For the past few weeks, rumors were flying that Uber Eats was combining forces with Grubhub. Then a European delivery app swooped in and shook everything up.
Just Eat Takeaway, a Dutch company dominant in the European market, acquired Grubhub for $7.3 billion, providing some serious competition for Uber Eats and DoorDash. The Just Eat Takeaway deal created what the company claims is the “world’s largest online food delivery company outside of China.”
For Uber, that means an already unprofitable Uber Eats, which lost $313 million last quarter, will likely keep losing money in the near future. But it’s not totally screwed.
Liad Itzhak, head of HERE Mobility, a transportation marketplace based in Israel, said it’s just a setback for Uber.
If Uber successfully bought Grubhub, it would have owned 55 percent of the food delivery market in the U.S. That’s huge. On the flip side, regulators could have prevented the deal from going through. That risk is reportedly what pulled Uber out of the deal.
Still, the deal would have helped Uber Eats add more pickup and takeout options, and keep DoorDash at bay. PitchBook mobility analyst Asad Hussain noted this new competitor will attract more potential Uber Eats customers and restaurants right as a strong delivery business is more important than ever. In the first weeks of the coronavirus outbreak, Yelp saw food delivery interest double.
“The hope for [Uber and DoorDash] investors was Uber and DoorDash would be able to carve up the North American food delivery market,” he said. “And lead to two major players.”
That’s not how it played out, so Uber needs to offer more deals and incentives to lure customers, delivery workers, and restaurants into what Hussain explained “historically has been a money-losing industry.”
The coronavirus outbreak is slowing its ride-hailing business, so a boost to Uber Eats could have helped the company, which lost $8.5 billion last year, weather the storm. Now its bets on freight, fintech, and its new grocery delivery service are more important than ever.