GYG and Uber Eats have joined forces: Here’s why its a win-win deal and all investors should take note

A tie up between GYG and Uber Eats may not have been the most market-moving news this morning, but we think it was the most important news so far as giving broader lessons to investors is concerned. Yes, every now and again there is market news that has a lesson for all investors and this was one of them. It goes right to the heart of the direction of the fast-food market and its economics…or specifically, the economics of delivery.

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GYG and Uber Eats tie up

First things first, let’s deal with the announcement. GYG and UberEats announced that effective from February 22, 2026, UberEats will be GYG’s exclusive delivery partner, enabling UberEats users to order right from their local outlet.

The announcement also announced that the pair would,’ increase their joint investment to bring guests even more value, choice and convenience’. From what could be read into it, there would be specific terms making it possible (i.e. profitable’). Reading between the lines: we know what we know about how much food delivery (especially relying on third parties) eats into margins. But this deal solves part of that problem by having GYG exclusive to UberEats, and (we’d imagine there’d be) better commercial terms for GYG than would otherwise be the case.

The dynamics at play

Restaurants pay commission fees on each and ever individual delivery app order (i.e. 15-30%) plus sometimes additional delivery fees or service fees. Obviously this eats into margins and margins aren’t exactly the highest in the business world.

Nonetheless, this is something restaurants have to live with rather than fight because people appreciate the convenience of getting food delivered to their door. It enables sales that would not have otherwise been possible (indeed 23% of GYG’s sales have come from aggregators). And for deliverers, while it is less safe to use bikes than cars, apps make payment far easier.

Exclusive deals like the recent Uber Eats agreement likely include caveats and improved commercial terms to make the economics worthwhile — for example, lower commission rates than standard aggregator deals, co-marketing support, volume incentives or price protection on fees — otherwise GYG could find delivery eating into profitability.

While GYG’s announcement doesn’t disclose specific financial terms, the emphasis on “improving commercial terms” and “strengthening the economics” strongly implies these kinds of concessions are part of the deal.

Of course, it still likely won’t match the unit economics of direct, owned channels. But it saves the convenience of having to negotiate with so many different platforms and/or expecting different fees. And on such a big platform, all the costs can be efficiently scaled for high volumes.

Case in point

Turn your eyes to Dominos Pizza Enterprises (ASX:DMP) and its US parent company. For some years, Dominos was notably hostile or at least very cautious about working with external delivery marketplaces like Uber Eats, and then over the last couple of years both caved in and changed course as the delivery landscape shifted.

Dominos was never ignorant about where the industry was headed, but it sought to build its own infrastructure and positioned that as a competitive edge. The logic was that by owning the entire delivery experience, Domino’s could protect brand quality, avoid paying high commissions or sharing valuable customer data, and maintain better control of its margins and customer relationships.

But the rise of the apps through the pandemic, and because of how competitors like Pizza Hut embraced these marketplaces earlier and thus captured incremental sales, forced a change of heart. In mid-2023, Dominos announced a partnership with Uber Eats, as well as Postmates. That made a lot of headlines in Australia.

Now, the deal involved an exclusivity period which ended and now Dominos began to partner with DoorDash in parts of the US. American Analysts have noted this reflects a broader recognition by the company that multi-channel distribution through aggregators can be incremental to sales, even if it typically contributes relatively low percentages of overall revenue so far (e.g., around 3 % through Uber Eats in the U.S. in late 2024).

Point of View (POV): You’re a food delivery platform

Let’s turn to the delivery companies’ perspective. Investors would know that many have been dud investments and have shut down, or at least delisted from public markets. Case in points: Marley Spoon, Youfoodz and My Foodie Box in the public markets as well as private aggregators like Deliveroo.

Part of what undermined profitability for businesses like this has everything to do with the unit economics of delivering food to consumers on a subscription basis:

First of all, there’s a high cost to serve. Fresh meal delivery and meal kits involve perishable inventory, costly logistics and last-mile delivery costs that are not easy to scale profitably without very large volumes or high mark-ups. In contrast to aggregator delivery platforms which outsource logistics to gig workers (i.e. Uber making drivers use their own cars), these companies often bore delivery and packaging costs themselves.

Beyond that, consider the fact that delivery aggregators frequently subsidise the first few deliveries or run discounts. This may attract customers, but it may not, and in either case reduces average revenue per user and makes it harder to cover fixed costs. Yes, a company may offer a few subsidised deliveries but just see the customer drop off. And of course you deal with the customers first hand – you never know who you’re going to get and/or what problems you’re going to encounter.

The normalisation of demand post-COVID also had an impact, as did the reality of commission economics in the eyes of restaurants.

Conclusion

But the tie up between GYG and Uber Eats would appear to resolve these problems. Otherwise, we would not have seen a deal at all…any unfavourable deal would not have seen the light of day given the duty of directors to act in the best interests of the company.

This deal reflects the reality of the food industry in 2026, that it always has been a low-margin and ultra-competitive business but particularly in a market where people rely on delivery apps.

Now, this deal may not be that significant for GYG, but we think investors should take a major lesson from all of this. Namely, that it is not just about making profits of any kind, but having high margins. Some industries will always be bigger margins than others, but companies should be doing all they can to maximise them given specific circumstances.