Grubhub’s wall of worry

…But whether its star keeps shining will depend on how Maloney handles several challenges looming in the months ahead. The company faces increased competition from well-funded Uber and DoorDash. At the same time, it must finish off a huge partnership with Yum Brands, owner of Taco Bell and KFC, signed a year ago. And it has to avoid getting squeezed between restaurants and customers who want to pay less for delivery and drivers who want to be paid more.

…Last year, Grubhub added 225 new delivery markets, pushing the total past 300. Delivery now accounts for about 30 percent of Grubhub orders. With growth comes complexity and cost. In new markets, Grubhub and its competitors have to dig into their own pockets to pay drivers until there’s enough business to cover their wages. Companies also compete with each other for drivers.

They’re also vying for chains, with Grubhub landing Yum and Uber signing McDonald’s. Chain restaurants offer enticing order volumes but also have bargaining power. In its IPO prospectus, Uber warns investors, “We charge a lower service fee to certain of our largest chain-restaurant partners on our Uber Eats offering to grow the number of Uber Eats consumers, which may at times result in a negative take rate.”

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