Dashed Dining: Uber Eats to cease operations in the United Arab Emirates
June 9, 2020
2 min read
What's going on here?
UberEats announced it will stop operating in the United Arab Emirates (“UAE”) after 4 June 2020 and will combine its services with CareemNOW, the online food delivery service operated by Middle Eastern ride hailing company Careem, which Uber acquired in 2019 for £2.4bn (you can read about that here).
What does this mean?
UberEats’ exit from the Middle East has taken place just 3 years after starting out in Dubai in 2017. The company decided to cease operations after a calculated look at the UAE food delivery market, which is highly competitive. As UberEats and CareemNOW both cater to the same consumer base, it is sensible to move forward with a single, locally developed brand in the long run. This will cease Uber’s direct competition with its own subsidiary whilst allowing Uber to expand their market share in the UAE through Careem instead.
Uber also believes that after their acquisition of Careem in 2019, food delivery will be a crucial aspect of the new super app it is developing for Careem. By combining services with CareemNOW, their app will become a “one stop-shop” to serve all of its consumers’ regular needs.
What's the big picture effect?
The UAE is not the first market UberEats has left. Earlier this year, Uber sold its food delivery business to Indian local rival, Zomato. The company also announced it will be leaving Egypt, Saudi Arabia, Ukraine, Czech Republic, Honduras, Romania and Uruguay by 4 June 2020.
Uber’s new strategy is to focus resources on markets where UberEats has performed well internationally, in which it retains a higher market share. The 8 markets it will leave did not offer a clear route for Uber Eats to become either the first or second most popular online food delivery service.
Uber Eats is also leaving the UAE due to competition. The UAE food delivery market is rife with international competitors like Deliveroo, locally popular brands such as Zomato, Talabat, and its own subsidiary, Careem. The latter brands have a strong hold on market share due to their local branding and familiarity with the region’s needs. Talabat for instance, is the Arabic word for “orders”, and provides its app in both English and Arabic to cater to linguistic preferences.
By letting CareemNOW take the reins on food delivery online, Uber can reinvest savings made from leaving certain regions into countries where it is already well established. This will give Uber a better return on its investments and improve its overall profitability in the long run.
Report written by Evania D’souza
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