Dive Brief:
- Uber is reportedly in discussions with Nuro, an autonomous vehicle company, to partner for food delivery. The companies are looking at a pilot later this year in Houston, where Nuro is currently piloting self-driving grocery delivery with Kroger, according to The Spoon.
- Early reports indicate that Nuro vehicles would pick up food from restaurants and then take it to a centralized hub, where a human driver would then complete the last mile.
- Uber went public on Friday, a few months after Nuro secured a hefty $940 million investment from SoftBank to spur growth. SoftBank is also an investor in Uber Eats.
Dive Insight:
Driver-powered delivery has been around for decades, but it's just been within the past few years that there have been new innovations in the space, from drones to robots to driverless vehicles. Nuro makes electric, low-speed vehicles that do not have space for a driver, are about half the size of a regular car and max out at 25 miles an hour. If such a fleet scales in the food delivery space — and a partnership with Uber would likely yield a pretty quick scale — it would represent yet another iteration in the space.
Innovations are moving fast in the delivery category. The delivery robot market alone, for example, is expected to grow from $11.9 million in 2018 to $34 million in 2024, according to a recent report by MarketsandMarkets.
The difference between driverless tests and this partnership, however — at least according to very early details — is that Nuro vehicles are expected to take food from restaurants to a central hub, and then an actual driver would complete the last mile to consumers. As originally reported by The Information, the objective in having a hub is to enable drivers to handle higher volumes and therefore make more money (and save time) by not having to go to each restaurant to pick up food.
The idea on paper makes plenty of sense and could also provide Uber with a way to lower its driver costs (welcome news for some restaurant brands). But one of the persistent challenges with food delivery is the compromise of food quality and temperature. Adding a step versus removing one would seem to exacerbate this issue. It could perhaps also add to delivery time if the mix isn't right, or complicate order accuracy with so many meals stationed at a hub.
Whether or not these reports yield anything is anyone's guess at this point. Uber is focused on its food delivery business, so experimenting with potential efficiencies and processes, particularly with a fresh infusion of IPO cash, makes plenty of sense.
