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Many restaurants have become reliant on food delivery apps during the pandemic, but questions remain about the potential effects of merger activity in the space. "And I think that we're generally in the early innings there." "A higher and higher percentage of our Rides customers are using Eats," CEO Dara Khosrowshahi said on the earnings call. But within Uber Eats, gross bookings increased 54% year-over-year. Last week, Uber announced an overall net loss of $2.9 billion and 3,700 layoffs in its first-quarter earnings report. Indeed, Uber Eats has buoyed Uber in recent months as the company's flagship ridehailing unit has been hit with a steep decline in business. "More broadly, we are seeing shared mobility companies such as Uber and Didi Chuxing increasingly lean into last-mile delivery as a means to offset ridership declines." "We expect to see continued consolidation in the North American online food delivery industry in the coming months, leading to an industry-wide margin uplift," said Asad Hussain, a PitchBook analyst who focuses on mobility. It's one reason merger and acquisition activity in the space could be poised to accelerate. The size of that overall market has grown in recent weeks, with a lack of ability to dine in at restaurants pushing more consumers to delivery. Uber's Uber Eats arm took in 25.7% of consumer spending on food delivery in the nation during April, according to Edison Trends, while Grubhub had a 22.8% share.
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Uber has offered to acquire rival Grubhub, according to multiple reports Tuesday, a deal that would bring together the second- and third-largest players in the US meal delivery space. It could also be sparking acquisition activity in a sector that's currently dominated in the US by a few major names. Last week, GrubHub said the restaurant industry is facing enormous challenges from the COVID-19 pandemic, and the company is using nearly all of its profits in the second quarter to generate as many additional orders for its restaurant partners as possible.The pandemic is driving a growing hunger for food delivery apps. However, the ride-hailing business at Uber and smaller rival Lyft Inc have been suffering due to the travel restrictions and both companies have pulled their full-year outlooks. GrubHub and Uber will likely push back saying industry isn’t profitable and need to consolidate to make it work,” said Robert Mollins, an analyst with Gordon Haskett. “It (the deal) will definitely be scrutinized but I think it will pass. Grubhub and its subsidiaries took in 28per cent of the sales, according to the data. Meal delivery services saw year-over-year growth of 24per cent, through the end of March in the United States, with Uber Eats taking in about 20per cent of consumers’ meal delivery sales, data from analytics firm Second Measure showed. Uber in January sold its Indian food business to local rival Zomato and earlier this month closed Eats operations in eight countries. UberEats, which offers food delivery services in more than 6,000 cities worldwide, has been a drag on the company’s bottom line since its inception in 2014.