Uber Eats goes local to find its niche in South African food fight

A stone's throw from Nelson Mandela's former home inSouthAfrica's Soweto township, Dumile Badela's restaurant is now more hectic and lucrative than ever, thanks toUberEats, his hungriest customer yet.

Having already dominated Africa's ride-hailing sector,Uberis trying to conquer thefooddelivery market by leveragingitsmassive fleet of drivers in the continent's most developed economy and tracking popularfoodchoices and destinations.

The prize is big. The country's onlinefooddelivery industry was worth 10.49 billion rand ($713 million) in 2019, according to data portal Statista. And with growth pegged at nearly 14 per centannually, it will hit 17.6 billion rand by 2023.

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Surprisingly perhaps,Ubergot off to a tricky start.

An initial focus on high-end restaurants proved to be a mistake in a country perpetually on the verge of recession. The San Francisco-based app is now targeting traditional,localfare.

In May, it launched in Soweto, where it works with around 20 partners and is adding morelocalfoods toits480,000 menu items, dispatching dishes like stewed tripe, caterpillars, cow heels and sheep's head to mostly middle-class customers who crave a taste of home.

"I'd sayUberEatshas improved our sales by about 15 per centto 20 per cent. But I'm targeting even more, up to 50 per cent," Badela says. "There's huge opportunity."

It could be a win-win;Uberposted a $1.16 billion third-quarter loss andUberEatsis the company's fastest-growing business, contributing more than 10 per centofitsquarterly revenue of $3.8 billion.

Uberisn't alone in wanting a large piece of theSouthAfricanpie.

Launched in the early 1990s as a call-and-deliver service,SouthAfrica's Mr DFood, part of Naspers-controlled e-commerce firm Take-a-Lot, is the established player.

Some two millionSouthAfricans have downloadeditsapp. It boasts 700,000 active monthly users, and over the past 12 months processed 1.5 billion rand infoodorders.

UberEatssaid it's recorded 2.1 million app downloads sinceits2016 launch, but declined to give figures forfoodsales.

Between them, the two companies have captured around 80 per cent-90 per centofSouthAfrica'sfood-hailing market, according to research firm Insight Surveys.

They'll soon be joined by Bolt, the ride-hailing firm formerly known as Taxify, which isUber's main competition in Africa. The Estonian company plans to launchitsfooddelivery service inSouthAfrica early next year.

"There is space for three, possibly four key market players, as the market is still initsinfancy and will continue to show rapid growth in the future," said Yashvir Maharaj, research director at Insight Surveys.

Uberis using data fromitsrides service to monitor popularfooddestinations and is tracking popularfoodsearches on theUberEatsapp to gauge what people are craving.

InSouthAfrica, it has found that Soweto and other traditionally black townships have a reservoir of middle-class consumers who may move further afield and crave a taste of home.

"Now that we're in Soweto we want to take those experiences and expand them to other townships, and go even deeper into Soweto," Dave Kitley,UberEats' General Manager forSouthAfrica, told in media briefing.

"We're thinking a lot about migration.When they move, their taste buds move with them."

That's something George Makume, the Soweto-raised owner of So Cafe, understands.

Three years ago, he opened his restaurant in the middle-class suburb of Roodepoort, 25 kilometres (16 miles) west of Soweto, noticing a lack of traditionalfoodoptions despite a growing number of black professionals moving to the area.

"People grew up with this kind offood, but it's difficult tofindunless you travel 20 or 30 kilometres to Soweto," he said.

Among his best-sellers are skopo sheep's head steam-cooked or grilled on an open fire followed by "Mogodu Mondays", a 2-for-1 special of spicy tripe and maize porridge.

Since partnering withUberEats, and more recently Mr DFood, Makume said his weekday sales have jumped 30 per cent-40 per cent.

Back at Badela's restaurant where evening prep is under way, he says there's plenty of business to go around.

"I'm not the only one in Soweto offering this kind offood. There are many places," he says. "So if I succeed, the guys selling amanqgina (pig trotters), namatwana (chicken feet) and skopo will say 'Yo! I can do it as well.'"

That's a potential boon for black communities, where unemployment typically outstrips the nationwide average of nearly 30 per cent.