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GrubHub plummets 43% because we're all disloyal food orderers

Wednesday, October 30, 2019 by Snacks
A GrubHub hero

A GrubHub hero

Your chicken parm is a million minutes away... GrubHub shares plummeted 43% to their lowest level in 2.5 years. The restaurant food delivery pioneer is sandwiched between 2 numbers from last quarter:

  • Revenues rose a healthy 30%.
  • But profits plummeted 96%. 96%. Let that sink in and sit in your stomach — Here's why:

“Promiscuous” customers... That's what the CEO just called us disloyal, price-focused GrubHub users. When we crave some pad thai, we open DoorDash...then Caviar...Uber Eats...Postmates. Comparison shopping forces delivery apps to slash prices to snag our late-night dinner $$$. Those "$2 off" coupon codes are crushing GrubHub's profits.

THE TAKEAWAY

GrubHub should focus on brand — not price... Delivery is a commodity — it doesn't matter where it get it from, it's the same (just like socks). But people do irrational things for a brand (like splurging $200 on a Patagonia pullover, because, Patagonia). If GrubHub can build loyalty for its brand with banh mi festivals or a stance on social food issues, customers may ignore lower-priced rivals and become monogamous.

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