Fancy a cup of coffee, but you’ve run out of beans? Fortunately, there is Grubhub. Because it doesn’t just deliver meals to you, day and night. ‘Grubhub is also good at delivering coffee, nice and hot’, it reads Gothamist, a New York news site. GrubHub will deliver your favorite meals on time and at the lowest price, otherwise they’ll make it right,” the site reports. New York Magazine†
The jubilant words do not come from enthusiastic journalists or users of the delivery app, but from Grubhub itself. The sponsored articles are part of an offensive the company is trying to win back customers in the US delivery market. Whether that will work is highly questionable.
Conquering American market
The contours of a knife and fork in an orange house: it is no coincidence that Grubhub has the same logo as the Dutch Thuisbezorgd. Almost a year ago, Just Eat Takeaway (JET), the parent company of Thuisbezorgd, acquired Grubhub for $7.3 billion. CEO Jitse Groen (43) wanted to conquer the American market. He outlined grand vistas for shareholders; He waved off concerns about competition. Since then, the company has been doing so badly that the purchase has greatly embarrassed the Dutchman.
Last Monday, shareholder Cat Rock Capital, with 6.9 percent an important vote within JET, called on Groen to leave. “The acquisition of Grubhub was a capital error of judgment,” CEO Alex Captain wrote in a letter to his fellow shareholders. JET would “seriously underperform” compared to competitors. Since the announcement of the takeover, the value plummeted from 100 euros per share to less than 25 euros.
A shareholders’ meeting will be held next Wednesday. Cat Rock wants to vote against Groen’s reappointment, and also block that of financial chief executive Brent Wissink and the entire board. Captain called on fellow shareholders to do the same.
Merger with Seamless
Grubhub was founded eighteen years ago in Chicago. While restaurants were still sending out paper menus and flyers, the company offered a digital alternative. In 2013, Grubhub merged with Seamless, a site that allowed businesses to place orders at restaurants. From now on, customers across the United States could order dishes via their telephone from about 25,000 restaurants.
In the first six months, 130 thousand orders were placed per day. The company grew rapidly: customers can now visit about 320 thousand restaurants in more than four thousand American cities. More than 700,000 orders are now said to be placed per day.
The lockdowns during the corona crisis gave delivery apps like Grubhub a huge boost. But customers are not devoted to Grubhub. Brand loyalty appears to be virtually non-existent with regard to delivery services: customers make use of competitors without difficulty. All that matters is the price. In the US, the relatively small Grubhub loses out to larger players such as DoorDash and Uber Eats.
Discounts and promotions
‘Meal delivery is not a sprint, but a marathon,’ Groen said in January. With nice words and hope for a better future, he tries to keep the shareholders together. Grubhub tries to keep customers with discounts, free deliveries and sponsored items. However, this is still insufficient to compete with competitors such as Uber Eats, which have much deeper pockets.
Which also doesn’t help: the lockdowns are over. More and more Americans are going back to restaurants instead of home delivery – yet another heavy blow to Grubhub. Groen acknowledges that growth is stagnating, especially in the United States, where Just Eat Takeaway’s turnover was also 5 percent lower this quarter. At the moment, the company was still making a loss, but precise figures are missing from the quarterly report.
“Want a $100 gift card?” Grubhub wrote on Instagram. The company continues to offer offers in the hope of reaching new customers. Next week will show whether it is enough to keep Groen in the saddle.