On Wednesday, Grubhub was rumored to be mulling a sale. By Thursday night, the third-party delivery company had “unequivocally” denied the claim. On Friday, one thing still seems true — consolidation is coming to the third-party delivery space.
In their denial, Grubhub also stated: “We believe that given the current pressure on profits across our public and private competition, there will likely be strategic opportunities to acquire share this year— given that our profitability is secure. ”
Consolidation in the delivery space has been predicted by analysts and operators for some time now. Smaller players, like Caviar, have already been gobbled up. Doordash bought them in August.
And operators big and small have been hedging their bets and working with multiple services on delivery. While 2017 and 2018 saw exclusive relationships between restaurant brands and delivery partners like Grubhub, DoorDash and Uber Eats, 2019 was the year monogamy died. Brands like Applebee’s announced partnerships with DoorDash and Grubhub in quick succession this summer. Uber Eats lost its exclusive marquee deal with McDonald’s when the burger brand added DoorDash delivery.
It’s good to have options. Operators want to be on various apps so they can be wherever the consumer wants them.
Options are particularly important if diners are as “promiscuous” as Matt Maloney, CEO of Grubhub, would have us believe.
In a letter to shareholders in October he wrote, “We believe online diners are becoming more promiscuous. For years, we saw in our data that a Grubhub diner was extremely loyal to our platform. However, our newer diners are increasingly coming to us already having ordered on a competing online platform, and our existing diners are increasingly ordering from multiple platforms.”
And Maloney seems open to buying some competition.
Here's Grubhub’s full response to its sale rumors:
While our policy is not to comment on rumors, given the considerable media speculation that appeared yesterday, we felt it was important to clarify that there is unequivocally no process in place to sell the company, and there are currently no plans to do so. We have always consulted advisors about a broad range of issues, including potential acquisition opportunities -- that has not changed.
In fact, we believe that given the current pressure on profits across our public and private competition, there will likely be strategic opportunities to acquire share this year -- given that our profitability is secure. However, as we have said previously, we are very excited about our near- and long-term opportunities and are confident in our organic growth strategy and our execution without M&A.
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