Grubhub cooks itself up for sale

Thursday, January 9, 2020 by Robinhood Snacks | Disclosures

The Delivery Wars: "Tell them to get their calzone out of my territory..."

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Hey Snackers,

Working at Disney for free is 40 times harder than getting into Harvard. 10,000 people applied. 14 got Mickey's acceptance letter.

Markets stayed relatively stable as US/Iran tensions appeared to cool.

1. Gruhub may sell itself because of the mafia-style delivery wars

News, delivered hot (28 minutes after the ETA)... Grubhub shares spiked on word the food-deliverer is considering selling itself (+ fries, sauce on side). If Grubhub gets acquired like the WSJ reported it might, it'll probably be at a higher price than where the stock was trading yesterday — that's why shares jumped 13%.

  • 2004: Grubhub is founded in Chicago as a menu-posting site — then it merged with delivery rival Seamless in 2013.
  • 2014: Grubhub IPOs with a $4.5B valuation, ultimately reaching $13B just over a year go.
  • 2019: Shares plunged over 40% in October on delivery of disappointing earnings -- it's now back to a $5B valuation (barely better than its IPO value).

You're becoming "more promiscuous"... That's what Grubhub's CEO thinks about us diners. Grubhubers used to be loyal, one-app customers. Now they're flirting with the competition, and it's an (expensive) marketing battle of "$5-off-next-order" promo codes to win them back. We noticed that delivery apps are divided by territory, mafia-style:

  • DoorDash (37% of the US market): Dominates the West, with most of the market share in San Francisco, Phoenix, and Dallas.
  • Grubhub (30%): Runs the East Coast, from Philadelphia to New York to Boston.
  • Uber Eats (20%): Took over the Atlanta-to-Miami corridor.
  • Postmates (10%) is LA-approved (it's pretty much only got LA).

If you can't beat 'em... Consolidate. The Delivery Wars are so vicious that even Amazon dropped its restaurant delivery service last year. With un-loyal customers and aggressive price competition, mergers are inevitable. Doordash already bought Caviar, and Grubhub might have to sell itself or merge — that's cheaper than splurging on marketing to beat Uber Eats in Miami.


Don't skip through this ad... Spotify could become the #1 podcast monetizer thanks to “Streaming Ad Insertion” (note to Spotify: Please rebrand that name). Instead of 1 ad per podcast played to all listeners (forever), Spotify's offering this combo:

  1. Targeted ads: 2 different people, listening to the same pod, get different ads (odds are a direct-to-consumer mattress ad for one, a natural deodorant subscription ad for the other).
  2. Refreshed ads: A pod recorded today could have an ad for Frozen II. Next year that ad would switch to Frozen III instead. Boom. Dynamically changed.

Nothing angers a marketer more... than when someone hears their ad, but hates their product. Cheesecake Factory making a podcast ad? Lactose-intolerant people will hear it. That's a wasted ad. They'd rather the ad target only 18-36 year-old males who like food that's cheesy, meaty, and cheesy. We've seen this before.

  • Facebook's ads are uber targeted (because Zuck knows you're in the "Gaga for Gouda" Facebook group).
  • Since targeted ads are more likely to resonate and sell cheesecake goods, they're more expensive for advertisers (and lucrative for Facebook/Spotify).

Spotify’s secret weapon isn’t just data — it’s their willingness to use it... Spotify knows your age, gender, location, and what music you’re listening to (for Snacks Daily listeners, it's Post Malone, Drake, and Ariana Grande). It’s willing to use that data to segment listeners into groups hearing different ads. But pod-rival Apple hasn't been willing to do that — privacy is their major selling point.

What else we’re Snackin’
  • Classy-er: Fitness startup ClassPass stretches into a unicorn status thanks to a new $285M funding round
  • Uber-er: Uber makes pricing and feature changes in California to strengthen its defense against the gig-work law (if you uber in CA, you prob got the email)
  • Futur-er: Walmart unveils Alphabot, a techy new platform to pack and deliver your groceries (and protect Walmart's spot as America's largest grocer)
  • Bumm-er: JPMorgan Chase raises the fee on Millenials' favorite travel credit card, the Chase Sapphire Reserve (the fancy metal will now cost you $100 more per year)
  • Cool-er: Streaming startup Quibi doesn't launch until April, but it'll intro over 175 original shows you can watch in an innovative vertical/horizontal "turnstyle" mode
Snacks Daily Podcast

Tough Mudder. They charge up to $200 for you to climb a wall, jump an ice trench, and slop through mud while avoiding electric dangling tassles.

The extreme fitness event company's business model looks like a music tour's, but it's teetering on bankruptcy.

More in our 15-minute podcast, Snacks Daily


Disclosure: Authors of this Snacks own shares of Uber, Amazon, Spotify, and JPMorgan Chase

ID: 1052914

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