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UBER TECHNOLOGIES, INC.

(UBER)
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Why DoorDash and Uber Eats Delivery Is Costing You More

05/08/2021 | 03:44am EDT

By Stephanie Stamm, Preetika Rana and Heather Haddon

Diners and restaurants alike flocked to delivery apps in record numbers when the pandemic forced establishments to close their dining rooms. The surge in business has driven huge revenue growth for companies like DoorDash Inc., Grubhub Inc. and Uber Technologies Inc., which owns Uber Eats and Postmates. While the apps' growth is expected to slow from last year's levels, the companies say they expect people to order in more frequently than they did pre-pandemic.

Wonder why delivery orders have become more expensive during the pandemic? Want to know what share of your money restaurants are getting? Here's a breakdown of several identical orders from the same New York City restaurant.

Why your prices are rising

In many markets, the price of food ordered via delivery app has gone up since the pandemic began. Since apps' service fees are partly determined by food prices, that means a higher bill overall.

Other costs also fall on customers. In California, for example, apps began charging customers a fee related to benefits that they promised drivers. In Philadelphia, where the city capped the amount apps can charge restaurants during the health crisis, DoorDash is charging a "regulatory response fee."

To illustrate this, The Wall Street Journal compared otherwise identical pre-pandemic and 2021 orders from three Philadelphia-area restaurants using DoorDash, Grubhub and Postmates. In each case, this year's orders were more expensive.

Why that delivery burrito is more expensive

Many restaurants -- including big chains -- are encouraging more-profitable pickup orders and raising delivery menu prices on apps.

Chipotle Mexican Grill Inc. said in April that its delivery prices now average 17% higher than those in stores. Similarly, Del Taco Restaurants Inc. raised delivery prices by around 20% last year to improve margins and is testing further increases.

Restaurants believe that customers who want the convenience of delivery will keep paying for it. Many are investing in pickup and drive-through services to make those options more appealing.

Yasufumi Saito contributed to this article.

Write to Stephanie Stamm at Stephanie.Stamm@wsj.com, Preetika Rana at preetika.rana@wsj.com and Heather Haddon at heather.haddon@wsj.com

(END) Dow Jones Newswires

05-08-21 0544ET

Stocks mentioned in the article
ChangeLast1st jan.
CHIPOTLE MEXICAN GRILL, INC. -1.49% 1370.64 Delayed Quote.-1.16%
DEL TACO RESTAURANTS, INC. 2.07% 10.83 Delayed Quote.19.54%
DJ INDUSTRIAL -0.27% 34299.33 Delayed Quote.12.65%
DOORDASH, INC. -0.11% 158.65 Delayed Quote.11.14%
GRUBHUB INC. -1.90% 59.89 End-of-day quote.-19.36%
UBER TECHNOLOGIES, INC. 0.00% 49.3 Delayed Quote.-3.33%
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Financials (USD)
Sales 2021 15 591 M - -
Net income 2021 -2 562 M - -
Net Debt 2021 3 970 M - -
P/E ratio 2021 -37,0x
Yield 2021 -
Capitalization 92 584 M 92 584 M -
EV / Sales 2021 6,19x
EV / Sales 2022 4,22x
Nbr of Employees 22 200
Free-Float 98,4%
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Mean consensus BUY
Number of Analysts 40
Average target price 69,25 $
Last Close Price 49,30 $
Spread / Highest target 62,3%
Spread / Average Target 40,5%
Spread / Lowest Target -39,1%
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Managers and Directors
NameTitle
Dara Khosrowshahi Chief Executive Officer & Director
Nelson J. Chai Chief Financial Officer
Ronald D. Sugar Chairman
Sukumar Rathnam Chief Technology Officer
Yasir bin Othman Al-Rumayyan Independent Director
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