Uber In Negotiations to Purchase Postmates
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.
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.
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