The big picture: Uber's Eats business in India isn't helping the company improve its bottom line, so it decided to offload it to one of its local rivals in exchange for a stake in their business. As a result, Uber can focus on other locations where it can make a profit. It's now also the owner of 9.99% of Zomato.
Uber's rapid global expansion has been far from perfect, and lately the company has been trying to cut its losses wherever it has trouble beating the local competition. Today, the company announced it sold its food delivery business in India to rival Zomato. The deal is estimated at around $160 to $200 million that Uber will get in the form of a 9.99 percent stake in the Indian startup, which is also backed by China's Ant Financial group.
Zomato will take over Uber Eats' operations in India. The company says it will keep the overall user experience the same, while working to improve coverage. Analysts at Forrester think Zomato still faces a relatively strong competitor, Swiggy, that raised around $1 billion in 2018 and is capable of handling more deliveries every day.
Uber entered the Indian market in 2017, but its Uber Eats business has failed to make any significant market share gains despite offering aggressive deals and discounts. The company's CFO, Nelson Chai, says the recent move is part of "our commitment to take a hard look at Eats markets where we do not have a path to leadership."
Uber promised investors that it will become profitable by 2021, but in the meantime it is burning cash at an alarming rate. As of late, the company has expanded to new places in the Middle East and Latin America, but Uber Eats India was apparently losing some $60 million per quarter in 2019, on revenues of $20 million.
Cutting its loses means the company can focus on other places where it can secure a foothold, as the global food delivery market is expected to be worth $15 billion by 2023.