San Francisco-based fare app, Uber, is shifting its dominance to the food delivery market with the launch of its local food delivery service in South Africa. It wants to leverage its impressive collections of drivers in the most developed economy of the continent. According to the Uber Company, it’s targeting popular food choices and destinations in the country.
In 2019, Statista Data Portal revealed that South Africa’s online food delivery business was worth $713 million, which is about 10.49 billion Rand.
And with the anticipated annual growth rate of 14%, it’s going to reach 17.6 billion rands by 2030. According to the company, that’s a big industry to exploit and dominate with its economies of scales.
Uber started on a wrong footing
Initially, when Uber rolled out its plans, the company focused on high-end restaurants, which was surprisingly a misjudgment of the present economic situation in the country. South Africa is still witnessing a small period of recession, and such a business model is difficult to thrive in the present economy. But Uber is now changing the food delivery business model with more focus on the densely populated local consumers of delivery goods. Now, Uber focusses on traditional, local fare.
One of the major impacts of this business model can be seen at the Dumile Badela restaurant, which is a few miles away from the Soweto Township Hall. The place is now bubbling with a series of activities with more lucrative food services because of Uber Eat’s innovative approach.
In May last year, Uber started with about 20 partners and launched its first food delivery business model in Soweto. It has now included more local foods to the impressive list of 480,000 menu items. The app dispatches dishes such as sheep’s head, cow heels, caterpillars, as well as stewed tripe to predominantly middle-class customers looking for a taste of home.
According to Badela, this is a welcome development for the locals and the restaurants within. The restaurant said the partnership with Uber Eats had increased its sales by about 15 percent to 20 present. But it’s hoping for more because there are still huge opportunities that are yet untapped.
Uber is not also supporting for the sake of supporting. Uber Eat has been growing at an alarming pace, as recent data has shown. The Uber Eats has contributed about 10% of the entire quarterly revenue of the parent company.
Other companies also in the race
With the vast opportunity in the food business in South Africa, it’s no surprise that Uber Eats already has competition.
South African-based Mr. D Food is currently giving Uber Eats a run for its money. The app has a significant presence in the country, as about 2 million users have downloaded the app. It has taken food orders worth about 1.5 billion rands within the past 12 months.
Interestingly, there are already 700,000 active monthly users of Mr. D’s food app. But with the 2.1 billion app downloads recorded by Uber Eats, the company could be doing better than Mr. D. in terms of marketing. Uber did not provide data on its food sales.
Both firms already have about 90% of the market, so it’s obvious the competition is mainly between these two companies.