Thursday 21 February 2019 2:35 pm

Uber Eats cuts app fees to compete with food delivery rivals Just Eat and Deliveroo

Reporter at City A.M. covering City politics, transport and law. Get in touch:

Reporter at City A.M. covering City politics, transport and law. Get in touch:

Follow Alexandra Rogers
Uber is to cut the fees it charges to restaurants that use its food delivery app in a bid to out-compete rivals such as Just Eat and Deliveroo.

Uber Eats will reduce the commission it charges to restaurants that use its app from 35 per cent to 30 per cent, which it says makes it the most competitive delivery service in the market.

The change is part of a new service fee structure which will also introduce a new rate of 13 per cent commission for restaurants who use the app but with their own drivers.

Read more: Uber narrows losses to $1.8bn in 2018 but revenue growth slows ahead of IPO

Previously Uber Eats was only available to restaurants who used courier that were provided through the app.

Uber says over 50,000 restaurants with their own delivery drivers are now able to use the app.

As it stands, there are 10,000 restaurants that use Uber's app and its drivers. Uber hopes to double this number in the next year, as the food delivery market continues to boom.

Shares in Just Eat dropped nearly six per cent this afternoon, as analyst speculated that Uber's move would place pressure on Just Eat to ramp up its competitiveness.

Read more: Lyft to pitch fast growth to investors as IPO race with Uber intensifies

"This marks another ratcheting up of competition in what is a bitter street fight for the takeaway spoils," said Spreadex financial analyst Connor Campbell. "For Just Eat it marks another increase in competitive levels that may eat into margin growth further."

Just Eat is currently facing pressure from activist investor Cat Rock Capital, which owns a 1.7 per cent stake in the firm, to merge, just a month after Peter Plumb resigned as chief executive after just 16 months in the job.