With Menulog gone, is Uber Eats now too powerful?
Australian food-delivery customers could face higher fees and fewer services amid fears Uber Eats will hold an effective monopoly following Menulog’s exit this week, experts say.
Australian food-delivery customers could face higher fees and fewer services amid fears Uber Eats will hold an effective monopoly following Menulog’s exit this week, experts say.
Menulog stopped taking orders from midnight on Wednesday this week (Nov 26), withdrawing from the fiercely competitive Australian market after 20 years and leaving Uber Eats as the sole provider in many parts of Australia.
It follows other high-profile food delivery platform exits from the Australian market including Foodora in 2018 and Deliveroo in 2022. DoorDash remains as Uber Eats’ main competitor.
Uber Eats’ meteoric rise in the Australian market – both its rideshare and the food-delivery platforms – has proven one of the main reasons other platforms have not been able to sustain themselves in the market.
IBISWorld Senior Analyst Andrew Ledovskikh said Menulog remained in the race with Uber longer than most.
“Menulog stuck it out longer than most, but ultimately experienced a dwindling market share amid strong competition from Uber,” Mr Ledovskikh said.
“Uber is an innovative company with a lot of capital backing but ultimately, the economies of scope are probably what give Uber the biggest edge.”
Mr Ledovskikh said Menulog’s high-profile and splashy marketing campaigns featuring Katy Perry and Snoop Dogg didn’t prove effective whereas UberOne memberships only accelerated Uber’s advantages.
Menulog had a successful 20-year run in the Australian market after starting in 2006 in Sydney by three founders – Dan Katz, Leon Kamenev and Kevin Sherman.
The brand merged with the Catch of the Day-owned EatNow in February 2015 and later became part of Dutch company Just Eat Takeaway.com in 2020.
Higher labour costs have posed a significant challenge for the food delivery giants with extra costs for safety training and insurance making it harder for companies to remain viable.
Mr Ledovskikh said the Australian food delivery market is potentially seeing its last consolidation.
He said the industry was reaching an endpoint to previous growth-over-profit business models, and that Uber’s focus will likely shift to profit maximisation using its dominant market position.
That could mean fee increases, potentially increased commissions for restaurants and changes to services that reduce costs, he said.
Kitty Lu, of Asian food delivery specialist HungryPanda, said the gig economy shouldn’t be too impacted by Menulog’s sudden exit, with the rider pool being shared across all platforms.
“The labour pool is actually shared. If you see a rider who was wearing a Menulog jacket, they’re probably at that time still doing Uber or working for HungryPanda,” Ms Lu said.
“This means that while drivers lose one source of orders, the orders themselves don’t disappear — they simply shift to other platforms where those same drivers are likely already registered.”
An Uber spokesperson said it had entered into an agreement with Menulog to support merchants, delivery people, and customers through the transition.
“Our focus is on ensuring restaurants can keep serving their communities, delivery people can continue earning flexibly, and customers can still enjoy their favourite local meals and groceries,” the spokesperson said.
“To help, we’re waiving activation fees and offering 0 per cent Uber Eats fees on delivery orders for 180 days for newly onboarded restaurants transitioning from Menulog.
“New customers will enjoy 50 per cent off their first two orders with restaurants or grocers (up to $30 off), and new delivery people transitioning from Menulog will receive seamless onboarding to Uber Eats and a $500 sign-up incentive.”
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Originally published as With Menulog gone, is Uber Eats now too powerful?
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