Grubhub will launch Just Eat Takeaway in the U.S. market, broadening its already-global reach that includes Australia, Brazil and Canada, in addition to its home base in Europe. Jitse Groen, the Dutch billionaire who created Takeaway in 2000 in his university dorm room, has been looking to expand aggressively over the last year. Less than two months ago, Takeaway received antitrust clearance from the U.K. for its $8 billion acquisition of Just Eat.
Matt Maloney, Grubhub’s CEO, helped start the company in 2004 and led a merger with a competitor, Seamless, in 2013 to create what was then a dominant food delivery website. But Grubhub has fallen far since then. DoorDash Inc., the current leader in the U.S., and Uber have eaten up market share, leaving Grubhub with 23 percent as of the end of April, according to market research firm Second Measure.
Even as the pandemic has led to a surge in demand for food delivery as people spend more time at home, the industry has been defined by fierce competition. Profit margins are tight or nonexistent due to the stiff competition to sign the most popular restaurants and add customers. Gross food sales for Grubhub rose 8 percent to $1.6 billion in the first quarter, and the company reported a net loss of about $33 million. Uber’s gross bookings for food delivery increased 52 percent to $4.68 billion in the same period, but the division’s loss also rose.
Groen and Maloney met more than a decade ago and describe one another as kindred spirits. “We have the same company on different continents,” Maloney said in an interview with Bloomberg on Wednesday. “There’s this mutual cosmic alignment.”
Analysts have long said the unprofitable model in food delivery is unsustainable and expected consolidation. For Uber, losing the deal is a blow to the company’s plan to increase revenue and eventually turn a profit from food delivery. That strategy was especially urgent with the pandemic lifting food delivery while decimating Uber’s main business of ride hailing. The company has cut jobs and side businesses as a result. It was relying on deals to achieve a top position in the markets where it operates.
In an emailed statement, a spokesman for Uber said the company believes the industry needs consolidation but that it’s not interested in “doing any deal, at any price, with any player.”
Talks between Uber and Gruhub started before the pandemic and heated up in April, a person familiar with the matter said. Financial advisers working on the deal referred to it internally as Project Checkers, the person said. Grubhub was known as Red, Uber as Black and Just Eat Takeaway later emerged as Jade.
Tensions between management of Uber and Grubhub were boiling over in recent weeks, a person familiar with the discussions said. Among the points of contention: the roles for Maloney and other Grubhub executives at Uber and the fate of a Washington charm offensive to win over regulators that was expected to take a year and a half, said the person, who asked not to be identified because the discussions were private.
Maloney said Groen contacted him after Bloomberg first reported on the talks between Uber and Grubhub last month. The discussions progressed quickly. “They knew the price to beat,” Maloney said.
Just Eat Takeaway said Maloney will join the board and run the North America business. “Matt and I are the two remaining food delivery veterans in the sector, having started our respective businesses at the turn of the century, albeit on two different continents,” Groen, the Just Eat Takeaway founder, said in a statement. “Both of us have a firm belief that only businesses with high-quality and profitable growth will sustain in our sector.”
—Bloomberg News
