- Uber Eats head Jason Droege unexpectedly stepped down from the food delivery platform on Tuesday. Droege launched the Eats division in 2015, and will stay with the company until June in an advisory role, according to a company filing about the leadership change.
- Pierre-Dimitri Gore-Coty, Uber’s vice president of international rides, will replace Droege, vice president of Uber Eats, effective immediately. Uber declined to comment beyond the filing.
- "As Eats moves into its next phase of more profitable growth, I am happy to have Pierre at the helm, and look forward to him applying his nearly eight years of experience with our Rides business to capture the many opportunities that lie ahead for Eats," Uber CEO Dara Khosrowshahi said in the filing.
Droege's sudden exit comes in the wake of Khosrowshahi's aggressive cost-cutting strategy for Eats. The company must now be one of the top two delivery providers in each market it operates in, or exit. Most recently, Uber Eats sold its India business to a local competitor.
This new standard is drastic, but necessary. Even though Eats is arguably Uber's most profitable division, driving revenue of $734 million in Q4 2019 — a 68% jump from a year prior — the food delivery platform lost $461 million during the period. The company is also spending big to keep its lead in key markets. Last year it shelled out 45% of its revenues, or $1.13 billion, on excess driver incentives (which denotes when Eats pays drivers more than its earning from the delivery) and driver referrals (payments made to existing drivers for referring new drivers to Eats). It spent $319 million in Q4 alone on these payments.
Some news. I’ve decided to step down from my role @UberEats. I feel lucky to have been part of Eats, from the 1st order in Toronto in Dec '15 to one of the world's largest marketplaces. This success is a testament to the hard work of our team,and I'm honored to have played a part— Jason Droege (@jdroege) February 25, 2020
It seems probable that the rate Eats continues to burn cash prompted this leadership change. During the company's February earnings call, the Uber boss said the "era of growth at all costs is over." But whether or not fresh talent at the helm of the division will help its profitability efforts is an open question. On the most recent earnings call, Khosrowshahi said that the food delivery platform will "follow the Rides playbook" to start "turning the dial toward healthy growth," which aligns with the decision to tap Gore-Coty as the new vice president who will lead Uber Eats.
Still, despite the resources of its tech-centric parent company, Uber Eats is still lagging behind food delivery leader DoorDash. The platform claims 35% of the market compared to Uber Eats' 29% slice of the pie, with Grubhub and Postmates trailing at 22% and almost 10%, respectively. It's possible that an executive shuffle and rising demand for restaurant delivery will be enough to yield better — if not ideal — results.
But the market is fierce, profitability is still far from reach and investors are growing impatient, so the company may need more drastic measures to get on a better path to growth. Uber Eats reportedly discussed combining operations with DoorDash six months ago in response to pressure from mutual investor SoftBank. Though nothing came of the talks, sources told the Financial Times that the delivery platforms could negotiate again or merge with a rival brand. Uber Eats told Restaurant Dive then it doesn't comment on industry rumors, but would consider potential deals.