The U.S. food delivery marketplace has a new player.
Amsterdam-based Just Eat Takeaway (JET) on Tuesday completed its acquisition of Chicago-based Grubhub in a $7.3 billion, all-stock transaction that makes the combined entity one of the largest food delivery companies in the world, with primary operations in the U.S., Germany, the U.K., Canada and the Netherlands.
The deal also brought change to Grubhub's top leadership. Former President and CFO Adam DeWitt will become CEO, replacing founder Matt Maloney, who will become a member of the JET Management Board.
Other changes at Grubhub under JET's ownership will likely be more subtle. The two companies have similar business models, which is one reason JET chose to pursue Grubhub in the first place. Both began in the early aughts as online marketplaces where customers could order from restaurants that provided their own delivery. They later adopted a hybrid model, launching their own delivery fleets to compete with logistics-first providers like Uber Eats and DoorDash.
Grubhub Chief Revenue Officer Seth Priebatsch told RB in December that the plan under JET would be to “continue running our Grubhub business as we always have.”
“Obviously some things will change, but the core of what we’re doing will really stay the same,” he said.
JET's strategy has been to prioritize market share over profitability, and it has said it plans to invest heavily to strengthen Grubhub's grip on markets where it already has a leading position.
That could include lowering delivery prices, a tactic JET outlined in an earnings call in March.
“One of the pillars of our delivery strategy is to be the price leader in our industry,” said CFO Brent Adriaan Wissink on the call, according to a transcript from financial services site Sentieo. “This means offering lower delivery fees across our markets compared to the competition, including free delivery.”
Grubhub and JET together generated revenues of $4.7 billion last year across 24 countries, with a combined comprehensive loss of $380 million. Amsterdam-based JET's primary markets are the U.K., Germany, Canada and the Netherlands, while Grubhub operates solely in the U.S.
“I have always believed that the combination of Takeaway.com, Just Eat and Grubhub is a winning combination," said JET CEO Jitse Groen in a statement Tuesday. "The new company is the market leader in Europe, Canada and Australia, with very strong positions in the most important markets in the United States. It is humbling to run such a company after our start in Holland more than twenty years ago. We welcome Matt and his team to this great company.”
The company's headquarters will remain in Amsterdam, with North American headquarters in Chicago.
With regard to the leadership changes, Maloney said in a statement that the closing of the deal is the right time for the transition. He said he is "confident that Adam will be successful in further building on the incredible progress that we’ve made at Grubhub in a relatively short period of time," adding that DeWitt has been an "indispensable part of our executive team" since 2011.
Once the leading delivery company in the U.S., Grubhub has lost share in recent years to DoorDash and Uber Eats. Grubhub accounted for 17% of U.S. food delivery sales in May, compared to 21% for Uber Eats and 57% for DoorDash, according to consumer analytics firm Second Measure.
Grubhub does have a strong presence in some large cities, including New York, where it was the market leader in May with 36% of sales, according to Second Measure. Its other big markets include Boston (33% sales share), Chicago (31%) and Philadelphia (30%).
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