Investor feeling in Uber is rapidly dropping. Since last week’s initial public offering, the company’s stock has fallen, dipping from the initial price of $45 per share last Thursday to $38 on Tuesday. One intention for the poor stock performance, according to experts, is an unclear path to cost-effectiveness.
But ride-hailing aside
There may be a profitable model concealed in all that red, precisely the company’s food delivery service. Growing exponentially faster than its ride-hailing business, according to the news on Fortune, Uber Eats has a clear mission. To Satisfy the swelling craving for food delivery. One of the largest food delivery services worldwide, Eats debuted in April 2015. About six years after Uber’s inception— and generated $1.5 billion in revenue last year. The service initially rolled out in Los Angeles, New York, and Chicago. And now serves food from more than 220,000 restaurants in more than 500 cities globally.
Uber Eats With Largest Food Brands
One key to Uber Eats success may be the help it gets from its partners. Some of the nation’s largest food brands including McDonald’s, Subway, and Starbucks, all of which boost the number of transactions with smaller, less expensive orders.
Uber Eats- Another risk
Uber’s protesting drivers, upset over the shrinking amount of money they say they’re making on the service. And “driver dissatisfaction will generally increase” as the company reduces driver incentives to improve its bottom line, it said in a document preceding its IPO.
Predictors also agree that Uber Eats’ take rate—or the money it makes on every purchase—is something to look out. Last two years, the ratio averaged between 17% and 18%, giving to Morningstar. Uber has warned investors in documents leading up to its IPO that new food delivery areas would be “less money-spinning.”
“Uber is coming,” he said. “It’s going to be very tough to stop them.”