Uber’s culinary spinoff comes to Tokyo but in a different way

Last September 29, Tokyo became the 34th city to offer UberEATS, the food delivery service from Uber Technologies, Inc, the company better known for ridesharing. Originally called UberFRESH, the service launched in August 2014 in Santa Monica, Calif, as a simple option in the main Uber app. Since then, it has grown into a standalone offering that is disrupting the food industry just as Uber disrupted transportation.

But the move into Tokyo is different.

REVERSE APPROACH

Unlike other cities in which UberEATS operates, Tokyo lacks an established Uber infrastructure. That’s because, under Japanese law, the ridesharing service cannot operate as it does in cities such as San Francisco, New York, and London. In Japan, private drivers are not allowed to transport paying passengers. This makes Tokyo a unique experiment for the company because it cannot leverage the brand recognition it enjoys elsewhere. In other cities, UberEATS builds upon a familiar experience. In Tokyo, the service is essentially starting from scratch.

“Things have been slightly different here,” Uber Japan President Masami Takahashi told The Journal. “Regardless, we have been pleased to see the incredibly high level of enthusiasm for UberEATS in Tokyo since day one.”

David Plouffe, senior vice president of policy and strategy at Uber Technologies Inc, sees a reverse approach for Tokyo. At an American Chamber of Commerce in Japan (ACCJ) event at Tokyo American Club, Plouffe told The Journal, “When ride sharing is embraced here, people will try it via the food app, which is the inverse of other cities.”

Whether ride sharing will be embraced in Tokyo remains to be seen. Although some services operate in the city — such as UberBLACK, the company’s luxury option, and UberTAXI, which allows riders to use the Uber app to call licensed cabs—the Uber experience known elsewhere is not available here. For that to change, the government must choose to rethink regulations.

FOODIES

Could food open the door to greater awareness and use of UberBLACK and UberTAXI? Perhaps. For now, however, the company is focused on connecting restaurants with diners.

“Requesting a ride through Uber and ordering a meal are two very different experiences,” Takahashi explained. “We want to ensure that every Uber interaction is seamless and easy. By building a standalone app dedicated to UberEATS, it allows us to create an experience that’s tailored to discovering food options and ordering meals with the same simplicity as ordering a ride.” Diners place their order and pay through the UberEATS smartphone app. The courier receives their delivery fee from Uber.

This concept has proven popular so far. More than 150 restaurants and 1,000 couriers signed up prior to launch. Sixty percent of these restaurants had never done delivery before.

Among those are Soul Food House. Opened in August 2015 by David and LaTonya Whitaker — natives of Georgia and Mississippi respectively — the comfortable Azabu-juban restaurant feels like someone’s home in the Deep South. Once customers taste the authentic Southern food, they want more; but visiting Azabu-juban isn’t always practical. So, demand for delivery was building.

“We had thought about doing delivery before, but didn’t know how to get it logistically done,” explained David Whitaker, who sat down with The Journal.

Soul Food House is now sending out 5–10 orders per day, but that isn’t the only benefit. “It helps in that, with those orders, if they are ordering for someone else who didn’t know about the restaurant, then it’s still advertising,” explained Whitaker. “That pushes where we can be all the time.” In fact, some diners see the menu in the UberEATS app and then come to the restaurant for the atmosphere.

HoneyBaked Ham, the famous US franchise with a location in Toranomon, is another early adopter. “We estimated we could get more sales because of their PR power,” said manager Hidefumi Tosaki. “UberEATS is more familiar to American people, who are more likely our customers. It is easy to get more orders, and it provides nice PR for our brand.”

INDEPENDENT FUTURE

Like the Uber ridesharing service, UberEATS is rooted in what has become known as the sharing economy. The term has been widely used since 2010, but has gained broader public awareness over more recent years. In its 2015 white paper The Sharing Economy, PwC defined the concept as allowing “individuals and groups to make money from underused assets.”

While the term may be unfamiliar, the service being provided is not.

As Paul Kraft points out, “With the high population density, independent food delivery has been a mainstay in Tokyo for many years—mostly by those with their own fleets of delivery motorcycles. Uber is trying to circumvent this system with their service.” Kraft is director of Nespresso Professional and chairman of the ACCJ Food and Agriculture Committee.

At present, UberEATS is a nascent idea. But could a future Tokyo see independent couriers replace the company-owned fleets?

Tosaki, whose store is located just outside Kamiyacho Station in Toranomon, thinks the potential of income generation in business areas may attract couriers and fuel adoption. “We have more customers in business areas because more foreign businesspeople work there. They tend to be familiar with food delivery,” he explained. “So, the independent couriers have more delivery locations in the small business area. That means they could deliver the food in a short time and make money more efficiently.”

BRANCHING OUT

At Soul Food House, Whitaker sees an opportunity not only for the couriers but for his own business plans. “In the long term, if it becomes something that is profitable and can be splintered off into a different division, I can create delivery branches to make sure we can serve more of the city or area.”

This idea ties into one of the challenges of the UberEATS model: delivery radius. The Tokyo metropolis is huge, and while in theory a dish could be delivered clear across the city, in what condition would the food be when it arrived?

To address this, the service launched in Tokyo with a limited 36-square-kilometer geographical area that included the Shibuya/Ebisu, Aoyama/Akasaka, and Roppongi/Azabu areas of Shibuya and Minato Wards.

“We aim to expand the service area to other neighborhoods of Tokyo over time,” Takahashi told The Journal. “Gradual geographical expansion like this is common to how we operate in cities around the world.”

As the year ended, Takahashi’s words had already come true. On December 12, it was announced that orders could be placed from parts of Shinjuku, Setagaya, and Chiyoda Wards, an area that includes Shinjuku, Yoyogi, Sangenjaya, Shimokitazawa, Yotsuya, and Ichigaya.

REGULATION

As UberEATS and similar food delivery services grow, the question of food safety will, too. Is regulation inevitable?

Asked if the government will step in, Tosaki said, “They might have to. Because they are independent, they might need to obtain a license for food safety, or be registered with the government.”

Whitaker agrees. “For health reasons, they would have to start regulating more.”

But as Kraft explains: “While there are many regulations surrounding the industry, enforcement is not as strict as in other countries. Although the Japanese government has traditionally been very strict on documentation, such as labeling and licensing, actual enforcement and inspection of kitchen facilities has been very low. Moreover, it is left up to the individual wards of Tokyo to set regulations and enforcement. It is because of this that I doubt there is much actual enforcement of food delivery businesses.”

OLYMPICS AND BEYOND

In addition to expanding into more areas of Tokyo, UberEATS is looking ahead to the Tokyo 2020 Olympic and Paralympic Games, which the company sees as a possible catalyst for acceptance of the sharing economy.

“We are as excited as the rest of the country about Japan hosting the Games,” said Takahashi. “It means an influx of many millions of foreigners by 2020, many or most of whom will be accustomed to using ridesharing and food-delivery apps in their home country. We want to be part of the government’s plans in ensuring the success of the Games.”

Takahashi also predicts that ridesharing services will help authorities manage the mass movement of visitors who will descend upon Tokyo in 2020, citing Rio as an example. “We saw in Rio during the Olympic and Paralympic Games that 15% of all foreigners who visited during the Games used Uber. We can only imagine how much demand there’ll be during the Tokyo Games.”

Of course, these visitors also need to eat. Access to some of Tokyo’s most popular dining options through an app might just be a game changer. “We will continue the dialog with our restaurant and courier partners to make sure that the relationship continues to be a win-win-win for all sides.

Custom Media publishes The Journal for the American Chamber of Commerce in Japan.

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