Is Grubhub Finally Proving the Bears Wrong?

…Grubhub’s integration of LevelUp (the payments and loyalty services provider it bought last year) into its delivery platform was also creating an “all-in-one” digital platform for restaurants. Clients like Just Salad, which exclusively uses the Grubhub/Level Up bundle in its 30 stores, can handle deliveries, pickups, in-store orders, loyalty points, and special offers, as well as monitor ordering trends on the platform — which significantly widens Grubhub’s moat against rivals like DoorDash and Uber Eats.

…Another key growth metric for food delivery services is the “take rate,” or the percentage of a transaction the company retains as revenue. A higher take rate indicates that a company has better pricing power than its rivals. Grubhub reported a take rate of 21.6% during the quarter, compared to 20.9% in the fourth quarter.

That rate is significantly higher than Uber Eats’ take rate of 18% in 2019, which declined annually over the past two years. DoorDash’s take rate is unknown, since it hasn’t opened up its books yet.

Grubhub’s U.S. market share declined over the past year, but it still controlled 43% of the U.S. food-delivery market in January, according to Second Measure. DoorDash and Uber Eats controlled 31% and 26% of the market, respectively.

Moreover, the U.S. food-delivery market is still growing, which suggests that there could be room for all three market leaders to flourish. Therefore, investors should focus more on Grubhub’s core growth metrics instead of market-share fluctuations.


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