Third-party delivery company Grubhub continues to see fewer orders, even as its competitors keep growing.
Orders for parent company JustEatTakeaway’s (JET’s) North American business fell 11% in the third quarter, continuing a long streak of declines. Orders are down more than 26% over the past three years, from 91 million in the third quarter of 2021 to 67 million in the most recent period.
JET’s North American business includes Grubhub, which is now a distant third in the U.S. third-party delivery race behind DoorDash and Uber Eats. It also includes Skip the Dishes in Canada. JET does not break out individual results for each brand.
The starkly different performances of Grubhub, DoorDash and Uber Eats is somewhat surprising given that the three companies offer a similar service and are all doing a fairly good job at it, according to consumers.
But the declines, said JET CEO Jitse Groen, are more a function of the company’s unique strategy in North America, where it is focused on becoming profitable rather than growing quickly. That has meant spending less on marketing to fuel demand, for instance.
“We want the business to be cash flow positive,” Groen said during an earnings call Wednesday, according to a transcript on financial services site AlphaSense. “And if that's, of course, the case, you're going to make sure that you run the business for profit. You don't run the business for growth.”
Grubhub is making progress toward breaking even on cash flow, Groen said. But a major roadblock has been a limit on what third-party delivery companies can charge restaurants in New York City, its biggest market by far.
“The fee caps don't allow us to make more investments than we do currently,” Groen said. “And therefore, we should be focused around the business not being a drag on the rest of the company.”
JET’s total orders excluding North America were down 3% year over year in the third quarter. Its other markets are Northern Europe; the U.K. and Ireland; and Southern Europe and Australia/New Zealand.
The fate of New York’s fee cap, which limits delivery providers’ take to 23% of the order total, is still pending a City Council vote. JET is confident the cap will eventually roll off, Groen said. But it is committed to the conservative approach for now.
It all comes as JET continues to seek a buyer for Grubhub, which it acquired for $7.3 billion in June 2021. It later wrote down the value of the company by $3.1 billion as demand fell. Sale efforts are ongoing, Groen confirmed, though JET has provided few updates.
“As I always say, [M&A discussions] have to materialize in order for us to comment on them publicly,” he said.
While Grubhub has slowed, DoorDash and Uber Eats have leapt forward. Gross order volume rose 20% and 19%, respectively, in their most recent quarters, indicating that there is still strong demand for delivery from consumers. Those companies have not been consistently profitable.
Chicago-based Grubhub has had success in spots. Its campus delivery business, for instance, continues to grow. But it’s a seasonal business that ebbs and flows with the school calendar.
And a blockbuster partnership with Amazon that gives Prime members free access to Grubhub's paid membership program, Grubhub+, has helped expose the company to more customers at a time when it is making fewer marketing investments, executives said.
“It has done a significant amount of heavy lifting for us,” said Chief Commercial Officer Andrew Kenny.
Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.