The Uber Eats dilemma: Appease restaurants or investors?

But there’s a lot for restaurants not to like about the arrangement.

Sure, third-party delivery services such as Uber Eats and Deliveroo are useful for driving growth. That’s helpful if you have outside investors. But they can be very bad for profit.

…If the food industry starts deciding that the growth prospects aren’t enough to offset the margin and reputational downsides, then they may start backing away from delivery services. Former Uber CEO Travis Kalanick seems convinced that the solution lies in so-called dark kitchens, where a restaurant operates a food-preparation site at a low-rent location that’s dedicated to deliveries. He has a new startup doing just that, though the approach is not without its problems.

…It’s a market with steep competition, too. The company has an edge over most other players, given how well capitalized it is. If it comes down to a price war to retain eateries, drivers and customers, then it is well placed to win.

But ultimately it’s the restaurants who need to know they can make reasonable returns in the long term for their business to be sustainable. Khosrowshahi needs to demonstrate how he can keep both the food industry and his investors happy.

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