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Uber Eats Marks Germany Foray To Disrupt Just Eat's Monopoly: FT

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Uber Eats Marks Germany Foray To Disrupt Just Eat's Monopoly: FT
  • Uber Technologies Inc (NYSE: UBER) is attempting to crack down on Just Eat Takeaway.Com NV’s (OTC: TKAYF) (OTC: TKAYY) German food delivery market monopoly through employed couriers instead of gig workers, the Financial Times reports.
  • Uber Eats timed its Germany debut over the next few weeks, starting in Berlin. It wants to capitalize on Europe to strengthen its market position reflecting on Germany’s ride-hailing prospects and Uber Eats’ market share gains in the U.K. and Spain.
  • Around 370,000 couriers accounted for over 24 million European Uber Eats orders last year. However, Uber’s high commission rates in Germany led to consumers and merchants exploring different options.
  • Uber-contracted fleet management companies will employ Uber Eats’ couriers in Germany. It will pay its German partners for each order who will pay their employees, a similar model at its Geneva food delivery business after a September 2020 court case.
  • The fleet management led to incremental costs hampering expansion beyond larger cities. However, it also translated into worker management efficiencies.
  • Uber and other gig-economy companies also faced regulatory challenges across Europe, especially after the U.K. Supreme Court’s Feb. ruling in favor of Uber drivers’ classification as workers instead of independent contractors.
  • Milan prosecutors threatened online delivery services with hefty fines after a year-long probe into working practices. The Spanish government intended to offer employee status to a huge chunk of delivery workers, forcing Uber to consider a German-style employment model.
  • Last year Uber Eats exited India and multiple smaller markets in eastern Europe, Latin America, the Middle East, and Africa after leaving South Korea in late 2019.
  • Uber sold its struggling local businesses in many instances for sizeable stakes in the dominant participant. Uber’s 14.3% stake in Singapore’s Grab would be valued at over $5 billion based on Grab’s $40 billion valuations.
  • Uber Eats noted explosive market growth during the pandemic. The March food delivery grew 150% on the pre-pandemic level to a $52 billion annualized gross bookings run rate.
  • Just Eat had dominated online food ordering in Germany since Deliveroo PLC’s (OTC: DROOF) 2019 exit leaving back fewer capable peers. Just Eat’s GrubHub Inc (NYSE: GRUBacquisition will help explore Uber’s home market U.S.
  • Germany accounted for a sizable chunk of Just Eat’s profits following huge investment for “Scoober” in-house logistics network build-up in the U.K., intensifying its war with Uber and Deliveroo.
  • Uber’s latest initiative was preceded by Finnish delivery start-up Wolt’s Germany debut, snubbed by Just Eat CEO Jitse Groen.
  • Uber had already engaged multiple restaurants, including large household-name chains.
  • Price action: UBER shares traded higher by 0.04% at $55.5 in the premarket session on the last check Wednesday. GRUB shares traded lower by 3.58% at $69.8.
 

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