Uber is losing money on delivery, even now. Can its food-delivery business ever turn a profit? jbarro writes
Losing money on every delivery. Photo: Jakub Porzycki/NurPhoto via Getty Images In the quarter that ended on June 30, Uber saw wildly different tracks for its two main businesses, due to COVID-19. Gross bookings in the company’s people-transportation business fell 73 percent as people went out less and were increasingly afraid to get in cars with strangers when they did go out.
But there is one factor that undermines the value of this hedge. Uber loses money on delivery, and so the rapid growth in this business has not generated the thing companies are supposed to generate: profits. Uber would note that it is now losing less money on delivery than it used to. The company attributes a $232 million loss to its delivery segment in the past quarter, compared to a $286 million loss in the same quarter last year, when it did about half as much delivery. So at least this is not a situation where doing more business just leads to bigger losses; the company’s profit margin on delivery has improved, such that it is losing less money for every dollar of delivery services it sells.
The second question is whether the pandemic has shoved customers and restaurants toward delivery in a way that will expand the delivery business permanently, or whether these strange times provide the optimal conditions under which a delivery-service provider should be most profitable. The pandemic doesn’t just increase consumer interest in having food delivered; it should presumably increase consumers’ willingness to pay to have food delivered. People really do not want to go out.
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