Uber (UBER) is placing another big bet, and this one is aimed at the office lunch table. Think about the last time your office ordered lunch for a team meeting. Someone had to pick a restaurant, figure out how many people were eating, and make sure the food showed up on time.
For years, most of those big group orders occurred outside of the Uber Eats app. Now Uber wants a seat at a much bigger table.
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www.barchart.com Uber's Growth Strategy Is Working
CEO Dara Khosrowshahi says Uber's game plan hasn't changed much. "Our strategy has stayed fairly consistent over the past couple of years, and in some sense because it's working," he said at the Goldman Sachs Communacopia + Technology Conference on Sept. 10.
The numbers back him up. In Uber's second-quarter earnings report on Aug. 5, the company reported gross bookings of $58 billion, up 22% on a constant-currency basis. Gross bookings are the total value of every ride and order. The quarter also marked the fourth consecutive quarter of growth above 20%.
Adjusted EPS jumped 35% YOY to $0.81 in Q2. Meanwhile, free cash flow over the past 12 months topped $10 billion for the first time in Uber's history.
A big part of Uber’s playbook is what Khosrowshahi calls the "barbell strategy." Uber builds premium, higher-margin products like Uber for Business, Uber Black, and advertising. Then it uses the extra profit to fund cheaper products that pull in new customers.
Uber Premium is already on a tear. CFO Balaji Krishnamurthy said on the earnings call that it grew 40% YOY in Q2.
Uber Acquires ezCater for $2.3 Billion
Uber recently agreed to buy U.S. catering and workplace meals platform ezCater in an all-cash transaction valued at $2.3 billion. ezCater connects businesses with more than 140,000 restaurants in the United States, handling everything from single meetings to recurring employee meal programs. ezCater's business stands out with its more than $2.5 billion in gross bookings over the trailing 12 months, marking YOY growth in the high-teens. It is already profitable on an adjusted operating income basis, reportedly sporting an average order value above $400.
Uber expects the deal to be "margin accretive." In plain terms, ezCater should lift Uber's overall profit margins. "Catering is a big business, and can be a huge revenue stream for restaurants," said Khosrowshahi. "With Uber's reach, we can bring that experience to millions more customers and help restaurants win more of these valuable orders."
ezCater CEO Nihad Rahman said that his team is “energized to bring our catering and B2B expertise to Uber's global ecosystem of customers, merchants, and couriers.” ezCater offers catering expertise, while Uber Eats provides a global reach and Uber for Business offers relationships with organizations of all sizes.
Multiple stakeholders could benefit from this multibillion-dollar deal. Restaurants will be able to grow through “larger orders and new diners,” customers will have a new option to simplify their group ordering, and couriers will have a new way to earn.
Khosrowshahi noted at the Goldman Sachs conference that people who use more than one Uber service spend three times as much as those who don't. So, the ezCater acquisition could be synergistic, as a company that orders catering through Uber could easily start booking rides through Uber for Business, too.
Uber Says It Only Buys Quality Assets
"The hurdle rate for us to buy any other company is very high," Khosrowshahi noted at the Goldman Sachs conference, pointing to Uber's organic growth, its autonomous vehicle investments, and his belief that UBER stock is "really cheap."
Uber already agreed to acquire Delivery Hero in July 2026, a deal it expects to close in the second half of 2027. The company has also bought back about $3.5 billion of its own stock this year, according to Krishnamurthy.
So, can Uber afford ezCater? Comfortably. The $2.3 billion price tag equals roughly a quarter of the free cash flow Uber has generated over the past year. Another way to see it is that Uber is paying a little less than one year of ezCater's gross bookings for a business that's growing and already profitable.
The deal still needs regulatory approval and is expected to close in the coming months. The real test will come after. Can Uber keep ezCater's big orders and reliable service intact while plugging it into a much larger machine? If it can, the office lunch organizer may soon be one of Uber's most valuable customers.
What's Next for Uber Stock?
Overall, Uber stock has a consensus “Strong Buy” rating on Wall Street. Out of the 45 analysts covering UBER stock, 33 recommend a “Strong Buy” rating, four recommend a “Moderate Buy” rating, seven recommend a “Hold,” and one analyst recommends a “Strong Sell” rating.
The average price target of $102.38 suggests potential upside of 46% from current levels. Meanwhile, the high price target of $150 suggests potential upside of 114% from here.
www.barchart.com On the date of publication, Aditya Raghunath did not have (either directly or indirectly) positions in any of the securities mentioned in this article. All information and data in this article is solely for informational purposes. For more information please view the Barchart Disclosure Policy here.
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