Uber said the food delivery market in India continues to be very competitive, and admitted to being the number three player in the space, in a market which is dominated by Swiggy and Zomato.
Referring to the food delivery business in India, Dara Khosrowshahi, CEO, Uber said, “Right now the market is very, very competitive. We want to be number one or number two in every single market. Right now in India, we are number three and so the team knows there’s a big lift ahead of them.”
The company, however, assured analysts that it continues to operate in India amid reports that the company is looking to sell its local unit. The UberEats market will continue to be competitive as other players have raised funds to invest in growth in this fast-growing category, he said.
Khosrowshahi’s statement comes in roughly three months after Uber said that increased discounts to customers along with incentives to drivers and restaurants in India caused a decline in margins for its food-ordering business globally.
On Thursday, Uber reported a record $5.2 billion loss and revenue that fell short of analysts’ expectations, as growth in its core ride-hailing business slowed, sending its shares down 6%.
In response to declining margins in the food business, Nelson Chai, CFO, Uber, on Thursday night, said, “Obviously we’re going to watch India. So if you think about the fact that our take rate is 10.2%, ex-India probably would have been another 100 basis points or so.”
Swiggy and Zomato also continue to aggressively burn close to $30-$40 million monthly on discounting, logistics and restaurant acquisitions. Yet there is no clear market leader in the space.
Uber’s food ordering business earns lower margins than the core ride-hailing business.
ET had earlier reported that Uber has halved its annual cash allocation to its food-delivery business in India to $90-120 million. This came a year after the San-Francisco headquartered cab aggregator earmarked its highest budget globally to India to scale up its food business. It’s India rival Ola too had pulled its focus away from its food-delivery business, Foodpanda, and will instead sell private brands on its own platform and externally as well.
However, on its core ride-hailing business, Khosrowshahi reiterated that Uber, which is battling Ola, has proved its ability to win the market. “We proved our ability to win in rides, and my expectation is the same on Eat’s side, we’re taking some of the lessons and extending them into the Eats category,” Khosrowshahi said in a conference call with analysts.