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Uber Eats Buys Postmates, Responds To Criticisms With Planned ‘Listening Tour’

The delivery behemoth acquired a key competitor as the third-party delivery app space faces growing backlash.

Uber Eats swallowed up Postmates in a $2.65 billion, all-stock deal and announced a national “listening tour” in a statement released on Tuesday. The merger means the rideshare giant now controls 37% of the U.S. delivery market, according to the New York Post

“The transaction brings together Uber’s global Mobility and Delivery platform with Postmates’ beloved business in the U.S. to strengthen the delivery of food, groceries, essentials, and other goods,” Uber’s release read. “The consumer-facing Postmates and Uber Eats apps will continue to run separately, supported by a more efficient, combined merchant and delivery network.”

While saying, without explanation, that combining the apps now provides consumers “more choice,” Uber also responded to a growing chorus of criticism saying third-party delivery apps hurt restaurants. 

“Uber has signaled its commitment to the success of the restaurants and merchants who use its technology to reach customers and delivery people by announcing a national listening tour,” the release said, mentioning a virtual tour due to start in 2021. 

But Uber Eats won’t have to travel the nation to find business owners complaining about the food delivery app service, which drills into restaurant owners' already thin profit margins. The company, which previously tried and failed to buy rival Grubhub, makes money by charging restaurants a fee as high as 30% to deliver their food. Cities and states are increasingly passing caps on fees apps like Uber Eats can pay. 

Since the start of the pandemic, more than 100,000 restaurants have been forced to shut their doors. The pandemic hit the restaurant business particularly hard as lockdown measures involved restricting seating capacity or forbidding dining-in options. Many restaurants were not structured for takeout and delivery.

Uber, the $80 billion company behind Uber Eats, has never actually turned a profit.

Many industry watchers posit that companies like Uber and Grubhub can only become profitable once driverless cars and further automation remove the need for workers. Uber Eats and third-party food delivery apps classify their workers as independent contractors, not employees eligible for benefits. Restaurants, on the other hand, can not sustain continued losses and have to provide healthcare for employees working full time. 

Doordash, another third-party delivery app that recently filed to go public, also loses money. The mismatch between tech titans fighting for delivery app supremacy and the mom-and-pop restaurants whose food they sell has caused public calls for consumers to stop using the apps and lawsuits. 

Doordash paid $2.5 million to settle a Washington, D.C. lawsuit accusing it of not giving full tips to drivers, QSR Magazine reported.

“There’s simply not enough value created in these businesses to reward consumers, couriers, restaurants, employees and shareholders,” Len Sherman, an adjunct professor at Columbia Business School, told the Seattle Times of third-party delivery apps. 

Meanwhile, Uber Eats’ release said it had “long been committed to powering delivery services that support local commerce and communities.”