Introduction
Grubhub, one of the leading online food ordering and delivery platforms in the United States, has experienced significant growth and undergone major ownership changes since its inception in 2004. As the demand for food delivery services continues to rise, particularly in the wake of the COVID-19 pandemic, many consumers and industry observers are curious about who owns Grubhub and how the company‘s ownership structure has evolved. In this comprehensive article, we‘ll delve into Grubhub‘s history, its current ownership under Just Eat Takeaway, and its position within the highly competitive food delivery market.
The Early Years: Grubhub‘s Founding and Growth
Grubhub was founded in 2004 by Matt Maloney and Mike Evans, two web developers who were frustrated with the inefficiencies of ordering food over the phone. Maloney and Evans met while working at Apartments.com and decided to create a platform that would make it easier for people to order food from local restaurants online.
The company started as a simple online menu directory, allowing users to browse menus and place orders for pickup or delivery. In the early years, Grubhub focused on building its restaurant network in Chicago, where it was based. The company faced challenges in convincing restaurants to partner with them, as many were hesitant to embrace online ordering.
Despite these initial hurdles, Grubhub managed to secure funding from investors who saw the potential in its business model. In 2007, the company raised $1.1 million in Series A funding, followed by $2 million in Series B funding in 2009. These investments allowed Grubhub to expand its operations to other cities and invest in marketing and technology.
The Seamless Merger: A Turning Point
In May 2013, Grubhub announced its merger with Seamless, its main competitor in the food delivery market. The deal, valued at approximately $1.9 billion, created one of the largest online and mobile food ordering companies in the United States. The merger was driven by several factors, including:
- Complementary strengths: Grubhub had a strong presence in Chicago and the Midwest, while Seamless was a market leader in New York City and other East Coast cities.
- Increased scale: The combined company had a larger restaurant network and customer base, allowing it to compete more effectively against other players in the market.
- Cost synergies: The merger allowed Grubhub and Seamless to consolidate their operations and reduce costs, particularly in areas like marketing and technology development.
The integration process following the merger was not without challenges. The companies had to align their cultures, technologies, and business processes, which took time and effort. However, the combined entity, which continued to operate under the Grubhub and Seamless brands, emerged stronger and better positioned for growth.
Grubhub‘s Acquisition Strategy
Following the Seamless merger, Grubhub embarked on a series of strategic acquisitions to expand its offerings, strengthen its technology capabilities, and enter new markets. Some of the notable acquisitions include:
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Foodler (2017): Grubhub acquired Foodler, a food ordering platform based in Boston, for an undisclosed sum. The acquisition allowed Grubhub to expand its presence in the Northeast and leverage Foodler‘s advanced algorithms for personalized recommendations.
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Eat24 (2017): In a deal worth $287.5 million, Grubhub acquired Eat24, a food delivery service owned by Yelp. The acquisition added over 40,000 restaurants to Grubhub‘s network and strengthened its partnership with Yelp, which had been a key source of traffic for Grubhub.
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LevelUp (2018): Grubhub acquired LevelUp, a mobile ordering and payments platform, for $390 million. LevelUp‘s technology allowed restaurants to create custom loyalty programs and analyze customer data, which complemented Grubhub‘s offerings and helped restaurants drive more sales.
These acquisitions not only contributed to Grubhub‘s top-line growth but also helped the company stay ahead of the curve in terms of technology and user experience.
Competitive Landscape: Grubhub vs. DoorDash, Uber Eats, and Amazon
The food delivery market in the United States is highly competitive, with several major players vying for market share. Grubhub‘s main competitors include:
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DoorDash: Founded in 2013, DoorDash has quickly become the leading food delivery service in the United States. According to a 2021 report by Bloomberg Second Measure, DoorDash held a 57% share of the U.S. food delivery market, up from just 19% in 2018.
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Uber Eats: Uber, the ride-hailing giant, entered the food delivery market in 2014 with the launch of Uber Eats. The service has since grown to become the second-largest player in the U.S., with a 26% market share as of 2021.
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Amazon: While Amazon is not a direct competitor to Grubhub, the e-commerce giant has been expanding its presence in the food delivery market through its Amazon Restaurants service and partnerships with local restaurants.
In 2020, there were reports that Uber was considering acquiring Grubhub to combine it with Uber Eats and create a more formidable competitor to DoorDash. However, the talks fell through due to antitrust concerns and disagreements over the acquisition price.
Table 1: U.S. Food Delivery Market Share (2021)
| Company | Market Share |
|———–|————–|
| DoorDash | 57% |
| Uber Eats | 26% |
| Grubhub | 16% |
| Other | 1% |
Source: Bloomberg Second Measure
Just Eat Takeaway‘s Acquisition of Grubhub
In June 2021, Grubhub was acquired by Just Eat Takeaway, a multinational online food ordering and delivery company based in the Netherlands, for $7.3 billion. The acquisition was driven by Just Eat Takeaway‘s desire to expand its presence in the lucrative U.S. market and create a global food delivery powerhouse.
Under the terms of the deal, Grubhub shareholders received American depositary receipts (ADRs) representing 0.6710 Just Eat Takeaway ordinary shares for each Grubhub share they owned. The acquisition created one of the world‘s largest online food delivery companies, with a presence in over 20 countries.
The acquisition has several implications for Grubhub‘s operations and market position:
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Global reach: By joining forces with Just Eat Takeaway, Grubhub gains access to a larger global network and additional resources to compete with rivals like DoorDash and Uber Eats.
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Technological synergies: Just Eat Takeaway‘s technology platform and expertise in managing a multinational food delivery business can help Grubhub improve its operations and user experience.
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Financial backing: With the support of Just Eat Takeaway, Grubhub has more financial resources to invest in marketing, technology, and expansion initiatives.
Leadership and Key Figures
Following the acquisition by Just Eat Takeaway, Grubhub‘s leadership underwent some changes. In December 2021, Adam DeWitt took over as the CEO of Grubhub, succeeding co-founder Matt Maloney, who transitioned to a seat on Just Eat Takeaway‘s management board.
DeWitt, who previously served as Grubhub‘s President and Chief Financial Officer, has played a key role in the company‘s financial management and strategic direction. Under his leadership, Grubhub aims to continue its growth and maintain its position as a leading food delivery platform in the United States.
Financial Performance and Market Value
Prior to its acquisition by Just Eat Takeaway, Grubhub was a publicly-traded company on the New York Stock Exchange. The company‘s financial performance in recent years has been marked by strong revenue growth, driven by the increasing demand for food delivery services and its strategic acquisitions.
Table 2: Grubhub‘s Financial Performance (2018-2020)
| Year | Revenue (in millions) | Net Income (in millions) |
|——|———————-|————————–|
| 2018 | $1,007.3 | $78.5 |
| 2019 | $1,312.2 | $-18.6 |
| 2020 | $1,819.4 | $-155.9 |
Source: Grubhub‘s Annual Reports
Despite the strong revenue growth, Grubhub has faced challenges in achieving consistent profitability, primarily due to high operational costs and intense competition in the food delivery market. The company‘s net income has been negative in recent years, as it has invested heavily in marketing, technology, and expansion initiatives.
As of April 2023, Just Eat Takeaway‘s market capitalization stands at approximately €6.5 billion ($7.1 billion). The company‘s major shareholders include:
- Jitse Groen (Founder and CEO of Just Eat Takeaway): 7.24%
- Caledonia (Private) Investments: 6.25%
- Tiger Global Management: 5.17%
- Cat Rock Capital Management: 5.13%
The Impact of COVID-19 on Grubhub and the Food Delivery Industry
The COVID-19 pandemic has had a significant impact on the food delivery industry, as lockdowns and social distancing measures have led to a surge in demand for online food ordering and delivery services. Grubhub, like its competitors, has experienced a significant increase in orders and revenue during the pandemic.
However, the pandemic has also brought new challenges for Grubhub and the industry as a whole. Restaurants, which were already operating on thin margins, have struggled to stay afloat amid lockdowns and capacity restrictions. Grubhub has faced criticism from some restaurants for its commission fees, which can be as high as 30% of the order value.
In response to these challenges, Grubhub has taken several initiatives to support its restaurant partners and ensure the safety of its drivers and customers:
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Commission relief: Grubhub temporarily reduced or deferred commission fees for independent restaurants struggling during the pandemic.
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Direct ordering: The company introduced a direct ordering feature, allowing restaurants to receive orders through their own websites and avoid paying commissions to Grubhub.
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Safety measures: Grubhub implemented contactless delivery options and provided personal protective equipment (PPE) to its drivers to ensure the safety of all parties involved.
While the long-term impact of the pandemic on the food delivery industry remains to be seen, it has accelerated the adoption of online food ordering and delivery services, which is likely to benefit Grubhub and its competitors in the future.
Regulatory Challenges and the Future of Food Delivery
The food delivery industry has come under increased scrutiny from regulators and policymakers in recent years, particularly in areas such as worker classification, commission fees, and antitrust concerns.
One of the key issues facing Grubhub and other food delivery companies is the classification of their drivers as independent contractors rather than employees. This classification allows companies to avoid providing benefits such as minimum wage, overtime pay, and health insurance. However, some states, such as California, have passed laws requiring companies to classify their drivers as employees, which could significantly increase costs for food delivery companies.
Another area of concern is the commission fees charged to restaurants by food delivery platforms. Some cities, such as San Francisco and New York, have imposed temporary caps on these fees during the pandemic to help restaurants survive. If these caps become permanent or more widespread, it could impact the profitability of food delivery companies like Grubhub.
Despite these challenges, the future of the food delivery industry looks promising, as the demand for convenient and fast food delivery is expected to continue growing. To stay ahead of the curve, Grubhub and its competitors are investing in new technologies and partnerships, such as:
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Drone delivery: Companies like Amazon and Uber are exploring the use of drones for food delivery, which could reduce delivery times and costs.
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Ghost kitchens: These are shared commercial kitchens that prepare food exclusively for delivery, allowing restaurants to expand their reach without investing in additional physical locations.
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Autonomous vehicles: Self-driving cars and robots could potentially be used for food delivery in the future, reducing the reliance on human drivers.
As the industry evolves, Grubhub will need to continue innovating and adapting to changing consumer preferences and regulatory landscapes to maintain its position as a leader in the food delivery market.
Conclusion
In conclusion, Grubhub‘s ownership structure has undergone significant changes since its founding in 2004, with the company growing from a small Chicago-based startup to a leading food delivery platform in the United States. The Seamless merger in 2013 and the subsequent acquisitions of Foodler, Eat24, and LevelUp have helped Grubhub expand its reach, strengthen its technology capabilities, and compete more effectively against rivals like DoorDash and Uber Eats.
The acquisition of Grubhub by Just Eat Takeaway in 2021 marks a new chapter in the company‘s history, providing it with global reach, technological synergies, and financial backing to continue its growth and innovation. However, Grubhub also faces significant challenges, including intense competition, regulatory scrutiny, and the ongoing impact of the COVID-19 pandemic on the restaurant industry.
As the food delivery market continues to evolve, Grubhub‘s future success will depend on its ability to adapt to changing consumer preferences, navigate the regulatory landscape, and invest in new technologies and partnerships. Under the leadership of CEO Adam DeWitt and the support of Just Eat Takeaway, Grubhub is well-positioned to tackle these challenges and maintain its position as a key player in the industry.
