Uber Technologies said on Tuesday that it will buy US corporate catering platform ezCater for $2.3 billion in an all-cash deal. The acquisition is Uber’s latest move to grow its delivery business, which has become its fastest-growing major business segment. The deal will give Uber a bigger presence in the corporate food and catering market.
Because uber can generate more business from each corporate transaction, larger orders can make the delivery business more valuable. The ezCater acquisition therefore fits into Uber’s wider strategy of making delivery a bigger part of its business. Uber said ezCater’s average order value is above $400. Uber’s delivery business accounted for about 37% of the company’s total revenue in the second quarter.
The company expects the acquisition to boost margins. It has also been Uber’s biggest growth driver in recent times.
Gross bookings in this segment grew by more than 40% in the second quarter, according to Rosenblatt analyst Scott Devitt. The ezCater deal comes only months after Uber agreed in July to buy German food-delivery company Delivery Hero for $14.8 billion.
The acquisition will bring together ezCater’s catering business, Uber Eats’ restaurant network and Uber for Business’ corporate customers, Uber said. Uber can use its existing restaurant and delivery infrastructure while ezCater brings its corporate catering business, according to Reuters. Devitt said bringing workplace buyers into Uber’s ecosystem could also help strengthen its membership business. That deal is aimed at creating the largest food-delivery group outside China, according to Reuters.
This could allow Uber to offer companies a broader food-ordering service through its existing business network. The deal also strengthens Uber’s business-focused segment, which serves corporate customers. Together, the two deals show that Uber is putting significant money into expanding its delivery operations.
Uber said the average ezCater order is worth more than $400. Corporate catering can bring Uber much larger orders than normal food deliveries. This means one corporate order can be worth much more than a typical individual Uber Eats order. The deal also gives Uber a new business line based on large food orders paid for by companies, rather than individual customers.
