You’ve hardly touched your Grub… and now it’s getting cold. Dutch food deliverer Just Eat Takeaway says it’s considering a sale of its US unit, Grubhub. It was only last year that Just Eat bought Grubhub for $7.3B, after a boom in pandemic ordering. But the Hub has slowly been crowded out as the delivery rivalries intensified:
- Lost appetite: Just Eat posted a 5% decrease in orders last quarter in North America.
- Shrinking slice of the pie: Last month Grubhub delivered only 10% of US online orders, down from nearly 70% in 2016. In that same span, DoorDash boosted its share more than 10X, to 59%, and Uber Eats upped its take 6X, to 30%.
People are still ordering food online… just not on Grubhub. Monthly sales across the online food-delivery biz have increased about 6X since 2018. This year they’re expected to jump 15% from 2021. But well-funded competition and mounting regulatory pressure have made it hard for Grub to stay on top.
- Dining and dashing: Customers will gladly ditch one app to order a cheaper burrito from another; Grubhub’s ex-CEO said these “promiscuous customers” limit growth.
- Fee frustration: Early in the pandemic, big markets like NYC capped delivery fees to protect struggling restaurants. Grubhub lost $100M+ from US fee caps in 2020.
It’s hard to overcome the “first-mover disadvantage”… Grubhub dominated US delivery for years before IPO’ing in 2014. But going public first may have worked against it. Although Grubhub posted its first profit in 2018, it sacrificed growth to get there, and now it’s losing money again. Meanwhile, Uber Eats and DD have never turned an annual profit, but they’ve burned through VC cash to take a big bite from Grubhub’s market share.