Uber (NYSE: UBER), like Amazon (NASDAQ: AMZN), is one of those companies that seems to slowly but surely be sinking its teeth into different corners of the market. While many people associate Uber with ride-sharing, the company also dabbles in package delivery and electric bike and motorized scooter rentals.
And of course, there’s UberEats, a popular food delivery service that’s been especially popular during the coronavirus pandemic. It’s not surprising, then, to learn that Uber has agreed to acquire alcohol delivery service Drizly for approximately $1.1 billion in stock and cash. Drizly has a presence in over 1,400 U.S. cities. The plan is to fully integrate Drizly into the UberEats app so that customers can order meals and alcohol together, all the while maintaining a separate Drizly app for those who want to order alcohol only.
Clearly, integrating Drizly with Uber Eats can make for a more convenient experience for customers. And it’s clear that Uber could come out a serious winner with its latest acquisition. After all, it already has the technology to serve an enormous customer base, and so branching out into a category that’s already related to part of its business makes sense.
Will restaurants lose out?
Alcohol sales make up a huge part of many restaurants’ revenue, especially given the markups on beer and wine that eateries are able to impose. But once it becomes easier for customers to order alcohol straight to their door along with food, the lure of going out for dinner and drinks may start to wane.
For some diners, a restaurant’s extensive wine or beer list may be a major draw. But if those same diners get access to a wider selection of alcohol through Drizly and Uber, they may not feel the need to go out and overpay for liquor when they can have it delivered instead.
Consuming alcohol at home also eliminates the hassle of worrying about safely getting to and from restaurants. Granted, that’s where Uber’s ride-sharing service comes in — to serve as a perpetual designated driver. But rideshares can get expensive, especially at peak times when surge prices apply. And so once alcohol becomes an easier thing to get a hold of, diners may be more apt to just enjoy their food and drink at their own tables rather than get dressed up and drag themselves out for a night on the town.
Obviously, if this comes to be, it could be the death knell of restaurants, many of which are already struggling immensely during the pandemic. For months, eateries have been forced to operate at limited capacity, and that’s already putting a large number at risk of having to close.
The one thing many restaurants are banking on, in fact, is a surge in revenue once the pandemic comes to an end and restrictions are lifted. But if Uber’s Drizly acquisition interferes with that surge, many food establishments may have to close their doors. And if they do, the landlords who rent to them could wind up in a major bind as they struggle to find replacement tenants.
Of course, one thing to keep in mind is that the threat of alcohol delivery already exists. Uber’s acquisition won’t create a brand-new offering — it will simply enhance an existing one and make it more accessible to the public. But unfortunately, that alone could be enough to drive some restaurants into the ground.
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