Grubhub (NYSE:GRUB) is still the leading third-party food delivery service in America, according to Second Measure’s latest market share figures. The company claimed 32% of the market in March, compared to 30% for DoorDash, 21% for Uber (NYSE:UBER) Eats, 10% for Postmates, and 7% for everyone else.
In the report, Second Measure also notes that DoorDash, which overtook Uber Eats as the second-largest service in late 2018, grew its sales 216% year over year in March — versus Grubhub’s 4% growth and Uber Eats’ 58% growth.
DoorDash’s growth is often cited in bearish cases against Grubhub — which lost nearly 40% of its stock value over the past 12 months on concerns about tougher competition, slowing growth, and higher spending. However, I believe Grubhub investors shouldn’t fear DoorDash for four simple reasons.
1. Overlapping users
2. Growth matters more than market share
…Grubhub expects its revenue to rise 31%-42% this year. That’s a slowdown from its 47% growth in 2018, but it indicates that the company still has plenty of room to grow alongside DoorDash and Uber Eats.
3. Preferences are regional
Grubhub dominates New York City with a 69% share of total delivery spending, and it’s also the market leader in Chicago with a 40% share. DoorDash is the strongest in San Francisco, where it holds a 45% share, and Texas, where it controls 48% and 51%, respectively, of the Dallas-Fort Worth and San Antonio markets. Uber Eats is the market leader in Miami, where it controls 58% of the market, and Atlanta, where it holds a 45% share.