Uber Technologies Inc.’s food-delivery business is betting that increased demand will continue after the coronavirus pandemic and help propel the unit to profitability next year.
Growth is coming from new customers and existing ones who are ordering more often, said Pierre-Dimitri Gore-Coty, head of Uber’s delivery operation. While order frequencies will eventually normalize to pre-pandemic levels, the overall expansion will enable the business to turn a profit in 2021, he said.
“A lot of the growth we’re seeing these days is here to stay,” Gore-Coty said in an interview Friday.
Delivery demand has surged this year as more people stay home, providing a bright spot for Uber while the pandemic upends the company’s ride-hailing business. For two straight quarters, Uber has made more money dropping off food than transporting people. Deliveries more than doubled in the third quarter even as Uber’s monthly active platform users, a category that also includes customers of the ride-hailing business, declined 24 per cent to 78 million.
Rising deliveries are one reason investors have been betting on Uber, with shares up 38% this month compared with a 9 per cent advance for the S&P 500 Index. Uber fell 1.7 per cent to US$46.19 at 3:12 p.m. in New York.
In Latin America, the delivery business recently left Argentina and Colombia, part of its plans to operate only in countries where it sees a clear path to being the top player, Gore-Coty said.
“We felt the investments needed to get there weren’t worth it,” he said.
Uber is looking to expand by handling groceries and pharmacy items in addition to prepared meals. The company is seeking a majority stake in Chilean startup Cornershop -- a deal that has been approved in Chile and is being reviewed in Mexico. Terms haven’t been disclosed.
In June, Uber also announced the US$2.65 billion acquisition of food delivery company Postmates Inc., a deal expected to increase Uber’s geographic footprint and range of restaurants in the U.S. The transaction is expected to close by the end of this year.