Just Eat Is Selling Grubhub to Marc Lore's Wonder for $650M

https://www.theverge.com/2024/11/13/24295454/grubhub-wonder-acquisition-just-eat-food-delivery-app

by anotherhue • 2 years ago

39 84 2 years ago

dexwiz2• 2 years ago

Why did Grubhub lose to DoorDash and Uber Eats? DoorDash's market cap is almost 100x this deal, and Uber is twice that.

What follows is anecdotal conjecture: Grubhub has not really evolved much beyond the same core business model they have had for the past decade. The other companies are doing all sorts of partnerships, rewards, referrals, gamification of algorithms etc. Grubhub stagnated while these companies innovated

dartos• 2 years ago

Maybe I’m cynical, but “innovated” and implementing classic growth and marketing tactics aren’t the same.

the_sleaze_• 2 years ago

Another armchair opinion: "GrubHub" has negative connotations in a food service situation where you're already so far removed from being able to grade how skeevy a kitchen is. Cheap chinese takeout from UberEats sounds cleaner than from Grub Hub...

Sohcahtoa822• 2 years ago

The other companies are doing all sorts of partnerships [..]

GrubHub partnered with Amazon. Amazon Prime now includes a GrubHub+ account.

I have Prime, but have yet to use GH+, but that's more because I just stopped getting food delivered in general. Not because of the price (I used DD and had the DashPass which is very much worth it if you get at least 2 deliveries/month), but because I started getting deliveries with missing items. When that happens, they won't offer to do another delivery, they'll just either refund the item or I can go pick it up. Both options defeat the purpose of ordering delivery. I either don't get my food, or I have to leave the house.

lumost• 2 years ago

There are two factors at work in my opinion.

Doordash prioritized selection, they did online ordering even when restaurants didn't want it. Eventually the demand was high enough that restaurants adapted. Grubhub focused on the traditional take out restaurants. Doordash also mixed in multi-delivery to handle mixed alcohol/food purchases.

Beyond this, tech always follows a power law distribution in returns. Doordash is the number one player, and as such will be about 10x bigger than the next runner up. How much of this is network effects/first preference vs. manufactured return is anyones guess, but most people do not want to spend time price matching doordash/grubhub on orders - so whoever has the bigger network/more customers will get the most folks.

vile_wretch• 2 years ago

DoorDash and Uber Eats also operate internationally and have a single cohesive brand whereas each country seems to have its own Just Eat-owned service as a result of acquisitions: JustEat in the UK, GrubHub in the US, SkipTheDishes in Canada and Menulog in Australia. All with the same branding and logo but different names and with distinct mobile applications.

tptacek3• 2 years ago

Do DoorDash and Grubhub have the same business model? DoorDash handles logistics end-to-end; as I recall (it's been a long time since I've used Grubhub), they at one point did not, but were instead just a market front-end to a variety of different delivery services.

lotsofpulp3• 2 years ago

End to end logistics would be employing the drivers and owning and maintaining the cars used to pick up and deliver.

aetherson2• 2 years ago

I use Grubhub regularly, they almost always have their own drivers. For a few pizza places that had existing delivery services, they're just a front end onto the pizza place's delivery service.

May be regional. I'm in the Bay Area.

bangaroo• 2 years ago

having worked at grubhub and spent a fair amount of time in discussion with ceo/founder matt maloney:

- the leadership during the peak of competition for mindshare in the space was exceptionally weak and overconfident. the grubhub/seamless merger led to a completely split company culture between NY and chicago.

- when they were on top, they were a shitty company with scummy practices (even for the space) that made restaurants very skeptical of them specifically. grubhub effectively ran like a protection racket. they bought up tons of "menu pages" websites and restaurant listing sites and launched fake websites to overtake the online presence of grubhub restaurants (including replacing their phone numbers in google summaries with voip numbers, calls through which restaurants were billed an "order origination" premium for.) they broadly resisted the desire of their restaurants to share ownership of their customers (or even be able to determine who their customers were.)

- they completely lacked the ability to plan long-term or even guess the consequences of any action they would take and would do things like "suddenly, without warning restaurants, offer a 50% off deal on lunch all across new york city," leading to huge numbers of canceled and delayed orders and further eroding their public perception.

- they were already public by the time that uber eats, doordash, and postmates were really aggressively entering the food delivery space and thus had to grow and ship with realistic constraints instead of burning investor money to disrupt in hopes that they would be profitable.

probably a million more reasons beyond that, but just off the top of my head a few ways the ball was dropped/the deck was stacked against them.

dexwiz2• 2 years ago

Thank you, this is about the only actually insightful answer in the thread.

purple_ferret• 2 years ago

I think Doordash realized people in middle America would pay to get Taco Bell and McDonald's delivered while Grubhub never really moved out of big cities.

dgrin91• 2 years ago

Bought for $7B in '21 and sold at a 90% loss now? Wtf happened? How could a food delivery service do so poorly during COVID years? I hadn't heard of troubles at GrubHub before and I now plenty of folks who use it

anotherhue2• 2 years ago

This is British empire levels of value destruction.

ruddct• 2 years ago

* Take a low margin, fragmented industry littered with failed businesses

* Then take some cheap but kind of profitable behavior in that industry (take local delivery over phone, send your lowest paid kitchen staffer to run it)

* Then layer on some of the most expensive labor on the planet (devs, PMs, tech company workers) to build a replacement for that behavior

* Then treat your lowest paid workers poorly, attracting regulatory scrutiny

xnx2• 2 years ago

Wtf happened?

Equally valid to ask why it was so overvalued 3 years ago.

jhatax• 2 years ago

Could ask the same question about $PTON. As another commentator said, “British empire levels of value destruction”.

SoftTalker3• 2 years ago

Food delivery is for people with disposable income or who just don't think about where they are spending money. Disposable income has been in short supply for a lot of people lately.

I have never once ordered from GrubHub, Doordash, or UberEats. Even during COVID. I don't understand paying a premium to receive cold, soggy food an hour or two later. In that time I can prepare an actually good meal with better ingredients, eat it while it's still hot, and clean up. For probably half the cost.

anthonypasq• 2 years ago

food delivery is for lazy people. youve managed to completely and totally misdiagnose every aspect of this situation in 5 sentences. quite impressive really

kube-system2• 2 years ago

You might not care for it, but prepared food delivery was successful decades before anyone imagined it being ordered on a smartphone.

nojito• 2 years ago

Disposable income has been in short supply for a lot of people lately

Not really true. Consumer spending and disposable income is up.

buggeryorkshire5• 2 years ago

Worked for JET at the time of this acquisition, everybody I talked to at work about this thought the acquisition was nuts.

anotherhue2• 2 years ago

Hello from Guardians.

buggeryorkshire5• 2 years ago

Ha! Hello, indeed.

chrnola• 2 years ago

Miss you all dearly.

bluehatbrit3• 2 years ago

Exactly my memory as well, even the upper-middle leaders seemed thoroughly confused by it.

buggeryorkshire5• 2 years ago

Yeah. It was that time iirc when all similar companies were trying to get market share whilst their sales went through the roof due to lockdown.

I wonder whether the project started a couple of years ago to consolidate the systems of all the acquisitions has actually borne fruit?

add-sub-mul-div2• 2 years ago

How are any of these businesses thriving? The price of restaurant food has gotten ridiculous on its own, even without the middleman. Add the markup on these platforms, then the delivery charges etc. How and why are so many people who aren't financially secure throwing their money away on something so unnecessary?

karaterobot• 2 years ago

Enough people have the money and don't cook, I guess. I know people who say they did not turn on their ovens the entire term of their lease. I think it's probably a bad way to move through life, but that's only my opinion.

duxup5• 2 years ago

I'm going to hope to avoid a generational bickering fest here but I'm going to note that I notice what I think of as strange default consumer behavior even in my own office....

The younger folks getting lunch delivered every day, they got new cars and not just new the better packages on those cars, their apartments have all sorts of amenities, great locations. I'm the "old guy" not just because of age but because I made my own sandwich and brought lunch. It's like all this is the default for them, they don't seem to notice.

They're 100% not wrong that opportunities are different compared to when I was their age, but at the same time, when I was their age I lived in a crappy apartment, drove a 15 year old basic car. My idea of going out was to some cheap place for dinner and paying for nosebleed seats on a weekday at the ballpark... these guys show up at the same fancy places I do / didn't eat at until much later in life.

I don't say this to ridicule them, but it seems like their concept of just sort of default consumerism is pretty heavy on the consuming.

diab0lic• 2 years ago

Similar experience. I’m in my 30s and many peers in the same age group (add a standard deviation in each direction, but skew to the left) “don’t know how to cook” and door dash daily, sometimes dessert is a separate order made later. When I mention that it sounds wildly expensive it doesn’t even register. There’s a pretty large gap in the assumed baseline between people who don’t use these services and people who rely on them.

no_wizard• 2 years ago

Where do you work, exactly?

This isn't the behavior I've witnessed with the younger generation, at all, unless they came from money or working in a well to do job.

I don't think we can extrapolate this one.

kthartic3• 2 years ago

As someone who you'd probably refer to as one of the "younger folks", I think part of it is a coping mechanism. The outside world looks incredibly bleak. Most of my friends and housemates appear burnt out or have a depressed outlook on the state of the world - politics, global warming, house/rent prices, crumbling healthcare, dating (which in today's world means swiping on an app), competitive work life, social pressures (exacerbated by instagram, tiktok, etc), gym, seemingly no time in the world to do anything.

Perhaps it's just because I live in London, but this a snapshot of my social circle right now. It's also no secret that the West is suffering from a mental health crisis.

With the weight of the world looming over me, a nice meal for lunch is about the only thing keeping me together (being slightly sarcastic here).

I do wonder, was it always this way? Genuine question - did you ever feel this way in your 20s/30s? Did your friends?

SoftTalker3• 2 years ago

I'm more than halfway through my fifties, I make a good living, but I still drive a 15 year old car and I live in a fairly modest house that isn't in a great location (not dangerous, just not centrally convenient to a lot of things). I rarely eat out.

I guess I live like this as my parents lived like this (though they didn't really talk about it, I just followed their model I guess). As a kid we had one car, we almost never ate out, we bought our clothes at Sears. My parents both had graduate degrees and made a good living but just didn't spend money unecessarily.

rmk• 2 years ago

It puzzles me too. But as the other commenter here has said, it appears to be a habit of the yuppies. If you are time-poor but cash-rich, I suppose this is a good solution. However, in my experience, people do not use their time saved by doing this in high-leverage activities!

add-sub-mul-div2• 2 years ago

Right, I'm just thinking these services wouldn't survive if the only people using them were the ones who could afford to vastly overpay for food.

Sohcahtoa822• 2 years ago

How and why are so many people who aren't financially secure throwing their money away on something so unnecessary?

I challenge the premise of your question.

I don't think financially insecure people are buying food delivery. At least not nearly as often as you might think.

I could be wrong, though. I have read that studies have shown that the majority of people buying lottery tickets can't afford to be buying them.

AnotherGoodName• 2 years ago

They have a weird priority in google and that’s their value.

Unless you know where to look you will not find your local restaurants website via google. You will be redirected to grubhub or equivalent by many dark patterns on your way to the direct website.

Try it yourself. Google ‘Thai spice’ (there’s a several thousand independent Thai restaurants by this name so it’s a good example). Scroll down past the door dash promoted adverts and such till you get a result for the actual nearest restaurant by this name. Usually under a ‘places’ section.

Click ‘order’. See that this is just a redirect for door dash, grubhub etc that add a markup to the restaurant direct ordering system.

In fact try to go to the actual website. Click the name of the restaurant in the places section after a google search. On mobile you now have a new google presented summary page with a prominent order online button which is again just a redirect to grubhub/doordash/etc. On a computer it’s slightly better. You can see a website button to order directly under the places section but it’s still second rated prominence compared to the prominence of the above services. On Mobile the pattern is dark as night.

Basically that’s the revenue source. It’s a link that’s overly prominent in google that ultimately simply orders via the restaurants website with a markup. It’s free money.

People will always have a reason to order online. Restaurants themselves bear the brunt of inflation more than anyone but essentially stealing a direct link to the restaurant, capturing all those online orders and added a markup is very easy and low risk money.

tokioyoyo• 2 years ago

All I can say is, internal dashboards in delivery companies show a completely different picture than I would’ve imagined. A lot (and I mean, A LOT) of people order in almost every single day. Convenience is hell of a drug.

buggeryorkshire5• 2 years ago

I'd say a lot more but people from JET know me (fuck you, btw) but yeah it's depressing. People ordering the same pizza multiple times daily, for months.

I don't understand it personally but did get an insight a few years ago. I had to move out of my house whilst I was renovating it for 6 months or so. Looked at the cheapest place I could that was somewhere nice in my town. It was fine for a single man, but the kitchen - Jesus, once you stood in it you could reach every surface and cupboard from being there.

I couldn't believe how shit it was. The estate agent just said "that's how kids live these days - they eat out, or order in"

(it was a few years before lockdown)

SheinhardtWigCo• 2 years ago

The markup’s not too bad and the delivery charges are substantially lowered by signing up for a membership, which is around $10/mo (or free with higher end credit cards)

morkalork• 2 years ago

It's weird when you can read articles about how half a country is living paycheck to paycheck but then as you see, these businesses are thriving with the other half of the population.

lotsofpulp3• 2 years ago

Are they thriving? DoorDash, instacart, grubhub, and uber all lose money.

lifeisstillgood3• 2 years ago

So with my poor laypersons understanding of MMT, governments print money to direct a nations resources where they want (ie if govt pays for nurses they are out competing the private sectors use of same person for say food delivery). But if they don’t tax that money away then inflation occurs.

They cannot tax the nurse 100% (!) so the money goes up the wealth chain (to nurses landlord and electric utilities owners). And then it gets invested in things like grub hub

Now the govt could tax the wealthy - but they don’t for reaosns (usually to do with campaign finance but also other less corrupt reasons)

But here grubhub just set fire to 5.5Bn dollars. Which from MMT pov is exactly the same as taxing it

And now the govt can print 5.5bn new dollars and spend it on nurses … with in theory net zero inflation effect

And that ladies and gentlemen is how MMT looks like Keynesianism with a new coat of paint

And is also why wealth taxes - which there is a fair bit of resistance to - is more or less the same as some horrific stock market crash - just the taxes are more controlled and more targeted

And why bonds are the compromise candidate in that debate as well !

Edit: so on bonds - if inflation is at 10% as was recently then offering 100bn of 20 year treasuries at 1% is taking 100bn out of the market or removing 9% of inflation pressure for the cost of 1% pa.

It does mean that when the bond market that every government is afraid of starts charging 7% then governments response really should be - ok that’s too expensive a means of reducing inflation - we are going to tax the wealthy instead.

Which is why I find it weird most governments have been persuaded to tie one hand behind their backs …

alberth• 2 years ago

You're overcomplicating it.

It's just Capitalism.

Someone made a $5B bet and it didn't payoff.

It's nothing more than that.

sdwr• 2 years ago

Hang on, it's only the same if Just Eat bought GrubHub from the government. Otherwise, the $5.5B isn't removed from circulation, it's in the hands of the previous owners of GrubHub

lifeisstillgood3• 2 years ago

Hmmm, my dreams of the Nobel in economics goes up in smoke.

I think it depends on how just eat financed it. If they borrowed 6bn from a bank, then the bank created 6bn from thin air, and will more or less have to write that off as just eat won’t pay it back. So the net balance will be .. err

6bn created and given to just eat: bank assets 6bn, just eat liability 6bn - total new cash in world is 6bn.

Just eat hands 6B to lucky founder, in return for a website and domain name.

Aha - the bank is the creator of the money - they magic it into existence - now if lucky founder deposits it into same bank, they have a liability of 6bn to him, and previously had a asset of 6bn of loans. Net zero. But now they have to write off the 6bn asset, so they are negative 6bn. So total money across the economy is down 6bn

This also - I think - works if just eat raised it from VCs who got it from investors - someone at some point loaned money to someone or is obliged to pay it back.

This shit is harder than it looks on Steve keens podcast

yieldcrv2• 2 years ago

Yeah this was a very poor and incorrect understanding.

Many assumptions.

Tax isnt to curb inflation.

The wealthy do get taxed.

Everything about creating money and to whom was wrong.

Look, everything makes more sense if you ditch that entire understanding and look at it like this:

The speed that money moves in an economy is more important than the revenues the government earns. So the government’s ability to collect tax actually isnt the priority, and it isnt controversial when your entity earns and has nothing for the government to collect.

No individual politician is responsible for this view or would even lead with it, but the aggregate outcome is that the government incentivizes some forms of transactions. If you do them, it wont tax you, and if you do something else it will tax you on the remainder. For example, you just want to earn income and save? This is the most heavily taxed because money is not moving in the economy and you are penalized for trying to take no risk.

In this case in the article, taking risk is incentivized. Just Eat moved ~6bn dollars to grubhub’s prior owners a couple years ago, in exchange for shares of grubhub. This is the velocity we want.

They sold it to someone else and realized a 90% loss. That’s a side effect of taking risk and the government allows tax deductions against future gains.

Just Eat can make 5.5bn tax free now if they ever have any profitable trades. Money moving in the economy into businesses and assets is more important and incentivized.

marcosdumay2• 2 years ago

I'm not disagreeing with your overall point. But:

Tax isnt to curb inflation.

In MMT, it is for that, and only for that.

The speed that money moves in an economy is more important than the revenues the government earns.

AFAIK, that's not known. I'd really like to hear if anybody knows more here.

lifeisstillgood3• 2 years ago

I am dubious about the speed issue - I am pretty sure wash trades are fast, but they don’t count. So we need some measure of “transactions, but that produce or have chance to produce value” - which is kind of back to square one.

>> Tax isnt to curb inflation. Under MMT tax is for destroying money
>> The wealthy do get taxed. But at the same rate as labour ? No. Ie capital gains vs income tax. This might be a fairness issue but it is also directly a resource allocation and incentive issue. If we want more risk to produce more value why not incentivise labour over investment - in the end who will be left to do the labour ?
>> Everything about creating money and to whom was wrong.

Governments print money as do banks - it’s where it comes from as a debt. Not sure how else to put it

marcosdumay2• 2 years ago

If you are going with MMT with a state monopoly on money creation (that extra assumption isn't automatic), then the only way private entities can make money disappear is if they literally burn it. Only the government can do that by transactions.

(And if you decide to go with private money creation, it's way more complex, and I have very little confidence on you solving the problem you stated.)

And that ladies and gentlemen is how MMT looks like Keynesianism with a new coat of paint

Your explanation doesn't sound like Keynesianism at all (with the "ism" it's that theory that Keynes didn't believe in). It sounds exactly like Monetarism (with the "ism" it's that theory that isn't derived from the MMT).

It does mean that when the bond market that every government is afraid of starts charging 7% then governments response really should be - ok that’s too expensive a means of reducing inflation - we are going to tax the wealthy instead.

Taxing the wealthy tends to be healthy. And after several years, your tax rate may have some impact on the interest rate (nobody really knows, lots of people claim to know). But on the best case, there's a delay to take into account that your idea does not fit at all.

throw48472852• 2 years ago

This feels backwards. Wonder basically only exists in the NY metro area, and their coverage is still spotty because it's tied to specific storefronts. They sell pretty OK bowls and pizza, and their main advantage seems to be excellent branding. What's the value prop here? Grubhub may be crappy, but it works and it works globally.

bsimpson2• 2 years ago

According to the article, they also own Blue Apron.

Feels like they might be buying clout in the industry by buying business that already exist in it.

CSMastermind• 2 years ago

Funny because Grubhub themselves went on a buying spree about 12 years ago purchasing tons of independent food delivery apps to gain marketshare.

ChrisArchitect• 2 years ago

Official release: https://about.grubhub.com/news/wonder-announces-acquisition-...

Just Eat Is Selling Grubhub to Marc Lore's Wonder for $650M

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