Why Uber Eats Sold Its India Operation to Zomato

Uber Eats India acquired after operating at a loss in 2019.
Why Uber Eats Sold Its India Operation to Zomato
Uber Eats operates in 3 MENA countries: Egypt, Saudi Arabia and the UAE. Source: Bloomberg

Uber has sold its its food delivery service, Uber Eats, in India to its competitor Zomato. The exact value of the transaction was not revealed, however, the estimated cost is $350 million. This gives Uber around 10% share in the Indian food delivery platform.

But Why is Uber Selling off Parts of its Operation?

The division has been operating in India for two years, however, it was lagging behind competitors Zomato and Swiggy. Uber’s move to sell off part of its India operations is not a surprise. The company has faced pressure from investors to make a profit. Uber EatsThe food delivery service has been loosing money globally on customer discounts, however, the India operation accounted for more than 25% of Uber Eats’ global adjusted losses in 2019.

The ride hailing giant will be more focused on ride hailing rather than food delivery. This move will help Uber’s food delivery service become more profitable, or at least, it will operate at less of a loss.

Uber Eats in MENA

On a regional scale, Uber Eats had plans to grow. The Uber food delivery service announced in November 2019 that it will be expanding within Saudi Arabia to Alkhobar and Dhahran. However, it only operates in 3 countries within MENA; Egypt, Saudi Arabia and the UAE. The rest are left with local companies, such as Talabatey which operates in Iraq, Sudan and Syria.

Uber Eats announced in a press release that they plan on expanding within the Middle East and North Africa. Although, given the current geopolitical situation, it is unlikely that they will launch in other Middle Eastern countries anytime soon.

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