Dive Brief:
- Just Eat Takeaway is "exploring the introduction of a strategic partner into and/or the partial or full sale of Grubhub," the company said in its Q1 2022 earnings release on Wednesday. JET originally bought Grubhub in 2020.
- JET CEO Jitse Groen confirmed with analysts on the call that management is having active discussions around Grubhub, but didn't disclose the intent of these talks.
- JET has been under pressure from activist investor Cat Rock Capital, which claims Grubhub has reduced JET's value, to sell the subsidiary since October. JET delisted its Grubhub shares from Nasdaq in February, but claimed that was not a precursor to selling the delivery firm.
Dive Insight:
Delivery commission fee caps in major cities like New York have dragged Grubhub's U.S. performance, Groen said on the call. Grubhub, Uber Eats and DoorDash have all challenged fee caps in court. On an annual basis, fee caps have cost the company over $217 million in EBITDA, he said.
"We're doing everything we can to get rid of the fee caps, now with the support of the American Chamber of Commerce," Groen said. Last month, the U.S. Chamber of Commerce came out in support of a lawsuit brought against New York City by major delivery firms over the Big Apple's 15% fee cap. The Chamber argues the fee will hurt delivery aggregators, restaurants, consumers and delivery food workers.
While the pandemic helped boost Grubhub's order volume and restaurant partnerships in 2020, the delivery firm's momentum appears to have slowed down in 2022. Groen said though there are encouraging signs in city centers regarding Grubhub's market share, the company has continued to see market share declines in parts of the U.S.
That decline has stretched across the past few years as DoorDash has accelerated growth into new markets and verticals. While Grubhub has largely remained focused on bolstering its restaurant business, DoorDash has expanded into grocery, convenience store and retail delivery to increase profitability.
Bloomberg Second Measure data finds that as of March, DoorDash held a 59% share of delivery sales — more than quadrupling Grubhub's 14% share. M Science estimates, however, that Grubhub's market share is even smaller, tapping out at 12% in Q1 2022 compared to 25% at the start of the pandemic, analyst Matt Goodman said in a note emailed to Restaurant Dive.
"Our data shows that market share losses Q/Q have not slowed since the acquisition by Just Eat Takeaway.com," Goodman wrote. "As restaurant delivery has slowed, DoorDash and Uber Eats have diversified more meaningfully into new segments... We have not seen Grubhub be as successful in diversifying its merchant partners."
DoorDash customers are spending more compared to Grubhub customers, as well, according to Bloomberg Second Measure. During Q1 2022, DoorDash customers spent an average of $323 each compared to Grubhub customers, who spent an average of $163. Uber Eats’ customers spent an average of $246 during the quarter.
JET's order growth in its North America business, which includes Canada, fell 5% to 89.6 million orders in Q1 2022 compared to 94.7 million orders quarter-over-quarter, according to its earnings release.
"Given trends in our data, it is not hard to see why Just Eat Takeaway.com would be considering such an option," Goodman said.
Correction: In a previous version of this article, Matt Goodman's name was misstated.
