Uber Eats Expands Retail Delivery With Five Below After Lawsuit Settlement With New York City

Uber Eats, DoorDash, and Grubhub reached a settlement with New York City over a set of laws that increased the minimum pay for delivery workers and capped the fees charged to restaurants.

Uber Technologies (UBER) and discount retailer Five Below (FIVE) announced on Thursday the national rollout of their delivery partnership, allowing Uber Eats users to order items from more than 1,500 Five Below locations nationwide.

The launch enables customers to purchase and receive thousands of low-cost goods, ranging from snacks to party supplies, through the Uber Eats app. 

"Uber Eats continues to expand its selection of retail and non-food offerings, helping consumers get more of what they need — beyond meals — delivered with just a few taps," the company said in a statement.

Five Below’s stock rose to a 10-month high of $137.30 in morning trading before paring gains later in the session, holding about 5% higher during the afternoon.

The announcement comes on the heels of a legal victory for Uber Eats, DoorDash (DASH), and Grubhub. According to a report by Reuters, the three food delivery platforms reached a settlement with New York City over a set of laws that increased the minimum pay for delivery workers and capped the fees charged to restaurants.

Filed on Wednesday in both federal and state courts, the settlement allows the companies more pricing flexibility under anticipated legislative changes.

It also resolves ongoing litigation, with the companies agreeing to dismiss their suits with prejudice, which means they cannot be filed again.

The minimum pay rate, which took effect fully on April 1, guarantees delivery workers $21.44 per hour before tips, a significant increase from the $5.39 per hour in 2023. 

New York had also imposed permanent caps of 15% on delivery fees and 5% on marketing services starting in 2021, a response to widespread restaurant closures during the pandemic.

Uber and its peers had argued that the restrictions infringed on their right to contract freely and forced them to absorb steep losses. They warned the rules would lead to higher costs for consumers and fewer options for restaurants.

The developments come amid a leadership transition at Uber. Earlier this week, the company named Andrew Macdonald as its new president and chief operating officer (COO) following the departure of longtime executive Pierre-Dimitri Gore-Coty. 

Macdonald will now oversee both Uber’s delivery and mobility businesses, along with initiatives like advertising and autonomous vehicles.

Uber’s stock traded flat in afternoon trade on Thursday. The shares have gained more than 34% this year and 28% over the past 12 months. 

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