Grubhub’s value just took a big hit.
Parent company Just Eat Takeaway (JET) on Wednesday recorded a $3.1 billion impairment on the Chicago-based delivery provider, blaming the drop on comparable stock valuations and rising interest rates.
Grubhub is now worth a little more than half of the $7.3 billion JET paid for the company last summer. But executives told analysts Wednesday that the impairment was entirely related to economic factors and not the company’s recent poor performance.
In the first half of the year, Grubhub’s total orders fell 10% year over year while sales remained flat. Those struggles have come as competitors DoorDash and Uber Eats continue to grow their sales.
JET executives reiterated that Grubhub’s struggles are largely related to delivery fee caps, particularly in its key stronghold of New York City, which made its cap permanent last August.
They also highlighted the company’s deal with Amazon that will give Amazon Prime members a year of free access to Grubhub+, a subscription that waives delivery fees on orders over $12 from many restaurants.
“The commercial agreement with Amazon represents a significant opportunity for growth,” JET CEO Jitse Groen said during an earnings call Wednesday, according to a transcript on financial services site Sentieo.
Groen declined to share results from the 3-week-old partnership other than to say orders have accelerated since it began.
“It would surprise me a lot if you won't see anything over the course of the next year in terms of a better trajectory for this business,” he said. “While it doesn't address all the issues that we face in the U.S., it does address a growth and market share issue.”
Grubhub’s valuation has been scrutinized since JET put the company on the market this spring. In May, The Times (UK) reported that it had slashed its asking price to as low as $1.26 billion.
But the deal with Amazon was viewed as a win for JET, which had been looking for a strategic partner for Grubhub along with a sale. And Groen said Wednesday it continues to pursue a full or partial sale of the company.
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