Uber has sold its food delivery service, Uber Eats to its rival, Zomato in India. The Gurgaon-based start-up acquired Uber’s food delivery service in an all-stock transaction which gave the American ride-hailing giant 9.99% ownership in Zomato.
The news is no surprise as Uber and Zomato were previously reported to have been in talks in November by Times of India. The move is seen as Uber’s attempt to cut losses as Uber Eats had been bleeding a lot of money in the country. Between August to December 2019, Uber Eats India is estimated to have incurred a loss of INR 762.5 crores. Uber Eats processing only about 0.5 million orders per day compared to business rivals Swiggy and Zomato with daily averages well over a million orders.
Founder and CEO of Zomato, Deepinder Goyal said in a blog post, “We are proud to have pioneered restaurant discovery and to have created a leading food delivery business across more than 500 cities in India. This acquisition significantly strengthens our position in the category. ”
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According to TechCrunch, Uber Eats’ business in India was valued between $300 to $350 million. With the food delivery business in India finally being off-loaded after a year, Uber will be able to cut its global losses. The company reported a quarterly loss of over $1 billion in November and lost about $5.2 billion in the previous quarter.
Uber aims to become profitable by 2021. CEO of Uber, Dara Khosrowshahi said, “Our Uber Eats team in India has achieved an incredible amount over the last two years, and I couldn’t be prouder of their ingenuity and dedication.” Khosrowshahi added that Uber will continue to develop the Ride business in India.
If you open the Uber Eats app on your phone now you get the prompt “Uber Eats in India is now Zomato” along with an option that will lead you to Zomato. The Uber Eats account is automatically set-up on Zomato if you have placed an order in India since July 1, 2019.