UBER EATS - CASE We all have had that hankering for a late‐night snack – but most often we resort to leftovers in the fridge or whatever might be on the counter or in a cupboard. Whether it is due to sleeplessness, studying, or even being a new parent, everyone has satisfied a craving or hunger at an odd time. And often we wished we had something more appetizing than what was on offer. So it is no surprise that the on‐demand market would come up with something to help satisfy this craving. Uber Eats is not the first company to offer home delivery of food, but it certainly is one of the most well‐known companies to enter this market. Uber Eats started out as UberFRESH in 2014, but a year late changed its name to Uber Eats. It is clear that this food‐delivery service trades on the well‐recognized name of parent company Uber when developing its approach to the food‐delivery customer. Much like Uber, Uber Eats attracts “independent contractors” to use their personal vehicles to deliver food at almost any time of day (only some cities have 24‐hour service). These drivers can set their own schedules and preferred areas of delivery. Existing Uber drivers can also sign up to work for Uber Eats, and do not have to go through any further vetting to do so. While still relatively new, Uber Eats has developed a strong network of restaurants around the world. Most cities served are in North America and Europe, with growth in Asia and South America. However, Uber Eats is not welcome in some cities because of prior problems with Uber, its ride‐share parent. Uber came charging onto the ride‐sharing scene in 2010 in San Francisco, offering the general public the opportunity to call for a ride using a phone app. This caused great dismay, and pushback, from taxi companies worldwide. Uber became a phenomenon, as consumers enjoyed the ease of use and lower prices for transportation. But in recent years, Uber has been hit by scandal upon scandal. The company has been booted from many cities and countries around the world, often for not following rules like undergoing proper background checks on drivers. Recently, the company culture has been attacked, as Uber faces lawsuits ranging from driver assaults on customers to accusations of a misogynistic work environment. Uber Eats was saddled with the poor brand reputation of Uber, but it also benefited from having a very valuable customer source: current Uber customers. It could not rely only on that group, however, so it began to reach out to market partners to help raise awareness and interest among the general public. In the summer of 2017, Uber announced a partnership with McDonald’s to deliver the fast‐food giant’s products to customers wanting to stay put to satisfy their cravings. Uber usually charges the price of the food plus a flat delivery fee that ranges between $4 and $6, depending on the city. In September 2017, Uber Eats announced that a lower flat rate of $2.99 would be charged for McDonald’s deliveries due to backlash from consumers who complained that original higher delivery rate could double the price of the food compared to drive‐through or restaurant visits. Realizing that such an increased cost for customers might make them reticent to buy, Uber even announced on its website that the McDonald’s and Uber Eats partnership was geared for a specific purpose: “Tap into $2.99 delivery on McDonald’s® for those late night and early morning cravings.” The implication of this message belies the problem facing Uber Eats: How does it appeal to a younger crowd that is more likely to have those late/night/early morning cravings without alienating other users who might be willing to use the service similar to a traditional food home‐delivery system. How would you proceed with this challenging situation? Sources: Cities for Uber Eats: https://about.ubereats.com/en_ca/cities History of Uber: http://www.businessinsider.com/ubers‐history/#october‐2010‐uber‐closes‐a‐ 125‐million‐seed‐funding‐round‐from‐first‐round‐capital‐kalanicks‐friend‐chris‐sacca‐and‐ napster‐cofounder‐shawn‐fanning‐8 Uber‒McDonald’s Agreement: https://www.uber.com/newsroom/tap‐into‐2‐99‐delivery‐on‐ mcdonalds‐for‐those‐late‐night‐and‐early‐morning‐cravings Subscription Service: https://www.uber.com/newsroom/tap‐into‐2‐99‐delivery‐on‐mcdonalds‐ for‐those‐late‐night‐and‐early‐morning‐cravings
