it expands.
The business is one of Uber’s fastest-growing areas, and its first that’s not for taxi rides.
Ana Mahoney, head of US cities for Uber Eats, sat down for an interview with Business Insider to talk strategy.

When it comes to delivery, Chinese food and pizza are about all that many Americans are used to ordering.

Outside of New York City and other metro areas, that’s often still the case, especially in the suburbs. That’s the exact market Uber wants to corner with its food delivery business as the ride-hailing giant continues its quest for global domination.

"The demand that we’ve experienced from the suburbs over the last year and a half has been truly phenomenal," Ana Mahoney, head of US cities for Uber Eats, said in an interview with Business Insider. "It shows the power and potential to expand our business everywhere."

Uber Eats first launched more than three years ago, and has expanded to more than 350 markets served by 300,000 couriers. Not only is delivery one of the fastest-growing areas of Uber’s business, it showcases the "power of the Uber platform," as executives are quick to point out. In other words, a vast global network of services powered by a phone app can mean just more than digital taxi hailing. The company hopes it can soon reach everything, and has a focus on groceries next.

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But while the densely-populated New York metro area is easily the most lucrative market for Uber’s ride-hailing business, delivery is growing in areas with less density, where walking to grab a takeout meal might not be an option. In France, for example, more than half of Uber Eats orders take place outside of Paris, the company said.

Financially, that geographical difference compared to ride-hailing will be key as Uber races towards an IPO, which the company is reportedly set to being in April. Suburbs and towns outside of major urban centers are deeply unprofitable for ride-hailing companies. Uber Eats could help the company plug the $370 million hole in its balance sheet from 2018.

"We’re seeing a lot of demand out there from families and people who eat differently than people do in our urban cores," Mahoney said.

It’s not just diners who benefit, either. Uber can leverage its massive network of data to expand local restaurants reach. Many of those small eateries might not have even had delivery options before.

"The amount of revenue that restaurants have access to is limited to the number of tables they have.

"The amount of revenue that restaurants have access to is limited to the number of tables they have in their restaurant as well as how quickly they can provide meals to customers and how often those tables turn over," Mahoney said.

"Delivery enables [restaurants] to, within the same fixed-cost structure, not just make money off of in-store sales, but also have a second avenue to sell their meals."

Then there are the massive enterprise deals Uber nailed down recently: Starbucks and McDonald’s, neither of which had delivery options before, joined the platform in recent months. Not only has McDonald’s seen higher checks on average on Uber Eats orders, but the hamburger chain has already sent out more than 10 million McNuggets, it said last year.

Uber Eats’ McDonald’s trial started with a pilot in Miami before it expanded nationwide last year. "Once we found a playbook, if you will, that worked, we started expanding that across the rest of the country, "Mahoney said, adding that it was an easy process to repeat for Starbucks.

Mahoney offered no specifics for what chains might be next on the list, but added that the company is "actively working on bringing all of our eaters favorite brands and local favorites onto our platform."

Do you work for Uber Eats? Have a story to share? Get in touch with this reporter at grapier@businessinsider.com.

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Source: Business Insider – grapier@businessinsider.com (Graham Rapier)