Uber is launching an assault on the corporate catering space with a deal to acquire ezCater for $2.3 billion in all cash deal. The deal will bring in one of the prominent platform providers of workplace catering in the U. S. into Uber’s expanding food delivery ecosystem and also strengthen Uber Eats’ foothold into high value group of food markets.
Established in 2007, ezCater links businesses with a network of 140,000 restaurants and catering providers for different corporate catering and catering needs like meetings, work-related events and everyday facilities. The site offers corporations various resources for catering orders, as well as data about food spending.
The acquisition will seek to integrate three distinct but complementary businesses. EzCater’s catering platform and understanding of business-to-business customers, Uber Eats’ larger consumer and restaurant network, and Uber For Business’s corporate relationships with midsize and enterprise customers. These three companies look to make group catering simple and create more revenue streams for restaurants and couriers to be integrated within.
Another reason why the deal is so notable is the business itself. Uber has announced that ezCater made over $2.5 billion in gross bookings on the trailing twelve months, which are growing at a high teens percentage CAGR year over year. This is profitable on a non-GAAP operating income basis and Uber expects the acquisition to add to overall margins. Average ezCater order value is over $400, meaning that catering is a high-value category compared to many other typical food-delivery orders.
The deal may also enable restaurants to take bigger, more profitable orders. Catering can be several times more lucrative than delivering a single meal, mostly when a workplace buys in for a meeting or an event, or colleagues have a social occasion together. Uber believes its reach will enable restaurants to tap into more of these lucrative orders.
The change also means that Uber Eats is venturing outside its identity as a consumer platform. Although Uber has gradually been adding retail, grocery, and other delivery services, catering for workplaces is a mainly appealing B2B opportunity. Companies often buy food in bulk and may have more regular requirements.
Uber CEO Dara Khosrowshahi, who also spoke about the company’s new catering service, called catering “a business that is huge” and “an important potential revenue stream” for restaurants. EzCater CEO Nihad Rahman shared this sentiment, stating, “we are excited to bring our catering and B2B expertise into Uber’s broader network of consumers, merchants, and drivers.”
This acquisition also backs up Uber’s expanding overall delivery services. The company has been investing quite a bit in Uber Eats and seeking out higher-volume and higher-value transactions. By acquiring ezCater it could improve that effort by securing an exclusive position in catering for large groups and workplace eating.
Long-term vision for this to benefit customers the long term goal is to make group food orders more convenient and reliable. In the future we envision a system that allows companies to organize great teamwork lunches meetings events in a more integrated way. Restaurants will also have access to orders from a much larger distribution network.
