It wasn’t just iFood that made Uber Eats close food delivery in Brazil – Brazil – Tecnoblog

Uber Eats exits Brazil's food delivery industry
Uber Eats exited the Brazilian food delivery sector (Image: Guilherme Reis / Tecnoblog)

As of March 7, Uber Eats no longer delivers restaurant orders. The company left the segment to dedicate itself to supermarkets and other types of delivery. At the end of the activity, Uber pointed out the dominance of iFood and its exclusivity contracts as an important factor in the decision. However, it seems that was not all. O technoblog talked to restaurants and experts to understand why a tech giant failed to establish itself here.

Uber did not speak openly about its reasons for leaving the restaurant delivery business when it announced its departure. However, the day before the goodbye, the company gave more explanations to the Administrative Council for Economic Defense (Cade).

A statement sent to the General Superintendence (SG) of the agency speaks of “artificial barriers imposed by iFood with its exclusionary conduct” and cites the practice as one of the reasons for exiting the market.

By “artificial barriers” and “exclusionary conduct”, we can understand that Uber is talking about the exclusivity contracts made by iFood with the restaurants. The company has been banned from entering into new agreements of this type since March 2021, but the old ones remain in effect.

Competing with a company that holds exclusive contracts and dominates 80% of the market, as is the case with iFood, is certainly a strong reason to leave the sector. This, however, does not explain everything.

Uber Eats did not adapt to the local market

The lack of adaptation to the local market is one of the reasons that may be involved in the exit of Uber Eats from the restaurant sector. The assessment of Dennis Nakamura, O Board partner, startup mentor and former iFood manager.

In an email conversation with the technoblog, Nakamura recalls that Uber is a bigger company than Rappi and iFood. It has a global presence and its transportation business makes it far surpass its competitors in size and market value.

But that’s not necessarily an advantage.

“Like most global companies, Uber Eats has a series of governance rules to keep the house organized. I’ve had the opportunity to contribute to global startups and ask for customization of platforms and policies, for example, is not pleasant. And for these innovative companies, agility, flexibility and customization is essential for them to blend with local culture and beliefs, making them more attractive to regional partners and consumers.”

Dennis Nakamura, O Board partner, startup mentor and former iFood manager.

Another factor is that Uber Eats had less negotiation flexibility with suppliers and partners.

“This also makes its governance more rigid, giving less flexibility and adaptability to the local and regional market, and an example of this is its rates being the highest, 35% of the order value”, explains Nakamura. “For a company that doesn’t offer everything its competitors do, being seen as the most expensive app doesn’t help.”

The consultant also points out that Uber did not take advantage of Uber Eats’ stay in Brazil to develop new business, as did iFood, which entered markets such as inputs for restaurants and intermediation for payments, for example.

Also, the fact that Uber is a publicly traded company doesn’t help either.

Uber Eats delivery person
Uber Eats delivery man (Image: Robert Anasch/Unsplash)

“The pressure of shareholders and partners is always a big factor for strategic decisions like this”, explains Nakamura. “We used that pressure intelligently to stand out from the competition when I was still one of the managers of iFood.”

He explains that the growth of Uber Eats in Brazil was well below what was seen in some regions of Asia. What happened, therefore, was also a decision to withdraw investments from here to take them there, aiming at a better global result.

The fact that Uber is a global company cannot be ignored. The decision may well have come from outside the country, and there are indications of that.

One of the people surprised by the departure was Renato Almeida. He is CEO of Consumer, a company that develops management systems for restaurants.

Since 2017, Consumer has had a tool for establishments to create their own delivery apps, MenuDino.

Almeida tells the technoblog that in the final months of 2021, he and his team held meetings with Uber Eats. The objective was to find commonalities in the two platforms for future partnerships.

The time spent, the effort made and the plans created came to nothing, obviously. For the executive, this shows that not even the company’s local team was aware of what would come in 2022.

O technoblog contacted Uber but got no response.

Restaurants had complaints about the platform

Problems with restaurants also show that Uber Eats’ passage through Brazil was far from pleasing everyone.

Luíse Macedo owns Buena Onda Burritos, a burriteria she opened in Ponta Grossa (PR) more than three years ago.

she tells the technoblog who even sold his dishes through Uber Eats, but had problems.

One of the complaints was that after the delivery person picked up the order, the customer could not contact the restaurant. This got in the way of troubleshooting.

“A lot of things that I could solve if the client talked to me remained unsolved, and I received a bad evaluation”, he comments.

Finally, Buena Onda left Uber Eats.

Luíse says that her restaurant was not the only one in town to leave the platform. The company, according to her, arrived in Ponta Grossa making great promises to establishments in the city.

Uber Eats motorcycle delivery man
Uber Eats delivery man on a motorcycle (Image: Szymon Fischer/Unsplash)

Among the differentials, there were discount coupons to be given to customers at no cost to restaurants, in addition to packaging, stickers, boxes and other materials for delivery.

Of everything it promised, the company would only have fulfilled the rate: 30% on each sale.

Generoso Burger never entered Uber Eats. Mário Rabelo, one of the partners of the São Paulo hamburger shop founded in 2019, says that the company came to look for him, but he did not see any sense for his business.

“We were already with iFood and Rappi and we were not happy with both. We preferred not to have a third company that would probably not make us happy in exchange for a few more orders.”

He says he is not surprised by Uber’s departure from the restaurant delivery industry.

“I found it natural, honestly. If the news arrives in a while that Rappi will also end activities, I will also find it natural. iFood monopolized everything and swallowed these companies. I know very few people, one or two, who were Uber Eats users. Most are iFood users. I think the impact [da saída do Uber Eats] in the growth of iFood is little. What I have noticed is a movement by some companies to assemble similar tools, but which offer slightly better conditions for the restaurant and for the delivery people.”

Mário Rabelo, partner at Generoso Burger.

Now, the in-app restaurant delivery market is no longer ranked second, leaving free ground for iFood to go further in its domain — but restaurants aren’t happy, and other companies want a little piece of that sector.

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