Uber Eats will no longer be delivering food in South Korea, the company said today. Reuters was first to report the news, writing that company faced competitive pressures in the world’s fourth biggest online food delivery market.
Indeed, it was a daunting task for Uber Eats to gain meaningful traction in South Korea, where Woowa Bros.’ food delivery service Baedal Minjok enjoys a 75 percent market share. Helping strengthen that position, Woowa Bros. raised $320 million in December of last year in part to build more food delivery robots.
Presumably, however, it wasn’t just external forces that brought Uber to this decision. Since going public this year, the company is under greater scrutiny to turn a profit, or at least, you know, not lose $5 billion every quarter. Even though Uber Eats grew 140 percent year-over-year and generated $3.9 billion in bookings as of its Q2 2019 earnings report, Uber CEO Dara Khosrowshahi told CNBC that Uber Eats wasn’t going to be profitable any time soon, saying:
The Eats business is still a business that carries very significant growth going forward and that continues to attract a lot of capital. Not just in the US, but all over the world. With the eats business there’s a lot of capital chasing a lot of growth and we’re the leader on a global basis. So, I don’t expect that business to be profitable in the next year or year after frankly.
Looking to relieve at least some pressure, in June, Uber laid off 400 people across its marketing team in an effort to streamline operations. For more background on Uber’s long struggle with turning a profit, check out this recent episode of The New York Times podcast The Daily.
Among the bigger, more existential questions for Uber is exactly where in the world can it be the number one food delivery service. It faces tough competition just about everywhere around the globe. In the U.S., Uber Eats lags behind DoorDash and GrubHub. In Europe its up against the likes of Deliveroo and recently merged services Just Eat and Takeaway. In India it faces Zomato and Swiggy.
It’s not all grim news for Uber though. One differentiator the company has over its rivals is its ride-hailing business, which the company is further integrating with its food delivery business. Uber has been testing a $9.99 subscription service that would include unlimited meal delivery.
Uber Eats will cease operations in South Korea on October 14.