Trading update from Grubhub’s Amsterdam-based parent may scare off US food-delivery investors, but it shouldn’t
Jet said total orders grew just 3% year over year in the third quarter in the US, where Grubhub operates. This compares with 51% in the UK, Jet’s fastest-growing segment in terms of total order growth during the quarter. In the US, gross transaction value decreased similarly, growing only 2% on the same basis.
These results suggest that Grubhub, once the US food-delivery leader, may be losing further ground. Back in August, Jet reported that total order and gross transaction value in the US grew 27% and 19%, respectively, in the first half of the year compared to the same period in 2020.
On a conference call on Wednesday, Jet CEO Jitse Groen said some of the US softening may be related to the fact that, in the US, “offices are still fairly empty,” acknowledging one analyst’s mention that Grubhub had a historically strong office business.
However, competition looks like a significant factor. YipitData shows that Uber Eats gained market share in the third quarter at the expense of Grubhub, overtaking the incumbent to become the market leader in New York City. Meanwhile, data from M Science shows that US market leader, DoorDash, expanded its national share by more than 6 percentage points year over year in the third quarter, at least at Grubhub’s expense.
A separate report by mScience shows that customer loyalty trends towards single delivery platforms increased month-on-month across the industry in September, but loyalty varies by platform, with Grubhub customers the least. are loyal. According to M Science, in August, about 64% of DoorDash customers only used its platform, compared to 41% who only used Grubhub.
While September has been slower than August for food delivery across the industry from a sales perspective, Yiddish data shows DoorDash’s gross order value for the full third quarter is above management guidance and consensus. Wall Street is predicting that DoorDash will expand by about 35% year over year on that metric, compared to DoorDash’s guidance of about 32% at the midpoint of its range.
Jet’s Mr Groen said on Wednesday that the company plans to shed more light on the state of its US business on October 21, its capital markets day. For now, he said his company has begun implementing a reform plan in the US that will, at least partially, refocus on business strongholds.
Such a change could explain Grubhub’s slowdown in measures such as total orders for the broader US market. But it likely prioritizes Grubhub’s top market, New York City, where city council members recently commissioned a permanent cap on the amount that delivery platforms can charge restaurants for services like lead generation and delivery. Grubhub, DoorDash and Uber Eats are now suing New York City over that measure. Meanwhile, Jet’s Mr Groen on Wednesday called the cap extension commissioned in New York City “a big blow to us”.
Uber and DoorDash will report third-quarter earnings on November 4 and 9, respectively. Investors may find that consumer appetite has not changed; It just changed hands.
Laura Forman at [email protected]