With its Postmates acquisition, Uber is betting that consolidation in the food-delivery sector will bring added pricing power, turning an unprofitable business line into a moneymaker.
Since the start of the pandemic, Uber has cut more than a quarter of its staff and exited or pared back some businesses, such as electric bikes and financial services, so it could focus on core areas: ride hailing and food delivery. Growth in Uber’s core rides business was slowing even before the pandemic drove a first-ever decline in bookings in the first quarter. Global rides plummeted 70%, Khosrowshahi said in June.
“Platforms like ours can power much more than just food delivery — they can be a hugely important part of local commerce and communities, all the more important during crises like COVID-19,” Khosrowshahi said. An acquisition of Postmates is less likely to raise regulatory scrutiny because it wouldn’t change the market as much. Postmates, a distant fourth, would give Uber a firm lead over Grubhub, but the combined company would still trail SoftBank-backed DoorDash Inc., the nationwide leader. Postmates would strengthen Uber’s position in Los Angeles and the American Southwest, two markets where the brand is strongest.Still, the deal has drawn some criticism.
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