Uber beat estimates but still posted over $1 billion in losses in the most recent quarter, according to the company’s Q3 earnings call this week. While Uber’s Rides business shows signs of stabilizing, other business units, including Eats, are still losing enormous amounts of money.
Losses for the Uber Eats business grew to $316 million, or 67 percent, from $189 million one year ago. And while Uber CEO Dara Khosrowshahi said the company aims to achieve profitability for 2021, he also in August said, “I don’t expect that business to be profitable in the next year or year after frankly.” Uber Eats team members were part of the layoffs Uber announced in October.
Over the last several months, Uber has unveiled several new features to its business aimed at cross-promoting its Rides and Eats services. Uber Vouchers, for example, is meant to drive more foot traffic to restaurants by subsidizing a user’s ride there. The company also said in September it would merge its Eats app with its main rideshare app.
“We can more quickly and efficiently attract and retain customers, as well as deepen their engagement by linking and cross promoting all of our offerings,” Khosrowshahi said on this week’s call.
But a good cross-promotion strategy won’t necessarily stem the bleeding when it comes to losses for the Eats business. And as Grubhub’s lackluster numbers for the last quarter suggest, the hype around the third-party food delivery services could be cooling down.
One reason for that may be that more restaurants are taking delivery, or at least pieces of it, back under their own control. As restaurant chains move to own more of their branding, credibility, and in some cases the last mile, many are turning to hybrid delivery strategies that only rely on third-party services like Uber Eats for part of the delivery process, which could result in restaurants paying lower fees to these companies.
Then there’s California’s AB 5, which was signed into law in September and classifies contract employees like Uber Eats and DoorDash drivers as employees. Despite Uber, DoorDash, and Lyft committing $90 million to fight the legislation, New York is considering a similar law right now, and others are bound to follow.
On this week’s call, Khosrowshahi reiterated Uber’s plans to defend its stance on AB 5 and similar laws. “So this is going to take dialog,” he said of the issue. “We’re up for that dialogue, and one way or the other we think that our model will thrive and grow.”