Is This The Death Knell For Food Delivery?

The Lempert Report
November 15, 2016

Uber announced that it is adding yet another new feature to Uber EATS.

Sometimes we just don’t know when to stop, or when we are about to destroy a growing trend. Uber announced that it is adding yet another new feature to Uber EATS – surge charges based on the time of day and how busy are deliveries to your order. It’s a signal to supermarkets and restaurants alike to be in tune with their customers. 

I would never have expected this – especially since around the country taxis and car services have effectively fought back against the Uber phenomena by advertising “no surge charges.” And that in certain cities across the US, and especially in London, England, which we have reported on before, Uber EATS is struggling to make money and gain customers as they continue to give away food to get people to try the service and offer free food if the delivery is late. 

It’s the ultimate case of penalizing your existing customers, and giving them a reason to become ex-customers.

Ben Dreier, Product Manager of Uber EATS announced the move in a blog. “… we’re asking UberEATS customers in select cities to pay more for delivery when they order from restaurants in areas where demand is high but delivery partners are scarce.” He goes on to write “the extra money from these orders goes toward financial incentives for delivery partners as well as our other operational costs. These partner incentives look at past patterns and aim to predict where and when there will be high demand and to encourage more people to get on the road in these locations”.

Reportedly the first cities to see surge pricing for their UberEats deliveries are Phoenix, Houston, Dallas, DC, Miami, and Atlanta.

Millennials love Uber, love convenience and love (and demand) value.  This move from Uber is a reminder to us all to understand our shoppers and realize that delivery or pick up at store is not a premium add on, but has become an integral must have for retailers.