Uber suffers another blow as it loses McDonald’s delivery monopoly in the UK
Uber Eats has lost the exclusive rights to make about 15 million McDonald’s deliveries each year in the United Kingdom.
The food delivery operation is facing new competition from its much bigger rival Just Eat, which announced Tuesday that it will become McDonald’s’ second delivery partner in Britain this year.
The announcement is yet another blow to Uber’s business in the United Kingdom.
Uber is already facing the potential loss of its ride-hailing business in London after regulators pulled its city license last year. Service is continuing while Uber appeals, but the stakes are high: London is one of five cities that accounted for nearly 25% of its bookings in 2018.
The loss of the McDonald’s delivery monopoly is a huge knock to Uber Eats. The delivery service does about 30 million orders in the United Kingdom annually and McDonald’s accounts for about half of those, according to Joseph Barnet-Lamb, an analyst at Credit Suisse.
“Without that exclusivity, orders could be under pressure in 2020,” he told CNN Business.
McDonald’s UK CEO Paul Pomroy said in a statement that the existing partnership with Uber Eats has been “hugely successful.” Delivery is available from 950 restaurants.
“We are delighted that we have agreed to partner with Just Eat as an additional delivery provider in 2020,” Pomroy added.
Uber Eats just quit India
Uber, which expects to post a loss of up to $2.9 billion for 2019, is under increasing pressure from shareholders to shed underperforming businesses. Uber did not respond to a request for comment.
CEO Dara Khosrowshahi said recently that Uber Eats will get out of markets in which it cannot establish or defend a No. 1 or No. 2 position. Uber said last week that it would sell its food delivery business in India to a local rival.
Just Eat is the biggest food delivery operation in the United Kingdom, where it processed 123 million orders in 2018. It is strongest outside London.
The company is likely to lose money on the McDonald’s partnership, according to Barnet-Lamb, because of low commission rates and low order values from the huge burger chain. But the deal could stem the loss of customers to other platforms and persuade other chain restaurants to join Just Eat, he added.
“This is all part of Just Eat taking back control of the competitive landscape,” Barnet-Lamb said. “It’s going to be interesting to see what Uber does next.”
Just Eat was due to merge with Dutch rival Takeaway.com this month before UK competition authorities paused the deal to investigate it on competition grounds. The combined entity would be the largest online food delivery platform outside China, according to Takeaway.com.
— Sherisse Pham contributed reporting.
