SOUTH KOREA – Uber Eats will be terminating its restaurant delivery business service in South Korea and exiting the market.
The move comes as the food delivery platform continues to face intense competition in the South Korean market from its biggest rival, Woowa Bros.’ food delivery service Baedal Minjok – which enjoys a 75% market share.
“After two years’ partnering with local restaurants to offer convenient, reliable food delivery, we have made the difficult decision to discontinue Uber Eats in South Korea at the end of October 14, 2019,” Uber Eats Korea said in a statement.
Uber, which operates Uber Eats services in Asian countries including Japan, India and Hong Kong said it will cease operation in South Korea on October 14.
Industry data show that South Korea is the world’s fourth largest market for online food orders, crowded with home-grown delivery apps.
Uber Eats is also increasingly facing competition across major markets and has been struggling to make its business profitable.
Even though Uber Eats grew 140 percent year-over-year and generated US$3.9 billion in bookings as of its second quarter of 2019 earnings report, Uber CEO Dara Khosrowshahi says that Uber Eats wasn’t going to be profitable any time soon.
“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,” Khosrowshahi told CNBC.
In the U.S., Uber Eats lags behind DoorDash and GrubHub while in Europe the company is up against Deliveroo and recently merged servicesJust Eat and Takeaway.
Comparably, Grubhub had established the beginnings of a profitability roadmap for the industry – even as some experts worry that it is losing share to its fast-growing Silicon Valley rivals.
The company has also forged an exclusive partnership with KFC, Taco Bell and Pizza Hut owner Yum Brands Inc, which took a US$200 million stake in the Grubhub.
In India Zomato ad Swiggy have notably been shifting their gears increase grip in the sector, stirring up more competition.
As the online food delivery is projected to hit $200 billion by 2025, players in the sector ought to are seeking to broaden their global presence, and strengthen their competitive position.