By on June 30, 2020

Uber Technologies is reportedly in negotiations to acquire Postmates, specifically for the purpose of incorporating the brand’s food-delivery services into Uber Eats and cashing in government lockdowns that look to ensure 2020 remains a perfectly dismal year.

Our collective loss may end up being Uber’s gain, however.

With constraints easing in most regions, ridership is slowly creeping back up. That will undoubtedly continue as risk-adverse urbanites choose to avoid the subway and bus lines for months to come.

Meanwhile, new restrictions on dining establishments are effectively forcing delivery services to become an umbilical cord between restauranteurs and their customers. Now is the perfect time to get a bead on the market and make moves, ensuring your place as the all-important middle man. 

Contracts have yet to be signed in the obligatory blood, yet the Wall Street Journal reports that Uber is very serious about the opportunity — apparently waving $2.6 billion under Postmates’ nose to give it something to consider.

Having spoken to those familiar with the talks, WSJ estimates a deal between Uber and the San Francisco-based food-delivery company could be announced next week. Perhaps even sooner.

Uber previously wanted to scoop up GrubHub but was bested by the $7-billion deal offered by Just Eat Takeaway NV.

These types of food delivery site have cropped up everywhere, resulting in the entities stepping on each other’s toes and hampering profits as each tries to out-promote the others. It’s assumed that, once they’re consolidated into a few mega corporations, they’ll be routinely profitable — again assumed, not proven.

From WSJ:

Even with millions of Americans stuck at home and ordering more meals in, food-delivery companies are losing money on orders or barely breaking even. Increased costs to fund promotions and safety equipment on one hand, and pressure to reduce commissions for strapped restaurants on the other, have created an even more challenging financial proposition for the companies.

Uber Chief Executive Dara Khosrowshahi has previously said the company would exit food-delivery markets in which it wasn’t a dominant player. But the meal business has taken on new weight and significance as the company’s core ride-hailing operation suffers amid pandemic-triggered lockdowns.

Your author has actually started trying to avoid go-betweens after noticing numerous restaurants sending packaged food with letters literally begging me to order directly from them in the future. The fees have become too dear for some kitchens to endure, even though others claim delivery apps have helped keep their business afloat during these particularly trying times. Of course, they also don’t mind when you order direct and circumvent the additional fees.

Third-party delivery platforms have found a way around this, though. Many now offer sweet discounts when you order, as well as simple ways to donate a fraction of the sum to a charity — resulting in that oh-so-rare sense of accomplishment we all long for. But it’s still at the expense of a largely captive restaurant market which shells out a percentage of its earnings for the privilege of being listed. On the surface, it seems odd space for outfits like Uber — especially when so many of the platforms don’t do much more than act as a go-between. Of course, it’s not all that different from how it deals with ride-hailing businesses.

The company has been trying to spin access into cash forever. Maybe someday it will achieve that goal.


[Image: MikeDotta/Shutterstock]

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11 Comments on “Uber In Negotiations to Purchase Postmates...”

  • avatar

    The only delivery I’ve ever really ordered was from a pizza place as I’ve always been outside of the delivery area for Chinese food. I’m of the opinion that if I can’t get off my duff long enough to cook my own food, or drive to a fast food place, I’m at the height of lazy. I wouldn’t use this service because I’m also too cheap to pay the service fee on top of the tip I’d give.

    I’ll sojourn out myself, or find another solution.

    • 0 avatar

      I ordered door DoorDash Burger King delivery in April and it was like $25 OTD.
      And, it was still grungy Burger King when I got it (not sure what I was expecting there).

    • 0 avatar
      Art Vandelay

      I’d just assume my food not ride in some strangers vehicle in a seat that may have had some skanks bare kiester in it earlier that day for all I know. I was a detailer long ago…The nastiness of some people with respect to automobiles is shocking. Hard pass.

  • avatar

    I’ve read a financial opinion piece where the author calculated that nobody in the gig delivery biz (delivering people or stuff) using their own wheels is actually making any net profit. (Accounting for depreciation / replacement cost.) If this is true, are any of these deals sustainable at the prices they are charging? Obviously commercial trucking is a very low margin business with frequent bankruptcies, so it seems plausible.

    • 0 avatar

      That seems like a pretty big assumption from that author. I think this comes down to the person doing the driving, their means of transportation, their location, and their mindset about WHY they’re doing what they’re doing. I moonlit as an Uber driver when I lived in Charleston, SC. I drove a (then nearly new) 2014 Nissan Sentra SR that got me around 32mpg city. I went out ONLY on Fri/Sat nights from about 9p-1a and could clear about $200 per night without trying too hard. I went out with the sole intention of covering a tank of gas. If I could do that, everything else was pure profit. I didn’t do it as a means of supporting anyone or anything, just to have extra “beer money” so to speak. Entirely disposable income that I could keep separate from my normal military household pay. I drove because I wanted to. I wanted to meet cool people and have interesting conversations after my family went to sleep instead of sitting on the couch, playing video games, or anything like that.

      I always warned everyone that I ever spoke to that was thinking about doing that as a “career” that it wasn’t ever meant for that. Any job that doesn’t have a full hiring/screening/interview process to determine fitness for the job isn’t meant to be relied upon. For Uber, all you have to do is pass a background check, have a license, and a pulse.

      Then Uber started offering vehicle purchasing programs to their drivers in need of new wheels with ASTRONOMICAL interest rates. Lots of people fell for this because (and I’m going to make a harsh generalization here) a large percentage of their drivers were not of the mature or savvy enough mindset to realize they’re being ripped off and would never be able to sustain that vehicle long term in most operating areas.

      Taken as a “side hustle” as they’re advertising recently, Uber is great in many areas. I tried my luck when I moved to West Virginia and made $12 after 6 hours on a Super Bowl Sunday. That was the end of my Uber road.

    • 0 avatar

      i bet i could, if i was using my $1000 used yamaha zuma 125, and probably be faster/get better tips from lanesplitting at lights. 80mpg, 50mph, $100/yr for insurance and i do any wrenching.

      ive given food delivery a thought, since id be getting paid to ride something thats fun.

  • avatar

    Having never used any of these delivery services before, can you not have GrubHub/Postmates deliver food to you that you ordered from the restaurant directly? You MUST order it thru their respective apps? I guess I just assumed that you ordered the delivery driver and they’d go wherever you ordered food from and retrieve/deliver it.

  • avatar

    These delivery services are killing restaurants as much as Uber is screwing it’s drivers. They act like they’re saving their businesses, but they’re really destroying them.

  • avatar

    We have continued to order take out direct from the places we usually go to. I pick up the food and give them a tip like an eat there situation. I want the local places to stay in business. We seldom go to chain eateries. I cannot see how it helps anyone to split the money that would go to the restaurant 3 or 4 different ways. Sure you could give the delivery driver a tip, but the restaurant is still being stiffed by the app.
    Most restaurant business is very low margin. Many have already been driven out by increased rents and other overhead.

  • avatar

    I live just far enough out of the city that nobody delivers, never has in the thirty odd years we’ve been here. Concentrates the mind wonderfully to learn how to cook and plan ahead. Thus I have been Mickey D free for decades barring a couple of sample tryouts now and then. It’s as garbage as one can imagine. No thanks. If you can’t slap some burger meat in a frypan and make something three times as good in five minutes, you probably can’t boil an egg either.

    On the other hand, I had the sudden urge for some dirty bird to take home when out pandemic grocery shopping one late morning about a month ago. TV ads for KFC deals seemed to indicate some decent pricing. Get to the order speaker, and they tell me, oh that’s an internet special. What, I’m going to download some foolish app in the parking lot so as to get lunch when I’m at the damn place and they don’t have to deliver? Hand it over right now! “No order code, sorry.” Well, screw it.

    I remain fast food free. Jeez, now I want to feel peanut oil dripping down my chin again. Momma! Help!

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