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.