Uber Eats: Market Exit from India

Executive Summary

Uber Eats, the food delivery arm of Uber Technologies Inc., entered the Indian market in 2017 and exited in January 2020 by selling its operations to Zomato. This case examines a market exit strategy executed through an all-stock transaction that allowed Uber to maintain strategic presence in India's food delivery sector while discontinuing direct operations in an intensely competitive market.

Market Entry and Context

Uber Eats launched in India in May 2017, initially in Mumbai, following its parent company Uber's established ride-hailing presence in the country (according to multiple media reports from Economic Times and Mint in May 2017). The service expanded to other major cities including Delhi, Bengaluru, Hyderabad, Chennai, and Pune over the following months. The Indian food delivery market during Uber Eats' operational period (2017-2020) was characterized by intense competition among multiple players including Zomato, Swiggy, and Foodpanda (owned by Ola). According to industry reports cited by Economic Times and Business Standard during 2018-2019, the market was experiencing significant cash burn with companies offering heavy discounts to acquire customers and restaurant partners.

Exit Decision

In January 2020, Uber announced that it had sold Uber Eats' India business to Zomato in an all-stock deal. According to the official announcement reported by Reuters on January 21, 2020, Uber received 9.99% stake in Zomato in exchange for its India food delivery operations. The deal was structured as a stock-for-stock transaction with no cash consideration changing hands. Dara Khosrowshahi, CEO of Uber, stated in the company's Q4 2019 earnings call (as reported by CNBC and Bloomberg in February 2020) that the company was focusing on its core mobility business in India and that the food delivery market required significant capital investment. He noted that the partnership with Zomato would allow Uber to maintain exposure to the food delivery segment without the operational burden and cash burn. According to Bloomberg's report on January 21, 2020, an Uber spokesperson confirmed that the company had been evaluating its food delivery operations globally and decided to exit markets where it did not hold a leadership position or where achieving such a position would require disproportionate investment.

Transaction Structure and Terms

The transaction specifics, as reported by Economic Times and Mint on January 21, 2020, included:

• Uber received a 9.99% stake in Zomato (pre-money valuation basis)

• All Uber Eats users in India were transitioned to the Zomato platform

• Uber Eats India employees were given the option to join Zomato

• Restaurant partners on Uber Eats were migrated to Zomato's platform

• The Uber app in India continued to show Zomato as an integrated food delivery option

  
  

Deepinder Goyal, CEO and Co-founder of Zomato, stated in a blog post published on Zomato's website on January 21, 2020, that the acquisition would consolidate Zomato's position in the market and that Uber Eats' user base would be integrated into Zomato's platform. He acknowledged that the deal would strengthen Zomato's market position against competitors, particularly Swiggy.

Strategic Rationale

Capital Efficiency Concerns: In Uber's Q3 2019 and Q4 2019 earnings calls (transcripts available through investor relations and reported by financial media), management repeatedly emphasized the company's focus on achieving profitability and reducing losses in international markets. The company had publicly committed to reaching EBITDA profitability, which required pruning loss-making operations.

Competitive Position: According to multiple industry reports cited by Economic Times, Mint, and Business Standard during late 2019, Uber Eats held the third position in India's food delivery market behind Swiggy and Zomato. RedSeer Consulting data cited by these publications suggested Uber Eats had approximately 10-12% market share by order volume in major cities during late 2019, though specific verified numbers vary across sources.

Strategic Focus: Khosrowshahi stated in media interviews reported by Reuters and Bloomberg in early 2020 that Uber was prioritizing markets where it could be the number one or two player in food delivery. He explicitly mentioned that the company was focusing resources on markets like the United States, United Kingdom, Australia, and Latin America.

Continued Market Exposure: The 9.99% stake in Zomato allowed Uber to maintain financial exposure to India's growing food delivery market without operational responsibilities. This structure meant Uber could benefit from Zomato's future growth and potential exit opportunities, as reported by Business Standard on January 22, 2020.

Market Context at Exit

At the time of the exit announcement, the Indian food delivery market context included the following verifiable information: Zomato had raised significant capital from investors including Ant Financial (Alipay). According to Crunchbase and media reports in 2019, Zomato had raised over $2 billion cumulatively from various investors by the end of 2019. Swiggy, the other major competitor, had also raised substantial funding, with reports from Economic Times and Business Standard in 2019 indicating total funding of over $1.6 billion from investors including Prosus (Naspers), Accel, and others. According to statements from industry executives reported in the Economic Times and Livemint during late 2019, the food delivery industry in India was characterized by low order values, high delivery costs, and heavy promotional spending, making profitability challenging for all players.

Implementation and Transition

The transition of Uber Eats operations to Zomato was executed over several weeks following the announcement. According to reports from Economic Times and Mint in January-February 2020:

• Uber Eats users received in-app notifications about the transition to Zomato

• Restaurant partners were contacted by both Uber Eats and Zomato teams regarding the migration

• Uber Eats stopped accepting new orders in India after the transition period

• Users could access Zomato through a link in the Uber app

  
  

Regarding employee transitions, no verified comprehensive information is publicly available on the exact number of Uber Eats India employees or what percentage joined Zomato versus left the organization. Media reports from the time indicated that employees were given options but specific numbers were not disclosed by either company.

Broader Strategic Context: Uber Eats Global Consolidation

The India exit was part of a broader pattern of Uber Eats exits from multiple markets during 2019-2020. According to verified reports and company announcements:

South Korea Exit: In October 2019, Uber sold its Uber Eats business in South Korea to Delivery Hero, as reported by Reuters on October 23, 2019.

Other Markets: According to Bloomberg and Reuters reports during 2019-2020, Uber either exited or significantly reduced operations in markets including Czech Republic, Egypt, Honduras, Romania, Saudi Arabia, Ukraine, and Uruguay during this period. Khosrowshahi stated in multiple earnings calls and investor presentations during 2019-2020 (transcripts available through Uber's investor relations) that the company was focusing on markets where it could achieve a top-two position and that smaller markets or those requiring disproportionate investment would be consolidated through partnerships or exits.

Subsequent Developments

Following the transaction, several developments occurred that provided context to the exit decision:

Zomato's Market Position: In subsequent years, Zomato went public through an IPO in July 2021 on the National Stock Exchange and Bombay Stock Exchange of India, as reported extensively by financial media. The IPO prospectus (publicly available) showed the company's financials and market position at that time.

Uber's Stake Value: When Zomato went public in 2021, Uber's stake (which had been adjusted for subsequent Zomato fundraising rounds) became publicly valued through stock market trading. According to Bloomberg and Reuters reports in July 2021, Uber held approximately 7.8% of Zomato at the time of IPO after dilution from subsequent funding rounds.

Uber's Stake Monetization: According to regulatory filings and media reports from Economic Times and Bloomberg during 2023-2024, Uber gradually sold down its stake in Zomato through public market transactions. By early 2024, media reports indicated Uber had sold most or all of its Zomato stake, though no verified information is publicly available on the exact proceeds or complete exit timeline.

Outcome Assessment

Capital Preservation: Uber avoided further capital investment in a loss-making operation in a highly competitive market, aligning with its stated goal of reducing losses globally.

Market Consolidation: The transaction reduced the number of major players in India's food delivery market from three to two primary competitors (Zomato and Swiggy), as noted in industry reports from RedSeer and Bain & Company in 2020.

Continued Exposure: Uber maintained exposure to India's food delivery market through its Zomato stake without operational costs.

Integration in Core App: The Zomato integration in Uber's ride-hailing app (reported by multiple media sources) allowed Uber to continue offering food delivery as a feature to its ride-hailing customers in India.

Limitations

Financial Performance: Neither Uber nor Zomato disclosed specific financial metrics for Uber Eats India operations such as revenue, order volumes, gross merchandise value, or losses during the operational period. While parent company Uber reported consolidated Eats segment results globally in its public filings, India-specific breakdowns were not provided.

User and Partner Metrics: No verified data is publicly available on exact number of active users, restaurants, or delivery partners on Uber Eats India at the time of exit, though various media reports provided estimated ranges that cannot be independently verified.

Internal Decision-Making Process: The specific internal deliberations, alternatives considered, and decision-making timeline within Uber regarding the India exit are not documented in publicly available sources.

Employee Impact: Comprehensive data on how many Uber Eats India employees joined Zomato, found other employment, or left the workforce is not publicly disclosed.

Competitive Dynamics: Detailed information about negotiations with Zomato versus potential alternatives (such as deals with Swiggy or continuing operations) is not available in public sources.

Post-Exit Customer Behavior: No verified information is publicly available on what percentage of Uber Eats users transitioned to Zomato versus switched to competitors or stopped using food delivery services.

Key Lessons

Portfolio Rationalization in Multi-Market Operations: Uber's exit from India food delivery illustrates how global technology companies must continuously evaluate which markets and segments justify ongoing investment versus those where capital can be better deployed elsewhere. The company's stated strategy of achieving top-two positions reflected a disciplined approach to resource allocation across its global portfolio.

Exit Through Strategic Transactions: The all-stock deal with Zomato demonstrates how companies can exit markets while maintaining financial exposure to the sector's growth potential. This structure avoided the write-off that would have accompanied a complete shutdown while preserving optionality through the equity stake.

Timing of Market Exits: Uber's exit occurred during a period of intense competition and heavy cash burn in Indian food delivery, before subsequent consolidation and the market's maturation. The decision reflected recognition that achieving market leadership would require sustained losses that might not yield acceptable returns given the company's other priorities and opportunities.

Integration Versus Competition: By integrating Zomato into its core Uber app in India, the company maintained some value proposition for its ride-hailing customers while avoiding the costs of running separate operations. This approach shows how companies can leverage partnerships to provide broader services without full vertical integration.

Global Strategy Requires Local Adaptation: The case illustrates that global expansion strategies must be continuously reassessed based on local competitive dynamics, required investment levels, and strategic fit. What works in one market may not be replicable in another with different competitive structures and economics.

Conclusion

Transition of Mamaearth from a digital-first brand to an offline powerhouse underscores the necessity of an omnichannel approach in the competitive Indian FMCG market. While the brand successfully leveraged its "clean beauty" identity and digital-savvy community to build initial momentum, its expansion into physical retail was the critical move required to break through the growth ceiling of the D2C space. By balancing the agility of online data with the massive scale of traditional distribution networks, Honasa Consumer Limited proved that a modern brand can successfully challenge legacy giants. Ultimately, the case highlights that long-term sustainability for new-age brands lies in market penetration through physical accessibility and maintaining a diverse brand portfolio to capture various consumer segments.

Discussion Questions

1. Exit Strategy Evaluation: Was Uber's decision to exit India's food delivery market through an all-stock deal with Zomato optimal, or should the company have considered alternative strategies such as continuing operations with reduced investment, seeking a different partner, or pursuing a complete shutdown? What framework should management use to evaluate such decisions when facing intense competition in a growth market?

2. Value of Equity Stakes in Exit Transactions: Evaluate the strategic value of Uber receiving a 9.99% stake in Zomato versus other potential transaction structures (such as cash consideration or a smaller stake). How should companies value illiquid minority stakes in private competitors when structuring exit transactions, particularly when the acquired stake includes no board representation or control rights?

3. Global Platform Strategy: Should Uber have maintained its food delivery operations in India given its established ride-hailing presence and brand recognition in the market? What are the advantages and disadvantages of operating multiple business lines in the same market, and how should companies evaluate the synergies versus the separate capital requirements of different segments?

4. Market Exit Timing and Sequencing: Uber exited multiple food delivery markets during 2019-2020 as part of a broader consolidation strategy. From a corporate strategy perspective, what signals should trigger market exit decisions, and how should companies sequence exits across multiple markets? Should Uber have consolidated all non-core markets simultaneously, or was the sequential approach more appropriate given stakeholder management and organizational considerations?