It’s been less than a month since Uber’s biggest ever acquisition failed. It tried to buy Grubhub for over $7 billion, which would have made the combined business with Uber Eats the largest food delivery service in North America.
The deal was blocked on anti-trust grounds, but that doesn’t mean it wasn’t Uber’s only option. It has acquired another competitor, Postmates, for $2.65 billion in an all-stock deal. It will give the food delivery arm of Uber a much needed injection as it has been losing money hand over foot.
According to reports, the Postmates app will continue to function independently, but will offer more efficiency than before by sharing merchant and delivery networks. Uber says this will mean more restaurant options for consumers and more efficient deliveries for drivers who pick up multiple orders at a time. The deal will be finalised in Q1 2021.
While other food delivery services are also struggling to make money, Uber Eats has the added pressure of the parent company’s core business ride-hailing service also not making money. But by tapping into a combined network between Postmates and Uber Eats, the company is hoping to cut costs and drive demand with better service.
Paradoxically, the pandemic has helped Uber Eats immensely, almost doubling its business in North America, but it has damaged Uber to a point where they’ve had to retrench nearly 15 percent of its workforce.
The US has seen a massive spike in coronavirus cases over the last several weeks as most states start coming out of various levels of quarantine. While people’s safety is always the number one concern, it might be a blessing in disguise for Uber Eats. With many still staying at home to avoid large crows, the food delivery businesses around the world are likely to continue to prosper.