Just Eat Takeaway.com, a leading European food delivery service, is parting ways with Grubhub, selling the U.S.-based platform for $650 million. This sale price starkly contrasts the hefty $7.3 billion investment Just Eat made to acquire Grubhub just three years ago. The buyer will be Wonder Group, a New York-based food ordering brand focused on offering fast, high-quality dining experiences.
The details of the transaction were revealed on Wednesday, indicating that Wonder will purchase Grubhub with a combination of $150 million in cash and $500 million in senior notes. This amount is significantly lower than the previous acquisition price during the height of the COVID-19 pandemic, when demand for delivery services surged and Just Eat beat out Uber to finalize the acquisition.
Just Eat Takeaway.com highlighted that the decision to sell Grubhub had been under consideration for some time, noting that it would serve to enhance growth opportunities and cash generation. The company stated that this move would also allow for better investment in regions where it holds a competitive edge, operating in 18 countries aside from the U.S.
Completion of the deal is anticipated in the first quarter of 2025, pending regulatory approval and other standard conditions. Upon finalization, Just Eat believes it will no longer retain any significant liabilities associated with Grubhub. The company’s CEO, Jitse Groen, expressed confidence in the arrangement, stating that it provides a suitable future for Grubhub and its workforce. Following the announcement, Just Eat’s stock surged by over 15% early Wednesday.
Both Wonder and Grubhub’s leaders, Marc Lore and Howard Migdal, respectively, conveyed optimism regarding the acquisition. They underscored that the transaction would aid in Wonder’s mission to enhance food accessibility while improving the overall customer experience.
Founded by Lore, Wonder presents itself as a new style of food hall, specializing in delivering meals crafted by renowned chefs and restaurants. Initially recognized for its fleet of delivery vehicles, the company has recently shifted towards a brick-and-mortar model while expanding its online services. Last year, Wonder made headlines by acquiring meal kit company Blue Apron for $103 million.
Grubhub, headquartered in Chicago, serves over 4,000 U.S. cities and maintains partnerships with more than 375,000 merchants and 200,000 delivery workers. According to Just Eat, Grubhub saw 237 million orders generated last year, translating to a gross transaction value of approximately $8.53 million.
Both Takeaway.com and Grubhub, established in the early 2000s, are recognized as pioneers in the food delivery industry. However, the market has grown increasingly competitive with the arrival of platforms like Uber Eats and DoorDash. The challenge of customer loyalty has become pronounced, as patrons frequently switch between different delivery services.
As of March 2024, data from Bloomberg Second Measure indicated that Grubhub accounted for a mere 8% of meal delivery expenditures in the U.S., significantly trailing behind its competitors DoorDash and Uber Eats. DoorDash currently dominates the market, capturing a substantial 67% of meal delivery sales, followed by Uber Eats at 23%.