Activist company

What’s next for Grubhub? The parent company plans to sell the business

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Less than a year after its acquisition by Just Eat Takeaway (JET), third-party delivery provider Grubhub may soon be back on the market.

Amsterdam-based JET said in a business update on April 20 that it is “investigating the introduction of a strategic partner into and/or the partial or full sale” of the Chicago-based company.

JET CEO Jitse Groen said on a call with analysts that the company was in active discussion with another party about Grubhub.

“I’m not going to tell you, obviously, with whom,” he said, according to a transcript on financial services site Sentieo, but the conversations come as JET’s North American order volumes, which include Grubhub, were down 5% year over year. in the first trimester. Gross transaction value also decreased by 5% at constant exchange rates.

Activist investor Cat Rock Capital has been urging JET to sell Grubhub since October, arguing that the acquisition hurt JET’s value. JET acquired Grubhub in June 2021 for $7.3 billion, and its share price has fallen almost 70% since then.

A better move for JET, Cat Rock claimed, would be to sell the delivery provider to an online grocery company such as Amazon, Walmart or Instacart to create a combined service that could compete with Uber Eats and DoorDash, allowing JET to focus on its European delivery business.

In February, Grubhub announced that it had partnered with shadow grocery operator Buyk to launch 15-minute delivery of grocery orders placed on Grubhub’s marketplace in New York and Chicago. (Rival DoorDash earlier in the month launched 30-minute grocery delivery in partnership with Albertsons.) But last month, citing the war in Ukraine and the “subsequent funding restrictions,” Buyk — whose founders got their start in grocery delivery in Russia – shutting down all operations.

JET, in a statement announcing the exploration of a sale of Grubhub, said: “The Board of Directors confirms its alignment with shareholders in wanting to both create and realize value from the portfolio of very attractive to society. The company noted that “there can be no certainty that such strategic actions will be agreed upon. [upon] or what the timing of these agreements will be.

Once the largest delivery provider in the United States, Grubhub has fallen behind its competitors in recent years. It lost a lot of ground during the pandemic in particular, as Uber Eats and DoorDash quickly evolved to offer more than just restaurant delivery.

Grubhub said it was also hurt by its outsized presence in big cities at a time when much of the delivery growth was happening in the suburbs. It was also more affected by caps on delivery charges in urban centers like New York and Chicago. Yet JET’s strategy since buying the company has been to double down on these strongholds.

“As we know, Grubhub has lost market share in parts of the United States, which we don’t like,” Groen said. “We are seeing encouraging signs in city centres. …And we’re also working very actively to try and remove the fee caps in the United States, I think that’s all I can say about that.

A version of this story originally appeared on WGB Restaurant Business sister site.