Uber Eats Expands with $2.3 Billion Acquisition of ezCater
Uber is buying US workplace catering platform ezCater for $2.3bn in an all-cash deal to boost Uber Eats’ footprint in group catering and company meals. ezCater connects companies with more than 140,000 restaurants, and has more than $2.5 billion in revenue bookings in the last 12 months.
The US-based workplace catering platform ezCater will be acquired by Uber Technologies for $2.3 billion in a deal that is set to close entirely in cash. This move is in line with the company's plans to broaden Uber Eats' offerings to include group catering and meals for the office. In a joint announcement, Uber and ezCater stated that the acquisition will fuse ezCater's catering and B2B knowledge with Uber Eats' customer and restaurant database and Uber for Business' connections with organisations.
The announcement was made on October 6th. ezCater handles office lunches, events, meetings, and repeat catering needs, and it connects businesses with over 140,000 restaurants in the US. The platform's gross bookings for the previous 12 months were over $2.5 billion, increasing at a rate of high teens compared to the previous year.
Uber Focussing on Catering Business for Further Expansion
According to Uber CEO Dara Khosrowshahi, catering is a significant industry that restaurants can tap into for significant revenue. Khosrowshahi elaborated by saying that more people may use ezCater's catering service if Uber expanded its reach, which would be great for restaurants. Larger orders and new customers are anticipated benefits for eateries as a result of the transaction. Consequently, a more streamlined platform is available for customers to use when placing food orders for events, social gatherings, and office parties.
The partnership will also provide Uber's delivery couriers with more options to make money, according to the company. Uber's larger ecosystem of consumers, retailers, and couriers will benefit from ezCater's catering and business-to-business (B2B) knowledge, according to CEO Nihad Rahman. According to the companies, ezCater is expected to be a margin-accreting acquisition for Uber and is profitable when measured using non-GAAP operating income. Catering is a higher-value market for restaurants and delivery partners, with an average order value exceeding $400.
Why is it a Crucial Deal for Uber?
With this purchase, Uber is aiming to diversify its food delivery company beyond only taking orders for individual meals. The business plans to increase the value proposition for restaurant partners and broaden access to group food orders by merging ezCater's well-established platform for workplace catering with Uber Eats' consumer and restaurant reach.
Assuming all necessary regulatory clearances and other closing requirements are satisfied, the deal is anticipated to close in the near future. While ezCater is being advised by Evercore, Uber is being advised financially by J.P. Morgan Securities. Legal representation for Uber is being provided by Covington & Burling and Freshfields US, while ezCater is being advised by Davis Polk & Wardwell.
