Uber Eats is taking a big step into small towns.
The delivery app announced this week that it鈥檚 expanding into 50 small cities and towns across Canada by the end of this year, including 10 in Ontario beginning Wednesday.
鈥淩estaurants in these smaller markets are genuinely excited that we鈥檙e coming,鈥 said Lola Kassim, GM and director of Uber Eats Canada. 鈥淲e鈥檙e able to provide new revenue streams to the local restaurants who decide they want to be on the platform.鈥
The towns which launched Wednesday are Woodstock, Chatham, Stratford, Grimsby, Fergus, Leamington, Tillsonburg, Strathroy, Fort Erie, Elora and Beamsville.
In most of the towns, Uber isn鈥檛 operating its rideshare service. So raising awareness 鈥 with restaurants, drivers and potential customers 鈥 will be one of the bigger challenges, Kassim said.
鈥淲e鈥檝e got to get that marketplace moving, which means we need to create awareness,鈥 said Kassim. 鈥淭hese are new markets entirely for the company, in most cases.鈥
鈥業s it going to be profitable at all?鈥
Still, while the company says it provides new revenue streams for restaurants, the head of an industry association says the revenue can come at a high, often-unpredictable cost.
鈥淚t鈥檚 a question of 鈥榠s it going to be profitable at all?鈥 and 鈥榓re we going to just see sales transferred to off-premise or are we going to see a real increase?鈥,鈥 said Kelly Higginson, CEO of Restaurants Canada. 鈥淲e are in a cost-burden crisis right now.
Higginson said most restaurants which use Uber Eats end up paying 20-25 per cent of their revenue from delivery orders in fees to the company, though in some cases it鈥檚 even higher. At a time when 51 per cent of restaurants in Canada are either losing money or barely breaking even, that鈥檚 a hefty chunk of change, Higginson said. Before the global pandemic, said Higginson, just 12 per cent of restaurants were in similarly dire straits. Of the restaurants who are turning a profit, most have a profit margin in the single digits, she said.
鈥淢ost of our operators are in that 5 per cent range,鈥 Higginson said.
While some provinces and cities have experimented with caps on the percentage charged by delivery services, Higginson said that can end up having unintended consequences.
鈥淲e鈥檝e seen a cap go in B.C., but all that did was the delivery services just changed their service options for the operators. And then it became 鈥榶ou can add on to get more marketing鈥 or 鈥榶ou can add on to get a different level of service,鈥欌 said Higginson.
Delivery services boomed during the pandemic
Delivery services took off like a rocket during the early stages of the pandemic, especially when COVID restrictions meant restaurants and bars weren鈥檛 allowed to open for on-site dining. Now, says Higginson, Canadian diners have become accustomed to being able to order what they want, when they want.
鈥淭he change of culture, with people staying in with Uber Eats and Netflix as opposed to being more on-premise dining has been a huge increase, to 30 per cent of full-service restaurants鈥 revenue, from 10 per cent pre-pandemic,鈥 said Higginson.
And Higginson said many restaurant owners aren鈥檛 easily able to gauge in advance how much those online orders are costing them.
鈥淭hat鈥檚 one of the hard things about it 鈥 a lot of our operators don鈥檛 realize the amount they鈥檙e going to be paying until the end of the month,鈥 said Higginson.
Still, argued Kassim, Uber Eats also gives restaurants exposure to a broader range of customers than they鈥檇 otherwise be getting.
鈥淲e鈥檙e providing marketing and discovery to help restaurants grow their business,鈥 said Kassim, adding that 70 per cent of Uber Eats customers have ordered from restaurants they had never eaten at.
And, she added, the restaurants don鈥檛 have to sign up if they don鈥檛 want to.
鈥淩estaurants and other merchants choose to be on Uber Eats,鈥 said Kassim. 鈥淎nd they choose to be on Uber Eats because they value the services that we鈥檙e providing.鈥
To join the conversation set a first and last name in your user profile.
Sign in or register for free to join the Conversation