In San Francisco and Seattle, officials recently set limits on delivery fees, and Boston, Chicago and Los Angeles are among cities that have mulled similar measures. New York is set to vote Wednesday on
“Many small businesses and customers rely on these services, and we’ve seen that the fees, either on restaurants or on customers, can spike to unacceptable levels and without competition there’s less to limit their ability to price gouge,” said Matt Haney, who sits on the San Francisco Board of Supervisors and has criticized Uber for its delivery fees.
Uber said it’s focused on driver safety and helping support independent, local restaurants struggling from effects of the virus. “Regulating the commissions that fund our marketplace—particularly during these unprecedented times—would force us to radically alter the way we do business, set a far-reaching precedent in a highly competitive market, and could ultimately hurt those that we’re trying to help the most: customers, small businesses and delivery people,” the company said in a statement.
Food delivery tie-ups are complicated. Even before the Covid-19 crisis, many of the operations were unprofitable as they fought for market share. In New York alone, at least a dozen food delivery services compete for customers who are increasingly ordering from multiple platforms. Grubhub, the oldest of the major apps, had been forced to burn cash to play defense against upstarts like
Then Covid-19 hit. Uber has had to reassure investors that it has enough cash to survive the year and pushed its goal of making an adjusted profit out to 2021. It also told 3,700 employees that they were
Profits are elusive in the food delivery business. Uber’s adjusted revenue for food delivery more than doubled in the first three months of the year, according to the company’s latest financial report. But even with that massive increase in sales, the loss from food delivery actually increased by 1% in the period to $313 million. And that’s before the full brunt of the pandemic took hold in the U.S.
Meanwhile, these companies face calls from officials to improve conditions for their gig economy workers. California’s attorney general sued Uber and rival
Persistent losses in the industry are why mergers seemed likely to many analysts and investors. In March, DoorDash accounted for 42% of the U.S. meal delivery market, according to research firm Second Measure. Grubhub had 28% and Uber 20%. “We’ve long believed that consolidation in online food delivery is inevitable,”
But the current economic conditions increase the likelihood of drawing the attention of antitrust regulators, White wrote, especially “given the impact any deal could have on a restaurant industry that is struggling to survive in the face of the pandemic.”
Restaurant advocates also said they were worried about the potential consequences of a deal. “It’s extremely concerning,” said Andrew Rigie, executive director of the NYC Hospitality Alliance, a group that represents restaurants in New York. Grubhub and its Seamless division already dominate the city, Rigie said, “and they use their leverage and market share at the expense of local restaurants.”
(Updates with background on worker rights issues in the ninth paragraph.)
–With assistance from
To contact the reporter on this story:
To contact the editors responsible for this story:
© 2020 Bloomberg L.P. All rights reserved. Used with permission.
Experienced General Manager with a demonstrated history of developing leaders and exceeding sales goals. Strong sales professional skilled in Management, Customer Service, Recruitment, People Development, Cultivating Company Mission, and Achieving Financial Results.