Uber Eats is pulling out of a clutch of markets — shuttering its on-demand food offering in the Czech Republic, Egypt, Honduras, Romania, Saudi Arabia, Uruguay and Ukraine.
It’s also transferring its Uber Eats business operations in the United Arab Emirates (UAE) to Careem, its wholly owned ride-hailing subsidiary that’s mostly focused on the Middle East.
“Consumers and restaurants using the Uber Eats app in the UAE will be transitioned to the Careem platform in the coming weeks, after which the Uber Eats app will no longer be available,” it writes in a regulatory filing detailing the operational shifts.
“These decisions were made as part of the Company’s ongoing strategy to be in first or second position in all Eats markets by leaning into investment in some countries while exiting others,” the filing adds.
An Uber spokesman said the changes are not related to the coronavirus pandemic but rather related to an ongoing “strategy of record” for the company to hold a first or second position in all Eats markets — which means it’s leaning into investment in some countries while exiting others.
Earlier this year, for example, Uber pulled the plug on its Eats offer in India — selling to local rival Zomato. Zomato and Swiggy hold the top two slots in the market. (As part of that deal Uber took a 9.99% stake in Zomato.)
Uber Eats rival, Glovo, also announced a series of exits at the start of this year — as part of its own competitive reconfiguration in a drive to cut losses and shoot for profitability. It too says its goal is to be the first or second platform in all markets where it operates.
The category is facing major questions about profitability — with now the added challenge of the coronavirus crisis. (Related: Another player in the space, Uk-based Deliveroo, confirmed a major round of layoffs last week.) tl;dr, on-demand unit economics don’t stack up unless you can command large enough marketshare so it looks like the competitive pack is thinning as it becomes clearer who’s winning where.
In a statement on the latest round of Eats exits, Uber said: “We have made the decision to discontinue Uber Eats in Czech Republic, Egypt, Honduras, Romania, Saudi Arabia, Ukraine, and Uruguay, and to wind down the Eats app and transition operations to Careem in U.A.E. This continues our strategy of focusing our energy and resources on our top Eats markets around the world.”
The discontinued and transferred markets represented 1% of Eats’ Gross Bookings and 4% of Eats Adjusted EBITDA losses in Q1 2020, per Uber’s filing.
“Consistent with our stated strategy, we will look to reinvest these savings in priority markets where we expect a better return on investment,” the filing adds.
The Uber Eats spokesman told us that the exits do not sum to any change to the ‘more than 6,000 cities’ figure for the unit’s market footprint — which Uber reported earlier this year.
Asked which markets the company considers to be priorities going forward the spokesman did not respond. It’s also not clear whether or not Uber sought buyers for the shuttered units.
Per Uber’s filing, Eats operations will be fully discontinue in the Czech Republic, Egypt, Honduras, Romania, Saudi Arabia, Uruguay and Ukraine by June 4, 2020.
Uber Rides operations are not affected, it adds.
A source familiar with Uber also said the changes will allow the company to focus resources on new business lines — such as grocery and delivery.
The coronavirus pandemic has disrupted the on-demand food delivery business as usual in many markets — with convenience-loving customers locked down at home so likely to be cooking more, and large numbers of restaurants closed (at least temporarily), putting a dent in the provider side of these platforms too.
At the same time there is a demand upside story in the groceries category. And last month Uber announced a tie-up with a major French supermarket, Carrefour, to expand its delivery offering nationwide. It also inked other grocery-related partnerships in Spain and Brazil.
Grocery delivery has been seeing a massive uptick as consumers look for ways to replenish their food cupboards while limiting infection risk.
While other types of deliveries — from pharmaceuticals to personal protective equipment — also potentially offer growth opportunities for on-demand logistics businesses, which is how many major food delivery platforms prefer to describe themselves.
Written by Natasha Lomas
This news first appeared on https://techcrunch.com/2020/05/04/uber-eats-exits-seven-markets-transfers-one-as-part-of-competitive-retooling/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+Techcrunch+%28TechCrunch%29 under the title “Uber Eats exits seven markets, transfers one as part of competitive retooling”. Bolchha Nepal is not responsible or affiliated towards the opinion expressed in this news article.
