How and why Uber Eats shut down in Ukraine: “Employees have been laid off without warning.”

Uber Eats food delivery service is closing down in Ukraine: June 3 will be the last day of its operation. AIN.UA editor explains how and why it happened.

Uber in Ukraine did not provide comments for this article.

The order came from above

Nobody knew that Uber Eats would be closed in Ukraine. On April 14, the food delivery service was launched in Dnipro, and the management was preparing to launch in several other Ukrainian cities this year alone.

On May 4, the company’s partners in Ukraine – cafes and restaurants – began to receive messages that Uber Eats will stop working in the country on June 3. Later, users of the service started to receive the same messages.

“In this company, they do everything without ceremony,” says one of AIN.UA’s interviewees who wished to remain anonymous. “Nobody warned anyone. The local management knew nothing. Everything was prepared and done at the global office level. Ordinary employees found out that the company was closing 5 minutes before sending the newsletter to partners. At one point, they blocked computers, accounts, mail. And they fired everyone.”

According to AIN.UA, neither partners, nor agents, nor customers/users had been warned in advance. Everyone found out about the closure of the service at the same time.

The country still has the team responsible for Uber and Uber Shuttle, although the operations have been controlled for several years from Warsaw, where the region’s central office is located.

Weak performance

In addition to Ukraine, Uber has shut down the food delivery service in 6 other countries: Romania, the Czech Republic, Egypt, Saudi Arabia, Uruguay, and Honduras. Uber will redirect resources from these countries to other, more preferred markets. The company makes no secret of this.

In other words, Uber Eats in Ukraine did not manage to reach the indicators that would make the management of the IPO company continue investing resources in the development of the service. 

This is not the first such story for Uber: previously the service left, for example, from China and Russia, losing to stronger local players. 

In Ukraine, Glovo became such a strong player in the delivery market. It started earlier, receiving the benefit of the doubt from users, while the launch of Uber Eats took place after a series of delays. In addition, it provided its customers with a wider range of services: delivery from pharmacies, supermarkets, courier services, and not just restaurants and cafes. The international company Uber in Ukraine failed to beat the Glovo startup.

What went wrong

Besides the fact that Glovo started earlier, the service had another undeniable advantage – McDonald’s. According to a source from the food delivery market, only this chain of restaurants can generate from 60 to 80 percent of all orders:

“Look at the cities where Glovo was launched in Ukraine — almost every city has McDonald’s restaurants. This allows them to enter a new city and hire couriers for a single restaurant chain. But it is the coolest and generates the most leads.”

Uber Eats failed to close a deal with McDonald’s, despite almost a year of negotiations. As a result, the service was left without a major source of orders. 

Another fact is the almost complete lack of marketing, while competitors actively advertised, launched promotions, and ad campaigns. 

Besides, no one expected that Raketa, a local player, would play so hard against Uber Eats. Despite all the capabilities of Uber, in just a few months, “Raketa took off” and pushed Uber Eats from the second place: now it is Glovo and Raketa that are leading the market. What helped achieve that was also free delivery (which is no longer available) and a wider range of restaurants. 

The quarantine also made things worse for Uber Eats. The volume of deliveries, according to AIN.UA, grew only slightly: people began to order more products from Glovo and, while Uber’s food delivery service could not offer this. 

There’s still a lucrative slice of pie

Local players do not disclose their performance indicators. According to AIN.UA, by the end of 2020, the volume of orders in Ukraine may amount to 1 million units per month. The average bill is about UAH 300. As a result, this is a market of more than 3.5 billion hryvnias. Uber will no longer fight for it. 

Uber stays in Ukraine and will continue to engage in passenger transportation services Uber and Uber Shuttle. The company does not indicate whether the company’s global redundancy policy will affect the Ukrainian office, but according to AIN.UA, no major changes are expected in the local office.