The food delivery industry has long entered an era of growth through acquisitions. On Tuesday, Uber announced the acquisition of ezCater, a corporate meal service provider, for $2.3 billion; just a few weeks prior to that, Dada (DoorDash) spent $300 million to acquire the university campus delivery business from Wonder. These two acquisitions may not excite most investors, but they send a signal that Uber and Dada are doing everything possible to maintain their growth momentum.
Indeed, both companies are actively integrating the European food delivery market: Dada has acquired leading firms in the industry such as Deliveroo and Wolt, while Uber has acquired Delivery Hero. However, there are very few targets of this scale left. Together, Uber and Dada dominate the food delivery market, and their businesses are continuously expanding into categories such as fresh groceries. For both companies, relying solely on acquiring new users to drive growth will become increasingly difficult.
To be fair, even without the acquisition, both companies were performing reasonably well on their own. Dada’s total order volume growth rate dropped from 36% at the end of 2021 to 19% by the end of 2024, but it rebounded to 36% again in the past 18 months. Although this recovery was largely due to the acquisition of Deliveroo, Dada’s business had already begun to pick up before that transaction was completed. Even without completing the acquisition of Delivery Hero, Uber Eats’ total order volume growth rate also rebounded in the same period; however, during the same time, Uber’s ride-hailing business experienced slower growth.
It is worth noting that the scale of Uber's acquisition of Delivery Hero far exceeds any acquisition Dada has completed in Europe. While Uber did not acquire all the assets of Delivery Hero, the total order volume of the acquired company last year was approximately half of that of Uber Eats (Uber Eats). This means that the impact of this transaction on Uber's overall growth rate will be more significant than the impact of Dada's previously announced acquisitions.
Two companies have also completed a large number of smaller transactions, and the impact of these transactions on revenue is not yet clear. For example, Dada acquired hotel software provider SevenRooms last year. Meanwhile, Uber has, within the past approximately 12 months, successively acquired parking app SpotHero, high-end travel service provider Blacklane, and a data collection company to serve its newly laid-out AI data annotation business. Both Uber and Dada generate substantial operating cash flows, and it seems they have reached a consensus: as long as the prospects for the acquired companies are promising, they will act decisively!
