Grubhub Exec Shrugs Off Threat from Rivals Uber and DoorDash

By Chloe Aiello. Grubhub isn’t feeling threatened by rival UberEats, even as its parent company gears up for an IPO, because the market potential of …

By Chloe Aiello

Grubhub isn’t feeling threatened by rival UberEats, even as its parent company gears up for an IPO, because the market potential of food delivery is still so huge, Grubhub President and CFO Adam DeWitt told Cheddar.

“There’s such a big opportunity right now that regardless of what’s happening with other folks that have similar services, we are actually growing faster now than we were a year ago, despite all the activity in the marketplace. It’s because we’re really focused on connecting restaurants and diners,” DeWitt said.

Grubhub, which also owns urban-focused delivery service Seamless and other services, has almost tripled in size since its initial public offering five years ago, DeWitt said, but the market opportunity has grown right along with it.

“With our advent into delivery, now the market is much bigger,” DeWitt said. “So at $6 billion in gross food sales, [it’s] still a very, very large runway for us to go.”

Revenue from online food delivery could hit about $19.5 billion in 2019 and as much as $25.5 billion by 2023, Statista estimated.

Despite DeWitt’s confidence, however, analysts have expressed concern that the delivery mainstay is failing to keep pace with competitors in an increasingly crowded sector, CNBC reported. As competitors like DoorDash and Uber have snapped up market share, funding, and new customers, Grubhub has struggled with customer retention. Plus, rival Uber is gearing up for an IPO that could value the company north of $100 billion.

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Does DoorDash Deliver Near Me? Here’s What You Should Know

Ordering food to your doorstep from time to time is practically inevitable, and since DoorDash is great option for takeout, you might be wondering, …

If you happen to be ballin’ on a budget like I am, you’re probably well aware of the fact that cooking your own dinner on a regular basis is — by far — the best (and cheapest) way to survive. But after enduring a harrowing day of work, the prospect of going grocery shopping and cooking a full meal sometimes feels impossible. Ordering food to your doorstep from time to time is practically inevitable, and since DoorDash is great option for takeout, you might be wondering, “Does DoorDash deliver near me?” Don’t worry — I’ve got you covered.

Third-party food delivery services like Postmates, GrubHub, Seamless, and DoorDashtotally come in clutch when deciding on what to order when cooking just isn’t in the cards. And luckily, DoorDash, an on-demand platform for door-to-door delivery, delivers to a very large portion of North America. In fact, per the brand, it serves “3,300 cities and all 50 states across the United States and Canada.” Make sure to check out DoorDash’s website to see where they deliver, because the range is honestly kind of incredible. From Anchorage, Alaska; to Savannah, Georgia; and Toronto, Canada; there are so many cities where DoorDash delivers. Let’s be real — it’s pretty incredible, if you ask me.

Giphy

If you don’t want to read through every city DoorDash delivers to, you can easily check if it’s available in your area by typing in your address on the delivery page where it says “Food Delivery Near Me.”

In addition to ordering food from all your favorite restaurants, sometimes DoorDash also lets you order bottles of wine to your house or apartment. Sadly, though, this feature isn’t available in every city where DoorDash delivers. Back in August 2017, the company rolled out this (almost) too-good-to-be-true feature in Los Angeles, California; San Francisco, California; San Diego, California; Vancouver, British Columbia; Miami, Florida; and New York City, New York. So if you happen to be living in one of these lucky AF cities, start deciding on your bottles of choice — the possibilities are quite honestly endless.

Giphy

Once you download the DoorDash app through the App Store or Google Play Store, keep an eye out for any and all deals and special offers — the company frequently celebrates holidays and special occasions by offering a variety of freebies. For example, this past November for Black Friday 2018, they offered free fries to the first 15,000 customers. Then, for Valentine’s Day 2019, DoorDash offered free goodie bags with all Chuck E. Cheese orders, and for the Super Bowl this past February, the app was doling out free mystery boxes with all valid Burger King orders. It’s pretty sweet honestly — just keep your eyes peeled and your ears open.

Giphy

Ordering food for delivery on a regular basis isn’t necessarily conducive for saving money, but every once in a while, it can be absolutely vital. DoorDash makes it super easy to order from all of your favorite spots, so for a foodie like me, it’s a definite must. Just make sure they deliver in your city before you get too excited, but they probably do. (I mean, come on — they deliver to over thousands of cities!) So, get ready for some delicious restaurant quality meals. IDK about you, but my stomach is 100 percent ready to rumble.

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Grubhub Investors Shouldn’t Ignore DoorDash

… backers include SoftBank (NASDAQOTH:SFTBY), Sequoia Capital, and Singapore’s Temasek Holdings. Last year DoorDash claimed that its service …

Shares of Grubhub(NYSE:GRUB) plunged about 50% over the past six months due to concerns about the food delivery service’s decelerating growth, rising expenses, and market share losses to aggressive rivals like DoorDash and Uber Eats.

KeyBanc analyst Andy Hargreaves also recently warned that Grubhub’s “diner retention, initial diner spend, and peak diner spend all appear to be deteriorating, which suggests lifetime value in newer cohorts is declining.” Hargreaves also warns that Grubhub’s active dinner growth could decelerate significantly, and that DoorDash is “gaining significant share” in the market.

A DoorDash "Dasher" riding a delivery scooter.

Image source: DoorDash.

That dire warning caused Grubhub’s shares to tumble, and that pressure could persist unless it proves the bears wrong. Unfortunately, it could be tough for Grubhub to allay investors’ concerns about DoorDash, which is reportedly gearing up for an IPO.

How fast is DoorDash growing?

DoorDash was founded in 2013, and subsequently expanded to over 3,300 cities across the US. It was valued at $7.1 billion after its latest funding round, and its big backers include SoftBank (NASDAQOTH:SFTBY), Sequoia Capital, and Singapore’s Temasek Holdings. Last year DoorDash claimed that its service was used by 90% of the largest U.S. restaurants chains, including IHOP, Wendy‘s, and The Cheesecake Factory.

DoorDash charges customers service fees of $6 to $8 per order, along with a default “Dasher Tip” of 10% (which can be modified), and makes an average commission of 20% from restaurants. Grubhub lets restaurants set their own delivery fees, which generally range between $4 and $8, optional tips, and anaverage commission of 5% to 15% from restaurants.

DoorDash’s share of the U.S. third-party food delivery service market rose from 13% in Jan. 2017 to 31% in Jan. 2019 according to Second Measure. During the same period, Grubhub’s market share plunged from 87% to 43%. Uber Eats claimed 26% of the market in January.

Grubhub's mobile app.

Image source: Grubhub.

Unlike Grubhub, which grew its market share through acquisitions, most of DoorDash’s growth was organic. Its only major purchase was that of delivery and logistics start-up Rickshaw in late 2017. This means that DoorDash isn’t spending much money integrating smaller businesses or worrying if all of its subsidiaries are on the same page.

Doordash claims that it tripled its annual sales in 2018, but it hasn’t disclosed any exact sales or profit figures yet. Those figures will be revealed if DoorDash files for an IPO — which could enable it to compete much more aggressively against Grubhub.

Is Grubhub worried about DoorDash?

Grubhub’s long list of mergers and acquisitions include Seamless, MenuPages, Allmenus, DiningIn, Delivered Dish, LAbite, Eat24, and Tapingo. Those acquisitions boosted its top line growth, but they’re not preserving its overall market share. Over the past year, Grubhub’s growth in Daily Average Grubs (meals), gross food sales, active diners, and revenue all decelerated:

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

Daily Average Grubs

34%

35%

35%

37%

19%*

Gross Food Sales

39%

39%

39%

40%

21%

Active Diners

77%

72%

70%

67%

22%

Revenue

49%

49%

51%

52%

40%

Year-over-year growth. Source: GrubHub quarterly reports. *22% excluding Eat24 from both periods.

During last quarter’s conference call, Grubhub CEO Matt Maloney didn’t mention DoorDash, and declared that the competition “really hasn’t slowed our growth” or increased its customer churn rate.

However, Grubhub’s slower growth in active diners indicates that it’s struggling to grow its customer base (and is possibly running out of smaller companies to acquire), and its forecast for 31% to 42% sales growth this year would represent a significant slowdown from its 47% growth in 2018.

Furthermore, Grubhub’s heavy spending on big marketing campaigns, acquisitions, partnerships, and the expansion of its logistics network caused its net income and EBITDA levels to plunge during the fourth quarter.

Q4 2017

Q1 2018

Q2 2018

Q3 2018

Q4 2018

GAAP net income

293%

74%

104%

75%

(110%)

Non-GAAP net income

68%

88%

99%

72%

(47%)

Adjusted EBITDA

45%

51%

61%

41%

(26%)

YOY growth. Source: GrubHub quarterly reports.

Grubhub expects its EBITDA to rise just 1% to 3% this year, compared to 27% growth in 2018, so we should assume that tougher competition is forcing Grubhub to ramp up its spending to prevent further market share losses. However, the expansion of certain services, like loyalty and payment services, could also lock in its existing restaurants.

Will investors get a nasty surprise in May?

Grubhub’s stock tumbled after its fourth-quarter earnings in February, and it could disappoint investors again with its first-quarter report in May. Grubhub’s management is oddly dismissive of the competition, but investors should identify DoorDash as a disruptive threat that could steal away its customers and restaurants.

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Restaurant Delivery/ Takeout Software Market Is Thriving Worldwide | Zomato, DoorDash, Amazon …

The Qualitative research study accompanied by ORBIS RESEARCH titled on “Global Restaurant Delivery/ Takeout Software Market describing the …
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Sample Report + All Related Graphs & Charts @: https://www.orbisresearch.com/contacts/request-sample/2861385

According to this study, over the next five years the Restaurant Delivery/Takeout Software market will register a xx% CAGR in terms of revenue, the global market size will reach US$ xx million by 2024, from US$ xx million in 2019. In particular, this report presents the global revenue market share of key companies in Restaurant Delivery/Takeout Software business, shared in Chapter 3.

This report presents a comprehensive overview, market shares and growth opportunities of Restaurant Delivery/Takeout Software market by product type, application, key companies and key regions.

This study considers the Restaurant Delivery/Takeout Software value generated from the sales of the following segments:

Segmentation by product type:

Cloud Based

Web Based

Segmentation by application:

Large Enterprises

SMEs

This report also splits the market by region:

Americas, United States, Canada, Mexico, Brazil, APAC, China, Japan, Korea, Southeast Asia, India, Australia, Europe, Germany, France, UK, Italy, Russia, Spain, Middle East & Africa, Egypt, South Africa, Israel, Turkey, GCC Countries


The report also presents the market competition landscape and a corresponding detailed analysis of the major vendor/manufacturers in the market.

The key manufacturers covered in this report:

Uber Eats

Postmates

Grubhub

Swiggy

Zomato

DoorDash

Seamless

Amazon Restaurants

delivery.com

Olo

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To understand the structure of Restaurant Delivery/Takeout Software market by identifying its various subsegments.

Focuses on the key global Restaurant Delivery/Takeout Software players, to define, describe and analyze the value, market share, market competition landscape, SWOT analysis and development plans in next few years.

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To project the size of Restaurant Delivery/Takeout Software submarkets, with respect to key regions (along with their respective key countries).

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GrubHub Is Losing Ground to Delivery Apps UberEats, DoorDash

The parent company to apps like Eat24 and Seamless has reportedly seen its shares drop in the past months. GrubHub Inc. shares sank nearly eight …
GrubHub is losing customers to new competition like DoorDash and UberEats.

GrubHub is losing customers to new competition like DoorDash and UberEats. GrubHub Inc.

It hasn’t been such a seamless quarter for GrubHub.

The parent company to apps like Eat24 and Seamless has reportedly seen its shares drop in the past months. GrubHub Inc. shares sank nearly eight percent following a report by analysts at KeyBanc Capital Market on Tuesday.

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In their assessment of the food delivery company’s recent business, KeyBanc concluded that “diner retention, initial diner spend and peak diner spend all appear to be deteriorating.”

GrubHub did not return Observer’s request for comment on the report.

It’s no surprise that GrubHub, which owns one of the oldest delivery services around (Seamless), would have a difficult time continuing to compete for new customers with vastly-funded new ventures by Uber and DoorDash. The two services have received millions in venture capital by Japanese conglomerate SoftBank, prompting them to take major shares of the delivery apps. Last year, SoftBank invested a whopping $535 million in DoorDash to help the app expand.

The San Francisco-based DoorDash has grown substantially within the past year, with the KeyBanc report claiming that the company’s “share gains began accelerating in 2Q18 and show little sign of slowing.”

Furthermore, with Uber’s looming initial public offering on the horizon, the rideshare app has been aggressively promoting its subsidiary services, namely UberEats, to its existing customer base (AKA riders). Similarly, Postmates’ expected IPO also puts it in direct competition with GrubHub for meal-ordering customers.

The report also notes that with emerging competitors, many diners are choosing to use different delivery apps instead of being loyal to just one. This could also be attributed to promotional codes or restaurant availability that Uber and DoorDash may be offering that say, Seamless doesn’t.

But overall, the food delivery app market is still growing, and new customers are still trying GrubHub’s already popular apps.

It’s also expected that as competition within this category subsides, services will begin to see a more leveled share of its customer base.

GrubHub Is Losing Ground to Delivery Apps UberEats, DoorDash

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