Uber says its food-delivery service is now profitable in nearly 40 cities

Key Points
  • Uber's food delivery business is profitable in nearly 40 out of 165 cities, as of October.
  • New CEO Dara Khosrowshahi is "pleasantly surprised" about UberEats' performance, according to VP of UberEverything, Jason Droege.
  • Uber is betting on its position as a logistics company to help it compete in the $100 billion-plus food delivery market.
Through its UberEats division, Uber offers a menu list that changes daily.
Source: UberEats

It's been a chaotic year for Uber, but one part of its business is a bright spot: food delivery. Since launching two years ago, UberEats is now in 200 cities and is profitable in almost 40 of them, the company told CNBC.

Uber is now competing in a crowded market, alongside GrubHub, Caviar and Amazon following its purchase of Whole Foods. Food delivery is a $100 billion-plus market, about 1 percent of the total food market, according to a study from McKinsey. Uber is betting that the edge in logistics from its ride-hailing business will help it make a push into food delivery.

UberEats was in 71 cities in March and profitable in three of them. As of October it was in 165 cities and profitable in "nearly 40." Uber said "profitable" means that the program is paying for all costs incurred in the cities and is sending money back to headquarters. It declined to share revenue numbers or more financial details.

"We're a logistics company at our heart," said Jason Droege, VP of UberEverything, which runs UberEats. "Uber had been working on logistics of moving people for many years, five to six years; we leveraged that technology and those learnings to give us a headstart on making food delivery high quality."

Droege, who reports directly to Chief Executive Dara Khosrowshahi, added that Uber's new CEO is optimistic about UberEats' potential. "I think he's been pleasantly surprised with the growth and progress we've made. Especially given the tough year that we've had. ... I think it's a bright spot in what he plans to grow into 2018."

In some markets, including Tokyo, Milan, Madrid, Seoul and Grenoble, France, the company launched food delivery before its main ride-hailing service, citing a lower barrier to entry with regulators. Food delivery is also a way to get the company's 2 million drivers around the world driving more.

Customers can expect more expansion in 2018, Droege said.

Khosrowshahi and Droege are on Recode's inaugural 100 list of the people who mattered in tech, business and media in 2017.

Correction: Uber told CNBC UberEats was profitable in "nearly 40" cities as of October 2017. It did not give a precise number.