Uber Pivots Away From the Food Delivery Business but Will It be Enough?

Uber Technologies (UBER) appears to be backing out of its Uber Eats business in an incremental manner. The company will no longer deliver food in South Korea starting this October. The ride-hailing business is flipping its Uber Eats India operations to an Indian food delivery business dubbed Zomato. The deal makes sense as Uber Eats’ EBITDA loss jumped 67% in the third quarter, reaching an aggregate loss of $316 million.

The question begs: where does Uber’s business go from here? Will the company narrow its focus to strictly transporting riders, possibly with autonomous vehicles, or continue to attempt to carve out a niche in the food delivery business? One thing is for sure: investors love the move to exit the South Korean food delivery business as Uber shares jumped 7% on the news. However, it must be noted that Uber is still in the red.

Uber leaders promised to provide investors with an adjusted EBITDA profit by the beginning of 2022 at the latest. This goal is still attainable yet the rideshare company might have to sell off some of its businesses that generate losses while squaring its focus on categories where it can become a true trailblazer. In other words, if UBER executives are willing to scrap their former mantra of growing as quickly as possible regardless of the cost, the company might be on the path to profitability. However, getting into the black will be painful. Uber will likely has a lot of work to do in order to win back investors, some of whom are disappointed the company exited the gigantic Indian market. Though Uber might not completely shut down its domestic food delivery business, it might be a while before the company makes any headway in its quest to be the top food delivery service in the nation. Pay close attention to Uber’s upcoming fourth quarter earnings report set to be released on Thursday, February 6.