Uber Says Food Delivery Business To Continue In California, Unaffected By Court Ruling

Ride-hailing company Uber Technologies Inc UBER will continue its food delivery service Uber Eats in California even if it's forced to shut down its primary business, according to a Reuters report Monday.

What happened: An Uber spokesman confirmed that the Uber Eats business shouldn't be impacted by the court order that states the company must classify workers as employees and provide them with relevant benefits.

In a court filing last week, Uber confirmed that it will have to shut down its ride-hailing services in the state of California if the court ruling comes into effect. Ride-hailing leaders, including Uber and Lyft Inc. LYFT, currently don't provide any healthcare or overtime benefits to cab drivers that work as contractors and are not a part of the company payroll.

Uber said California accounts for 9% of the company’s rides and Eats gross bookings.

Why it matters: In the most recent quarter, Uber’s sales were down a massive 29% year-over-year due to the COVID-19 pandemic.

However, while mobility revenue fell 67% year-over-year, its delivery sales were up 103% in the June quarter. It was the first time where Uber’s delivery sales outpaced its mobility revenue.

Further, while the mobility business accounted for 76% of gross bookings in 2019, this number stood at 30% for the second quarter.

Price Action: Uber stock traded 0.7% higher at $29.69 per share in the after-hours session Monday. The company’s shares have dropped 15% since the court filing last week.

Photo courtesy: Yuva Tamai via Flickr