Uber restructures food delivery business: After India, shuts down Uber Eats in eight markets

Uber said that the eight markets contributed only 1 per cent of gross bookings and 4 per cent of adjusted EBITDA losses in Q1 2020 for its Uber Eats business.

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Uber Eats – the food delivery vertical of SoftBank-backed cab-hailing company Uber which sold its India business to Alibaba-backed Zomato — has now logged out from eight other markets. The decision was taken “as part of Uber’s ongoing strategy to be in first or second position in all Eats markets by leaning into investment in some countries while exiting others,” Uber said in its SEC filing on Monday. A copy of the report was seen by Financial Express Online. Uber would end operations in the Czech Republic, Egypt, Honduras, Romania, Saudi Arabia, Uruguay and Ukraine by June 4, 2020, while “it would transfer Uber Eats business operations in the United Arab Emirates (UAE) to Careem.” Careem is an Uber company that it acquired for $3.1 billion in 2019.

Uber reasoned the exit saying that the eight markets contributed only 1 per cent of gross bookings and 4 per cent of adjusted EBITDA losses in Q1 2020 for its Uber Eats business. “Consistent with our stated strategy, we will look to reinvest these savings in priority markets where we expect a better return on investment,” Uber said as it looked to focus on markets doing relative better. The exit came just around two-three years of launch in most of these markets. Uber pushed its Eats business in Ukraine in 2019, Saudi Arabia, the Czech Republic, Egypt, and Romania in 2018 while it expanded in UAE in 2016. The company is currently present in around 21 countries including the UK, Australia, Japan, Spain, Mexico, Canada, South Africa, New Zealand, France etc.

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Uber Eats had reported $461 million in losses in December quarter of 2019 – up 66 per cent from $278 million during the year-ago period. The net revenue of the food delivery vertical increased to $415 million from $165 million during the said periods. “It is a good thing that the industry is consolidating. They have been burning money on every order primarily due to hyper-competition and aren’t charging for deliveries. These things are not sustainable. So consolidation gives you that pricing power. Customers will hopefully understand the value proposition and will pay for the delivery or buy without discounts,” Rajesh Raju, Managing Director, Kalaari Capital had told Financial Express Online commenting on divesting Uber Eats India business. Uber along with Ola on Monday had announced resuming its services in select cities in the Orange and Green zones under lockdown.

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First published on: 04-05-2020 at 20:25 IST
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