Uber Shuts down Uber Eats’ Operations in Seven Countries

Uber Technologies Inc., on Monday, announced the closure of its food delivery service, Uber Eats in markets where it was unpopular. The company’s subsidiary in the Middle East, Careem has also announced that it would lay off 536, or 31%of its employees.

Following Uber’s announcement, Uber Eats will stop operating in Saudi Arabia, Egypt, Romania, Czech Republic, Ukraine, Honduras, and Uruguay by June 4, 2020. The company has also said that it would transfer its Uber Eats business to Careem on the same day.

In a Securities and Exchange Commission filing, the company said that the “decisions were made as part of Uber’s ongoing strategy to be first or second position in all Eats markets by leaning into investment in some countries while exiting others.”

The discontinued and transferred Uber Eats operations represent 1% of the Eats’ adjusted EBITDA losses in the first quarter of 2020.

“Consistent with our stated strategy, we will look to reinvest these savings in priority markets where we expect a better return on investment,” the company added.

This does not affect Uber’s car-hailing services in these countries. In the meantime, the company would focus on its cab services as states begin to reopens. The company has said that it is working on a system that would ensure that both its drivers and passengers wear face masks.

The coronavirus pandemic can be said to be a major impact on the decision of the company. Uber Chief Executive Dara Khosrowshahi said the company decided to cut its food delivery services in low-performing markets while more focus can be channeled towards its cab-hailing service, which has been badly affected by the pandemic.

Shares of Uber have since fallen after its Monday’s announcement. The company’s shares recently traded at $27.81 down 2.04%, with its stocks falling 26% in the last three months. In addition to its business sustenance strategy, the company may just have plans to lay off nearly 20% of its 20,000 workers.