Uber Eats will no longer deliver to restaurants in Brazil
Uber will end operations of Uber Eats in Brazil. In a note sent to Mobile Time, the company said that the intermediation service for restaurants will work until March 7th. After that, you will focus your efforts on other delivery services.
“From now on, the company will work on two fronts: with Corner shop by Uber, for intermediary services in the delivery of purchases from supermarkets, wholesalers and specialized stores; and package delivery through Uber Flash”, he informed. “After this date (March 7,), users will be able to use the Uber Eats app to enjoy the best selection of supermarkets and wholesalers in Brazil, as well as decoration items, stationery, beverages, and pet products, among others”, he adds.
The corner shop is currently available in over 100 cities in Brazil. According to the company, market delivery almost tripled the number of orders. Uber also says it will expand Uber Direct, a corporate product that allows stores to deliver same-day deliveries to their customers and maintains its “commitment to its more than 1 million partner drivers” who generate income by traveling and delivering on the platform.
Coincidentally, Uber’s shares ended on Thursday valued at $42, down 2.8% from $43.3 last Wednesday. The departure of Uber Eats from the Brazilian market was widely reported by international vehicles.
Sought by Mobile Time, the Brazilian Association Online to Offline (ABO2O) said that, if implemented, the end of operations in Brazil of Uber Eats is very bad for the sector: “The market needs more companies competing in the restaurant delivery segment. Without a regulatory environment and decisions, especially from CADE, to ensure this good competition, consumers and restaurants will be increasingly linked to some application options available in the country”, he assesses.
In turn, the National Association of Restaurants (ANR) lamented the closure of Uber Eats activities in Brazil, and sees the app’s exit as a “loss of competitiveness” in the foodservice sector.
“At this still delicate moment, in which the economy needs greater traction, it is important to have a range of operators. Although it is an important drop, the delivery market has been gaining new players with innovative and very interesting proposals to ensure better conditions and benefits to the entire ecosystem – from delivery people to restaurants and consumers”, replies the ANR.
Earlier this Thursday night, the president of the Union of Messengers, Motorcyclists, Cyclists and Intermunicipal Motorcycle Taxis of the State of São Paulo (SindimotoSP), Gilberto Almeida dos Santos, told this publication that the departure of Uber Eats from the segment delivery service for bars and restaurants is due to the dominance of food with more than 80% of the market.
In SindimotoSP’s view, it is less a company to “precarious the situation of deliverymen”. Still, they see food as the “great villain” in the worsening of food delivery these days.
Analysis I – Uber
This is not the first time that Uber Eats has closed operations in countries. In May 2020, the company stopped operating in eight countries and its subsidiary in the Middle East laid off 536 people. At the time, one of the reasons was the impact of the pandemic on orders, but also the fact that these locations did not gain traction and represented less than 1% of Uber’s total revenue.
Now, a series of factors may have contributed to the end of the national operation:
The first yellow light was the departure at the end of 2021 of its main executive in Brazil, Silvia Rodrigues.
The financial result for the third quarter of 2021 shows that Uber is unprofitable, having registered a net loss of US$2.4 billion, a deterioration of 123% from US$1.1 billion in the same period a year earlier.
In the presentation of the third-quarter report, Dara Khosrowshahi, CEO of Uber, and Nelson Choi, CFO of the company, do not mention Brazil or Latin America as an example in delivery, but the United States and Canada. Brazil is highlighted by its private racing service, which has returned to pre-pandemic levels. In the past, the region was highlighted as having a lot of potentials to be explored.
In August of last year, Uber needed to launch a $1.5 billion credit note offer to pay for an acquisition in the freight and logistics segment and not compromise cash.
In 2020, the company even disbursed US$ 450 million to transfer assets that were considered Uber’s future, but which required a lot of efforts and investments that could be used in racing and delivery.
In the Brazilian delivery and logistics market, this was not the first warning of change or consolidation. It is worth remembering that the Delivery Center also announced the end of its activities at the end of 2021;
It also weighs against the Brazilian macroeconomics: the country has 13.5 million unemployed, spent 2021 with accumulated inflation of almost 11% in the year, and entered a technical recession in December;
There is frank competition from Uber Eats on two fronts: delivery with food, Rappi, 99, and others; and marketplace deliveries such as Mercado Livre, Americana’s, Amazon, and Magaluf.
In the dispute for the food delivery market in Brazil, Uber Eats was never able to stand up to food, which has always led the segment, according to the Panorama Mobile Time/Opinion Box survey on mobile commerce and payments. In the most recent edition, from October 2021, iFood is named as the favorite food delivery app by 72% of Brazilians who use this type of service, while Uber Eats is in a distant second place, with the preference of 8 % of the audience.
Analysis II – I Food
Even with the departure of Uber Eats from the delivery of bars and restaurants, it is still too early to say that food has won the delivery market in Brazil. Yes, iFood is the biggest player of national origin. But the Moville-linked app has several challenges ahead:
It faces wide and open competition with Rappi, which has been receiving strong investment rounds annually;
The large marketplaces have advanced in market deliveries and are starting to look at bars and restaurants, just remember Magalu’s app acquisition movements in the last two years;
The advance of niche competitors, such as Zed Delivery, which has been building with traders in the pandemic at attractive rates;
There are demands for stricter industry rules that could threaten iFood’s dominance and encourage more competition. An example is the CPI of Apps that currently takes place at the City Council of São Paulo.
The victory of I Food is not complete as the departure of Uber Eats was total. The US company is still trying to gain ground by delivering market items with Corner shop, which was purchased in 2021, but could very well have closed the delivery operation altogether, or sold it to a smaller rival than I Food so that there were no problems with approval at CADE.
It’s important to remember that iFood’s itself bought the local unit of Orders in the past, another delivery app that did not gain traction in the Brazilian delivery market. And Uber sold its Russian operation to Yandex.