A continued surge in delivery prompted by the coronavirus pandemic helped Grubhub notch massive jumps in revenue, orders and users in the second quarter, leading the company to believe the trend is here to stay, the company said Thursday in an earnings report.
Second quarter revenues for the third-party delivery company were $459.3 million, an increase of 41% year over year. Daily average orders rose 32% to 647,100, accelerating each month of the quarter ended June 30. And the number of active users increased 35% to 27.5 million.
The company also added a net 25,000 restaurants to its platform since early May for a total of 225,000.
The strong results convinced the company that consumer ordering trends seen during the pandemic will be permanent.
“Given the strength we continue to see in the third quarter, we now believe the pandemic has been less of a temporary demand spike and more of a permanent catalyst putting our business on a higher, sustained trajectory,” executives wrote in a letter to shareholders.
Grubhub’s Q2 bottom line was also shaped by a large one-time investment of about $100 million to support its network. More than $85 million went toward lowering diner fees, coupons and advertising, and $15 million went to helping drivers and increased safety measures such as personal protective equipment kits.
The investment helped drive $200 million in incremental gross food sales, which totaled $2.3 billion for the quarter, a 59% increase, Grubhub said.
And coupled with a nearly 100% increase in operations expenses, it contributed to a net loss of $45 million, compared to a net income of $1 million in the same quarter last year.
Adjusted earnings before interest, taxes, depreciation and amortization (EBITDA) was $13 million. Without the $100 million investment, EBITDA “would have easily reached record levels,” Grubhub noted in its letter.
Growth was strongest in Grubhub’s less mature “Tier 3” markets, where gross food sales increased 150% year over year, the company said.
Meanwhile, growth in New York City, a major Grubhub market, was relatively slow, particularly in Manhattan as many restaurants are still closed and some residents are living elsewhere, the company said. And overall corporate business began to return only slowly as many offices remained closed.
Grubhub is set to be acquired by Amsterdam-based delivery company Just Eat Takeaway.com in a deal valued at $7.3 billion, making it one of the largest third-party delivery companies in the world.