Grubhub’s Recent Problems May Be Just the Beginning

Grubhub (NYSE: GRUB) stock has fallen more than 50% since last September, and after slumping through 2019 now trades at a 52-week low.

Shares of the food delivery specialist have gotten shellacked — the company’s profits have fallen as competition has stolen market share.

…Grubhub has steadily lost market share. According to Edison Trends the company had a 26.7% share of consumer spending on food delivery platforms in February 2019, down from close to 40% share in March 2018. That compared to 27.6% for DoorDash, now the leader according to that estimate, and 25.2% for Uber Eats.

…”cumulative payments to Drivers for Uber Eats deliveries historically have exceeded the cumulative delivery fees paid by consumers,” meaning it relies on restaurants, or itself, to subsidize delivery costs. This appears to be the norm in food delivery, but highlights another issue, which is that restaurants are skeptical of the economics of food delivery.

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