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UberEats Is Going After Caviar in Food Delivery Market

The first casualty of this impending battle may be in-house delivery drivers.

Headlines announcing the launch of Uber’s standalone meal-delivery app in Los Angeles last week say it all: GrubHub killer, Seamless challenger, Spoonrocket destroyer … and the list goes on.

UberEats, launching in New York today, is expected to be all of these things. But while potentially swallowing the market share of companies like Seamless would certainly be a happy coincidence for the company, UberEat’s real competitor is Caviar.

For one, both services offer users a curated list of the most popular restaurants in each market. Additionally, unlike Seamless and GrubHub, Caviar and UberEats offer these restaurants a fleet of couriers and delivery drivers in addition to a proprietary tech platform to manage the deliveries — the idea being the delivery process should be on-demand, affordable and convenient for both the restaurants and the customer.

As it stands, Seamless and GrubHub don’t exactly measure up to Caviar and UberEats and instead serve as restaurant aggregators at best. (Though with GrubHub’s acquisition of delivery service Delivered Dish in December, that may soon change.)

At launch, UberEats will have more than 100 restaurants and a total of 1,500 couriers signed up on the platform in New York, with plans to expand over the next year. Caviar, which launched in Manhattan in 2013 and in Brooklyn in 2014, has more than 400 restaurants signed up and has both bike messengers and drivers delivering for the service.

Caviar also has an expedited service called Caviar Fastbite and a corporate offering called Caviar For Teams. While UberEats is just in its infancy and as such doesn’t yet offer a corporate service, the company has its own version of an expedited serviced called Instant Delivery. Partnering restaurants pre-prepare a limited amount of a single food item, which Uber has a separate set of contractors pick up and bring to a central midtown location. When a customer requests that item, so long as it is still available, a courier picks it up from the midtown location and delivers it to the designated destination.

Though Caviar stands to benefit from being first to market, the primary advantage UberEats has is the ability to leverage Uber’s existing user base. The prospect of an influx in demand paired with the promise of handling the logistics and delivery is a hard one to pass up for restaurant owners — some of whom say they are disillusioned by the existing delivery platforms they’ve been using.

Cynthia Kueppers, the founder and CEO of Uma Temakeria in New York, says she uses a combination of Seamless, UberRush and Caviar to deliver to customers, but is looking for something that is, frankly, more seamless. Kueppers hasn’t hired any in-house delivery drivers and has to use UberRush couriers to deliver orders she receives through Seamless. With the introduction of UberEats, which eliminates the need for that extra step, Kueppers said she is reevaluating whether her existing suite of delivery services will be necessary.

“Seamless hasn’t been a very good partner but has the corporate clients, which I like,” Kueppers told Re/code. “That’s where Uber will have a challenge disrupting, I think.”

Carolyn Bane, the founder of Pies ‘n’ Thighs, says though her restaurant employs an in-house delivery person, the costs — what with workers’ compensation, insurance and pay — are considerable, and services like UberEats and Caviar help alleviate the restaurant’s overhead.

“We’ve always had delivery,” Bane said. “It’s gone from 20 percent of our business to 28 percent of our business with all of these platforms. We have our own in-house riders, but then we have Caviar, so it’s been nice to field more delivery without having to staff more.”

“I think the delivery riders might start to have a little feeling about their job security,” she added.

But opening up their delivery services to Uber’s vast user base also means restaurants may be required to churn out more food more quickly to meet the growing demand. Kuepper, whose restaurant has seen a recent jump in demand for its sushi burritos, has already prepared her crew for the launch of UberEats.

“We’re definitely staffing up for it,” she said. “We’ve hired an extra person or two. We’re putting a little bit of resource into it to make sure it’s a good fit.”

Logistically, the service works very much like Uber’s car service, but it’s a three-sided marketplace instead of two. A customer first places an order; the restaurant can accept the order and indicate an estimate of how much time it will take to prepare and deliver it; the restaurant then will fill the order and request a courier on its dashboard; the nearest courier can choose to accept the request and deliver it to the customer. Customers will be able to track delivery from the kitchen to their door in the app.

Uber is able to monetize the service on both ends. For restaurants, there is a 20 percent to 30 percent fee for each order. Couriers, who are paid per delivery on a per-mile basis, pay a 20 percent commission.

Uber’s move into the food-delivery marketplace is yet another example of the company flexing the capabilities of its on-demand logistics operation. Though the company has been testing its delivery capabilities for some time now with both its UberRush service and a much more limited version of UberEats that was part of the Uber app, the launch of the stand-alone UberEats service marks the company’s official attempt to claim a piece of the food-delivery territory.

New to the game or not, Uber is notorious for being a formidable opponent. And if companies like Seamless, GrubHub and even Caviar want to fend off the threat of UberEats, they have to continue to innovate to meet the needs of the restaurants and the consumers.

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