Uber Bought the fourth-largest U.S. food Delivery Service

Uber and food delivery business

On Monday, Uber, and Posmates made an important announcement. Uber became the owner of the fourth-largest U.S. food delivery service. As a reminder, Uber only trials DoorDash when it comes to market share.

Importantly, Uber has no intention to discontinue the Postmates app. Moreover, this app will continue to operate supported by a more efficient, combined, and delivery network.

The coronavirus pandemic had a tremendous impact on the American ride-hailing company as demand for ride-sharing has plunged. Based on the information taken from Uber’s first-quarter earnings call, gross bookings revenue for its rides segment fell by 80% in April compared to the same period of time in 2019. However, at the same time, gross bookings revenue in eats increased by more than 50% during the period.

Uber and PostmatesUber and coronavirus pandemic

Notably, in the past, Uber wanted to buy a rival food delivery service called GrubHub. However, companies could not agree on a break-up fee. Furthermore, the ride-sharing company grew frustrated with what it regarded as stalling tactics. It is worth noting that, European food delivery service JustEatTakeaway bought GrubHub in early June.

At one point in 2019, Postmates had reportedly filed confidentiality for an IPO. However, later that year, the company decided to delay its offering due to deteriorating market conditions as well as tough competition. Moreover, the company also considered trying once again. Interestingly, in its last fundraising round in September the company’s value was $2.4 billion. Uber bought Postmates for $2.65 billion in stock.

Moreover, Postmates was quite successful in urban Los Angeles, as well as Miami. However, it struggled to compete nationally against DoorDash, GrubHub as well as Uber Eats. Interestingly, even after this deal Uber Eats will still trail DoorDash in food delivery market share. However, thanks to this factor it will be easier to gain approval from U.S. regulators.

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