Uber expands food deliveries to stem losses

UBER lost $2.9billion (£2.3billion) in the first quarter as its overseas investments were hammered by the coronavirus pandemic.

The firm is now looking to its growing food delivery business and aggressive cost-cutting to ease the pain.

The ride-hailing giant said it is offloading Jump, its bike and scooter business, to Lime, a company in which it is investing $85million (£68million). Jump had been losing about $60million (£48 million) a quarter.

“While our rides business has been hit hard by the ongoing pandemic, we have taken quick action to preserve the strength of our balance sheet, focus additional resources on Uber Eats, and prepare us for any recovery scenario,” said chief executive Dara Khosrowshahi. “Along with the surge in food delivery, we are encouraged by the early signs we are seeing in markets that are beginning to open.”

On Wednesday, San Francisco-based Uber said it was cutting 3,700 fulltime workers, or about 14 per cent of its workforce, as people avoiding contagion either stay indoors or try to limit contact with others.

Its main US rival Lyft announced last month it would lay off 982 people, or 17 per cent of its workforce, due to plummeting demand. Careem, Uber’s subsidiary in the Middle East, cut its workforce by 31 per cent.

Uber brought in $3.54billion (£2.85billion) in revenue in the first quarter, up 14 per cent from the same time last year. Revenue in its Eats meal delivery business grew 53 per cent as customers in lockdown at home opted to order in.

The company exited markets where its food delivery business was unprofitable, including the Czech Republic, Egypt and Honduras. But it added key accounts including Chipotle, Dunkin’ and Shake Shack.

Uber’s bottom line was hurt in the first quarter when the value of its investments in Chinese ride-hailing giant Didi, Singapore-based Grab and others plummeted by $2.1billion (£1.7billion) as demand collapsed in those regions.