California imposed an order this week that, for a minute there, led us all to believe Uber’s food delivery business in that state was on the rocks.
Spoiler alert: it’s totally not.
Recap: On Monday, a California judge issued a preliminary injunction ordering that Uber (along with Lyft) reclassify its drivers as employees in keeping with the state’s AB5, which was signed into law in January. Uber CEO Dara Khosrowshahi then took to the airwaves to tell us all the company will likely have to temporarily shut down service in California if the court does not overturn the ruling.
As is usually the case when we talk about third-party delivery services, there’s fine print, which Eater SF promptly dug up. An Uber spokesperson confirmed to the publication that the shutdown would only apply to the company’s rideshare business, and that Uber Eats — now Uber’s biggest business — would continue “as is.”
I can’t really think of a better way of putting it than in Eater writer Eve Batey’s own words: “Uber’s threat to take their ball and go home if forced to comply with California law really only applies to a ball that, right now, isn’t the one that the other kids want to play with all that much.”
Eats currently generates more revenue than Rides, according to Uber’s second-quarter earnings report. That makes sense, seeing as the world has been in a pandemic-induced lockdown of late, and even with restrictions lifting in places, average consumers are just not going out as much. They are, however, ordering a ton of delivery meals from restaurants. Gross bookings for Eats were $6.96 billion in Q2, which was up 113 percent year-over-year and up 54 percent over Q1 2020.
Uber also recently struck a $2.65 billion deal to acquire fellow third-party delivery company Postmates — a service that just happens to be number one in Los Angeles, a city that just happens to be the second most populated one in the U.S. Yanking the plug on California, even temporarily, would make the deal pointless. Uber might have ethical flaws in its business model, but its leaders aren’t dumb.
Besides, they’ll get a chance to continue the fight to keep its delivery drivers and couriers as contract workers come November, when Californians vote on Proposition 22, which would exempt rideshare and delivery drivers from being considered employees. Needless to say, tech companies are all-in on this one.
But if regulators continue to scrutinize third-party delivery practices, and consumers continue to rely on off-premises meals while restrictions around in-house restaurant dining room remain in place, it seems only a matter of time before Uber et al. go from the frying pan to the fire with food delivery.
Maybe then we can take eloquently worded threats to shut down seriously.
Accelerating the Drive Thru
Of late, there’s been much ado about the drive-thru, with major restaurant chains like Shake Shack and Chipotle all announcing an increased focus on the format.
So it wasn’t too surprising this week to get new data showing the drive-thru is far and away the most popular restaurant “experience” among consumers. A new survey from Bluedot and research firm SeeLevel HX found that 74 percent of respondents said they have visited the drive-thru “the same amount or more often than usual” compared to 43 percent in April. Those consumers surveyed also named drive-thru “the safest” of the to-go formats polled in the report.
It’s all a bit of a no-brainer if you ask me. If you’ve hung around inside a restaurant lately waiting for your pickup order, you’ll know the experience is often tense and confusing. Meanwhile, curbside pickup is still so new for most restaurants that operational kinks have yet to be worked out. That makes drive-thru, a decades-old format, seemingly the safest and fastest way to collect your grub at a time when dining at a restaurant is a no-go for many consumers.
But drive thrus could be faster. A lot faster. In this week’s survey, 81 percent said waiting more than 10 minutes in the drive-thru is too long.
As mobile ordering increases in restaurants and more chains reformat their brick-and-mortar locations to accommodate drive-thru, speed of service will need to be at the top of the priority list.
Restaurant Tech ‘Round the Web
- A new survey by Oracle Food and Beverage found that 59 percent of U.S. consumers and 47 percent in the U.K. “plan to dine-out as soon as they are able.” Forty percent in the U.S. and 39 percent in the U.K. would feel “safer” using a digital menu from their own device. Another 35 percent in the U.S. and 31 percent in the U.K. had similar feelings about digital payments.
- Mobile platform Mad Mobile has acquired restaurant tech company CAKE, best known for its POS system. Mad Mobile hopes to use the acquisition to create a next-gen POS designed for mobile-first restaurant experiences.
- For more on the future of ridesharing, which is usually an indicator of what’s to come for food delivery, check out this podcast from Axios Re:Cap.
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