Just Eat Takeaway, who purchased Grubhub less than a year ago for $7.3 billion, has announced that they may consider selling off part or all of the Grubhub.
What happened here?
Did Jitse Groen (CEO of Just Eat Takeaway) buy a lemon? This is an expensive case of buyer's remorse for the Dutch delivery giant.
Within just months of closing the deal, investors were pushing for the company to bail out on Grubhub. Apparently, they finally decided to listen.
While it doesn't mean it's a done deal, I can't help but think they have to be pretty serious about the idea (more than just “exploring” the thought of a sale) if they're going so far as to make it public. One has to wonder if they're already in talks.
We address this topic in the latest episode of Deliver on Your Business. Even more, we dive into just what happened with Grubhub. A few years ago, Grubhub was Doordash. They were the dominant king of the delivery industry with no real rival.
How did this happen???
- Grubhub used to be the king 2:50
- The root cause of Grubhub's demise: Arrogance 3:49
- My story of delivering for Grubhub and what I liked about it 4:30
- When things started to change: 7:22
- Fast food, Taco Hell and the explosion of Cherry Picking 9:19
- Grubhub begins cracking down on drivers 11:46
- Driver loyalty to Grubhub erodes and erodes FAST 13:34
- Grubhub's relationship to restaurants erodes 18:53
- Adding restaurants to platform without permission 19:13
- Fake websites and marketing charges 21:44
- Grubhub botches restaurant relations during the pandemic 23:00
- Grubhub's relationship with customers goes south as well 27:10
- What happens next for Grubhub? 35:19
- Who would possibly buy Grubhub? 39:10
- The case for (and against) an Uber sale 39:27
- The case for a sale to Amazon 43:43
- The impact of Just Eat Takeaway moving to an employee model in Europe 45:05
- Could the same fate happen to Doordash in the near future? 45:45
Season Three Episode Three: What Happened to Grubhub? Transcript:
Hey, my friends. I want to ask you to do something here just in your mind. Try and think ahead that it's it's the end of the year 2024 and Doordash is struggling. They're barely staying afloat. They are, you know, last place out of all the big players in the area. And there's some little guys catching up on them and all of a sudden they have gone from the king to the laughing stock of the food delivery companies. Is something like that even possible?
Well, I want to tell you, you know, with the news that's come out today, we can, we can look at an example of a company that basically has had that happen to them. You may have heard the news that Grubhub has announced or Just Eat Takeaway has announced that they might consider selling GrubHub and, Oh how the mighty have fallen, because I can tell you what I started out grubhub was Doordash. Grubhub was the king. They had, I, I would look at the charts from 2018. When I got started at, they were up like 55% of the market. And in 2017, they were up over 60% of the market. And now they're the laughing stock. They're at the bottom of the barrel. They've already been sold once and now it's, it's like, you know, I don't know what happened here.
Did Just Eat Takeaway buy a lemon?
Did, did did, JET did Just Eat just figure out that they just bought a lemon and they've got investors that are really insisting that they sell this company off. That it's, it was a huge mistake. What happened? How did Grubhub go from the king of delivery to the laughing stock? That's what we want to talk about today.
Folks. I want to thank you for joining me here on the Deliver On Your Business podcast. If you are new to Deliver on Your Business, this podcast and the website that we're a part of, you can go to Deliveronyourbusiness.com. That'll take you to the website pages or entreecourier.com. We're all about the business of being an independent contractor, because here's the thing.
When you signed up with GrubHub or DoorDash, Uber eats any of these companies, when you agreed that you're an independent contractor, what you did is you agreed that you're providing a service as a business. And so the whole point of the Entrecourier and of this podcast is to help you look at it as running a business and to apply the whole idea of running a business to what you're doing, because I think that's the best way that you can succeed. That's the best way that you can beat these companies at their own game is to take control yourself and run your own business. Be your own boss.
How Arrogance destroyed Grubhub's relationship with all three major customer groups
So anyway, GrubHub. What happened to GrubHub? How, how do you go from the dominant, dominant, I mean, just as, as dominant as Doordash is today, player in the delivery industry to where they are now?
I think probably the best word to say it is arrogance. There was something that Grubhub never figured that they had to fix anything about themselves. And I think that it just really went into a tailspin. You know, it was interesting because there were several times I, you know, One interview. I read back in 2016 and a couple of other since then, you know, a couple from just, you know, the last year before the sale, where Matt Maloney used to scoff at the idea of any of these other companies catching them or passing them.
And yet here they are. I mean, they've not only been passed, but they've been left in the dust. How does this happen? And I really think that it's arrogance. You know, what I want to do, I just want to talk about kind of my, maybe my experience and just some of the things that I've seen over the years that really seemed to lead to this downfall of a giant and, and it's really the only way that I can put it. It's just, it's been astounding to me to see the free fall that has happened with Grubhub, how they have just totally blown away the market share. And how does this happen?
Grubhub screwed up their relationship with drivers
You know, when I first started with GrubHub, I had been delivering for a couple of weeks with Uber eats and, I'd stopped at a sandwich shop to pick up an order.
And there was a driver that was waiting to pick up an order for Grubhub. And he was telling me, he goes, yeah, I made about $1,300 last week. And I'm like, whoa, that's a lot of money, you know?
And he said, well, yeah, but I did have to put it in a lot of hours to make it work, but still, it was like, oh man, there's other options out there. And I tell you what, you know, and I signed up, I got started it wasn't long after that, that it was, it was hard for people to get on with Grubhubs. After that, I think people figured out Grubhub was the place to deliver.
If you wanted to make money, Grubhub was the ones. And when I started, once I started with them, they kind of became, you know, I picked up this term from UDM, I was just on his YouTube channel here just today as I record, this, it was just today. And. I remember him talking about, you know, these companies, you know, a certain particular company being the bread and butter and that's, that's exactly what Grubhub was.
It was like, I would get onto a block with Grubhub and I would do almost exclusively Grubhub and every once in awhile I'd fit in a little order from Postmates or Uber eats or DoorDash, but it was like always GrubHub and I just almost couldn't fathom not delivering Grubhub. And it was, especially when I got started, it was always busy. There were always good orders coming and it was always just one after another. And you just kind of get into a groove with them, you know? And the orders, you know, there, there was just always some good orders out there.
There were a lot of things that I loved about doing Grubhub. They had a driver specialist here in town. There was an office that I could go to. And if I had an issue, I could go there or I could email my drivers specialist or what. And, you know, so there was always access, there was a direct number to driver care and, and it wasn't an overseas call center. They were local people that had been that they had, you know, some of them, I think, had been drivers as I talked to some of them, but it was like, you could talk to these guys and sometimes you'd get some that you recognize, “oh, Hey, I've talked with you before.” and they were helpful and it was just like, it was night and day between delivering for them or Uber eats or DoorDash or Postmates. And it was just like, if you got on with Grubhub, you had it going on, you know, you were going to make some good money somewhere along the line.
When things started to change
Things started to change and, you know, here's, here's the thing. I think that. With the companies like Grubhub, it is really a, it's a three-way relationship that they've got, you know, they've got really three customers or three sets of customers. They've got the restaurants, they've got the customers and then they've got us as drivers. And it was like about a year and a half to two year period that is like, Grubhub found a way to alienate and piss off all three. You know, it was just like, and I think that they weren't ready for the growth of the other companies, especially for the for the growth of Doordash. And I think they did a lot of things that it was never trying to fix issues with them, but it was almost more like a reaction to other companies coming on.
And that's why I say it was arrogance that they just never felt like there was something that they had to change. There. They never felt like there was something that they needed to fix that was negative, but it was more like they had to try and add things on or do different things and stuff like that. And, and you could just start to see this slide. And I want to say probably about summer or so of 2018 and it just kind of this little gradual slide for a little while. And then all of a sudden it was like they went over the edge, you know? That was my experience. Anyway. And there were just some things along the way that I noticed.
Fast Food, Taco Bell and the explosion of Cherry Picking
Yeah. It's I think it started where, where I think the whole thing maybe began was when they added on fast food options. When I started doing delivery. Did any of you ever used to deliver for Caviar? You know, th there were the ones I always heard of that they were like the good restaurants, you know, th th the upper end restaurant she delivered for them.
And so the pay was always better on that. And maybe they weren't quite as busy or whatever, but, you know, it was like Grubhub had all the good restaurants in town, and then they started picking up fast food. And especially, I think their deal with yum brands and in particular, all of a sudden Taco Bell was on the platform.
Now, Taco Bell had been around, I think, in delivery for a little while, but it was usually with DoorDash or Postmates and you always had to go in and place the order and pay for it will Grubhub up never did that. You know, if they were adamant that they were not going to do these order and pay things, we didn't have, you know, you didn't have the red card, you didn't have the we didn't have a debit card from GrubHub.
They never gave that to you when they picked up Taco Bell. Well, okay. It's not that bad though. Cause you still don't have to place the order. Right? But all of a sudden you started seeing a larger percentage of extremely low paying orders. And it just went with the territory: Taco Bell, right? You had a lot of people that were ordering cheap food. And so if you're tipping on is as a percentage, the tip is lower and probably a lot more people that maybe aren't going to tip anyway. And all of a sudden you started seeing a lot more, $3 deliveries $3.50, I think back in the day it was a three 50 delivery fee plus 50 cents a mile. That's what it was in my market. It was real easy to figure that out Grubhub eventually changed the pay model to something that was much, much, much less transparent. And. Somewhere in that you started seeing just a lot more really cheap deliveries.
And I think that's when you started to seeing maybe the growth or the explosion of cherry picking that there were a lot of drivers that just figured out, you know what, this is not worth it. This is, this doesn't make sense, you know? And, and so they started rejecting more orders and. That created a problem though, because you started seeing a lot more, I think deliveries that were not getting accepted, not being taken and Grubhub had to do something.
Grubhub declares war on drivers (especially cherry pickers)
And I think what happened was it started, you know, what, what I said on on UDM's channel earlier today, I said it was kind of like they started a war on drivers and all of a sudden they started cracking down.
They started doing a lot of different things. They started doing these, you know, we're going to restrict your ability. To schedule, you know, you had to have a scheduling block and all of a sudden that went away or, you know, something would happen. And a lot of times you didn't even know what it was. And it says that “we noticed, something that doesn't look right. We're going to pause your ability while we investigate” and, and there were times that I know a lot of people I would hear that had been told certain things by their drivers specialist or something like that, but it was always verbal. It was never in writing.
And, but it was just all these different things where they're finding different reasons to first restrict scheduling and eventually started deactivating drivers for things that a lot of times, drivers never knew what that was about. That. You know, and it, it was like they were cracking down on drivers that, you know, orders are not being picked up.
And so we're going to blame the drivers.
And you really started to see a change in people's attitudes towards GrubHub. I remember when I started if you got into like the Facebook groups and some different things like that, and Grubhub was the one place that it was like, you didn't really see them complaining about Grubhub that much. That started to change when they started, I think trying to intimidate drivers into taking a higher percentage when they started doing some of their different restrictions.
Loyalty among drivers plummets fast
A lot of different things that happen that the relationship with drivers really began to erode. There was a time where loyalty to Grubhub was huge. Within the Grubhub driver community. If you were delivering back in 2018, maybe even the beginning of 2019, you might've noticed that, that there was, there was an incredible amount of loyalty that it was there. There were a lot of people that were just like, you know, Grubhub for life and they wouldn't even think of delivering for anybody else.
And so that relationship with drivers began to erode and I can remember them sending out, I'm trying to find if I've got the emails still, I remember them sending out, “Hey, we're going to make some changes. We're going to start dispatching you. You know, when the order is ready, rather than when you received the order, we're going to start making changes to how we do things to make that experience better.”
And they promised change. And the change has never happened. And so, you know, that was the first thing that I think that, that relationship with the drivers started to go downhill and, and I don't think they've ever recovered from that. And, and, and you just started seeing other changes that go, like I mentioned, you know, you used to have a driver specialist, he used to be able to go into the office.
It's harder than ever to get support
Well, after a while it was. It was harder and harder and harder to get a response from your drivers specialist. It used to be that I could email the guy and right away I'd get a response, you know, within, within 24 hours. And then sometimes nothing at all. Just nothing and well. Okay. Well you could go into the office and that I remember, and this, it just seems like that was one of those things that was kind of like the day everything changed.
I was here in Denver, they moved their office and they didn't announce where they're moving it to. You know, at first they started saying, you can only come in if you have an appointment and, and we're going to crack down on that. We're going to get, you know, I think, you know, they were even threatening people with trespassing if they came in and tried to do something without an appointment, you know, and, and then they changed the location of the office. They moved the local office. And eventually they did away with the driver specialist and ultimately they did away with the low, you know, the US-based driver care team. You used to have a direct number that you could call.
They started making it harder. They started changing the number. They started doing so many things to try and, and, and it was like all the things that made Grubhub special, they started taking away. At least that was, that was kinda my experience as a driver over the years. And all of this was, was before the pandemic, all of this was really a lot of this happened in 2019. It seems like that's when a lot seemed to really start going downhill.
Grubhub screwed up their relationship with customers.
But, you know, there were other sides of it too. And. I think there were some, you know, some real gaffes, especially with the restaurant relationship and, and a lot of the things that they did with the restaurants. I think it's a lot like how they were cracking down on drivers. It was more like it's a reaction to drivers not taking those really low orders.
And, and they felt like they needed to force drivers or manipulate drivers into making the changes. Instead of doing something to make drivers, make a, make the orders more acceptable, more palatable, you know, and, and this is something that I did a couple of years ago when I did some comparisons on the different companies.
And the one thing that I always said about GrubHub is that GrubHub, they never did anything to incentivize drivers in the way that other companies did.
Uber Eats had always had different promotions and they would do their searches and they would do their quests and they would do you know, different promotions that they would do to try and get people to come out on. Especially on the times when they really needed people and Doordash, of course, they're famous for their peak pay when things are going to be slow, then they would, you know, ramp up the peak pay and pay a little bit more.
And Grubhub was always doing just their delivery pay and that was it. And. They didn't need to incentivize drivers though, because they had so much loyalty that they didn't need to offer bonuses. They had drivers that even when everybody else is offering this huge incentives and I can remember going out and getting, you know, $12 per delivery, peak pay during a snow storm and Grubhubs just their normal pay rate, but they didn't feel like they needed to change things because there were so many drivers that's all they were going to do is do Grubhub. And so, you know, just things started changing like that.
Adding restaurants to the Grubhub platform against their will
And then I think on the restaurant side is, is the next place where you started to kind of see, I think at erosion of that relationship as well, and probably the, one of the first signs of things really starting to go south. On that end of things was when Grubhub made the move to start doing order and pay.
I can remember Matt Maloney laughing at and criticizing other companies, especially DoorDash and Postmates for the whole order and pay thing that he used to really pound on those companies for that practice.
And then they started doing it themselves. And the problem with it was they did it so much worse than anybody else. You know, they started, they sent out, they sent out the the debit cards and you go in, you place your order and everything like that. But the problem was with so many times was the menu is completely off and it.
If the pay, if they didn't have the price just right. You know, what would happen is you go in and you place the order or something like that. You go to pay for it. And. Somehow they didn't have the price in there just right. Or something like that. So, so the total pay ended up, or the total order amount ended up being more than what Grubhub loaded on the card and Grubhub didn't have a way to adjust the card or anything like that.
So if there was a problem, you just contact support and guess what they cancel the order. Well, okay. So here's the thing with, from the restaurant's point of view, first of all, they never authorized Grubhub to start listing them to begin with, but then, you know, you go in, you place an order and when the card got rejected, it was like, oh no, we're canceling goodbye.
You got to walk away. It put the driver in a horrible spot. There were times that I, early on that I would take the better paying order and pay orders because what they were going to pay was going to be enough to cover that wait time and all of that stuff. But when that started happening, it was like, I want nothing to do with that.
And. Because it really puts you in it because all of a sudden now, you know, the restaurant is mad at me, not at GrubHub, but you know, when they start realizing this is what's happening and it's with GrubHub and it, you know, all of a sudden, you know, Grubhub is the one that is getting a bad name among restaurants for this practice.
Questionable marketing and billing practices infuriates restaurants
They were caught at one time charging restaurants for, they started making some, some mistakes, I think. And maybe they always did this kind of stuff. I don't know if this was new or if they started getting caught. But Grubhub was brilliant at their marketing, but one of the things that they would do is they'd create these little micro websites for restaurant partners.
And so if people were looking for certain kinds of food, they'd find this site and they could call and it would take them into Grubhub they'd place, the order and things like that. Grubhubs started charging restaurants for calls that never led to an order. And Grubhub started using the restaurant names and URLs and website names and things like that without the restaurant's permission.
And there were, so there were a lot of things like that, that all of a sudden, you know, again, it just kind of eroded that relationship.
Grubhub's horrible response with restaurants during the start of the pandemic
And I think their response in the pandemic was really. I think it's what really sealed the deal, right? When the pandemic hit and all of a sudden everything shut down, you know, and you know, the states have ordered that the restaurants have to close down and the only way restaurants could do anything is through.
And Grubhub made a big deal. Hey, we're not going to charge you the delivery fees here. We're going to, we're going to, we're going to put a break on that. We're going to suspend that for right now and everything like that. And so a lot of restaurants believed, oh, that meant that Grubhubs going to waive delivery fees.
You know, we're going to make it easier for you to get into delivery, right? Well, when you read the fine print, what it turned out being was that Grubhub was only postponing. They were still going to charge the delivery fee, but it was more like a loan. Now, all of a sudden the restaurant was racking up a debt to Grubhub and the middle of the most terrible time for them, as far as trying to, you know, they're, they're barely staying afloat because now nobody can come in and, and GrubHub saying, oh, you owe us this money now for, for all these fees from a couple months ago.
Another thing that happened during that time was that Grubhub started offering $10 off for $30 order. You know, you know, it was kind of one of those things we're going to try and encourage people to go, you know, go to the restaurant. So we're going to give them $10 off. Well, they wanted the restaurants to take that $10 off of their fee.
So if it's a $30 order, they wanted the restaurants charge only $20. Right. But then Grubhubs started charging commission on the whole amount. So if they're charging 30% commission, right. You know, 30% commission on a $30 order is $9 at Grubhub yet. Well, 30% commission on a $20 order is $6. Okay. So you would think, okay, you know, we're going to take $10 off.
We're fine with that. But then GrubHub says we want commission on the whole $30 instead of the $20. So all of a sudden, out of $20 at the restaurants getting Grubhubs, taking $9 out of that, they're taking almost half of it. And, you know, it's, it's all that kind of stuff that it was like Grubhub, bumbled the relationship with the restaurants, I think, far worse than any of the others.
As a driver I began to notice restaurants leaving the Grubhub platform.
And so. They've kind of ruined their relationship with drivers and they've ruined their relationship with restaurants. And, and I noticed, you know, there were, there was a while, you know, that it was like, there were restaurants that they were only on Grubhub, you know, and there were some good paying, you know, usually, you know, the tips are really good with this restaurant or with that restaurant.
And it was always only on GrubHub. And then all of a sudden they started showing up on the other platform. And in fact, I can remember one time I had an order and pay. I went into, it had always been an, a Grubhub order, and I was never one to hide the fact that this is Grubhub, you know, Grubhub would always tell their drivers, you know, don't let them know that this is GrubHub.
It just, just placed the order as if you're the person. And I'm, I was going to play that game. You know, when I, when I would place it. I would just say, Hey, this is a Grubhub order. Are you okay with that? You know, we're paying with, for it, with this card, are you okay with that? And because if it was going to be an issue, I wanted to know now, instead of waiting for the food to be ready and everything like that.
And so I just, I was not one to play that game. That Grubhub wanted you to pay as a driver. You know, I think that was the other part that I felt uncomfortable with. I never felt the pressure to lie to the restaurant. With the other companies, as much as I did with GrubHub. And, you know, that was kind of another one of those little chinks in the armor, as far as that relationship with drivers.
And so, but, you know, I came to this one restaurant and I remember them, you know, th they were like, oh, we don't do Grubhub anymore. What I, you know, so it was okay, well, thank you. And I moved on or something like that, but I just, I started noticing more restaurants that were no longer on GrubHub. And somewhere along the line, you know, it just like here was the greatest opportunity that any company could ever have where.
The whole country is forced into delivery. If they want to get food at all, you know, and, and because they can't go into the restaurants. So the only way to get that restaurant food is delivery. And for most of these restaurants, the only way to do delivery was using a third party delivery company. And, and it was like, you couldn't have a better opportunity.
And then the relationship with the customers goes south
And here was Grubhub is kind of the poster child of just totally screwing up that relationship. And so here's the thing is, you know, they've, they've pissed off the drivers. They've pissed off the restaurants and, you know, you gotta think about what does that do to the relationship then with the customer. And the problem is. You know, you got mad drivers, you got orders, not being picked up. You had orders not being delivered. And Grubhub seemed to have the worst time trying to get drivers to take these orders.
And it was interesting because I just, you know, I watched Twitter. I, I try and watch all the social media about all these companies and, and the one company that I always saw the most complaints about. Was GrubHub and, and it's just like this perfect trifecta, you know, of somehow they managed to alienate all three groups that they need to have a great relationship with.
And I think when you look at it that way, When you look at the fact that it was like GrubHub never seemed like they felt like they needed to fix anything about the way they did things, but instead let's blame the drivers let's blame the cherry pickers let's, you know, blaming everybody else, but themselves never felt like they needed to change anything about how they did things with any of them.
What was Just Eat Takeaway's role in all this?
How, how, how can you stay dominant with that type of an attitude? You know, how I, and it's, to me it's kind of amazing that Grubhub was ever in that position to begin with when you look at that, that kind of underlying culture. And so, you know, and that's what I want to bring up because I know. When I read in the forums, when on Reddit, on Facebook, all these different things, I'm always seeing people blaming, Just Eat Takeaway.
If something's not good about GrubHub, it's the new owner's fault. You know, it all went downhill with the new owners. Folks, it was going downhill well, before they were bought. In fact, the only reason that they ever ended up being bought out to begin with was they were already on the way down. You know, they were no longer in a position where they could continue to be viable as a standalone company.
And so the problems were problems that happened, I think, well, before the purchase. And if you were to ask me, I would tell you that the Just Eat takeaway wasn't the problem. It's the Just Eat Takeaway, bought a lemon. You know, I, I don't think they did their due diligence. I don't think they did a good enough job looking into why is Grubhub in this tailspin? I don't know if they bought this idea that, well, you know, Doordash just had so much money thrown at them that, you know, obviously they're going to catch up, but you know, that that Grubhub will prevail in the end.
That was always kind of the attitude. And that was always kind of the song and dance for Matt Maloney. And the rest of the Grubhub team was that we were prevail because we're running the better business. Right. And you know, the truth of matter is that there was a time when Grubhub was profitable before the Panda.
You know, that they had certain quarters that, you know, that they were turning a profit before the pandemic, when nobody else could be profitable. And I think that that stuck in their heads, that that was just the way it was always going to be. That's my guess, you know, that's, that's my take on it. And ultimately it was that Grubhub never saw the need to change the things that they needed to change.
The things that they did. Honestly, I think there were panic moves. I think moving to Taco Bell was a panic move. I think, moving to adding restaurants, even without their permission, just so that they could have more customers on the website. You know, if, if you go on and you're going to order with Grubhub and you see maybe 15 restaurants and Doordash has four.
You got to do something about that. Right? So they started, you know, one is kind of opening up the territory, making it longer drives and with longer drives means colder food and more drivers wanting to turn down the offers. And that was one of the things that happened with me was that the distance on deliveries went from 2, 3, 4 miles to 12, 13, 14 miles. You know, all of a sudden they were dispatching almost exclusively to restaurants that were seven miles away from me. In fact, I remember a time that I'm, as I'm watching, it's like every single offer I was getting was like seven miles from where I was almost seven miles exactly. And I was like, what's up with this? And he started getting more of these just super long distance deliveries that are never used to see.
So, you know, they had to open up the territory, try and get, you know, put more restaurants up on the board so that people could choose from them. And when that wasn't enough, kind of the next panic move was, then now we're going to start putting restaurants on that haven't agreed to be with us, and we're going to start doing these order and pay deliveries 'cause now we've got more people that people can choose from, but the problem was that with all these things, you know, if, if the driver's got to go and place the order and the, the menu screwed up, then you know, the Grubhub has a different menu in their system than what the restaurant actually has.
Well, now the customer can always get the food that they want it. And I guarantee there's a lot of drivers taking shortcuts and just saying, oh, screw it. Just, you know, whatever you got, that's closest to it. And not, not talking to the customer, you know, all these different things that are just adding up to what ultimately is a terrible experience for the customer.
And so here you have, you know, as I said before, the most ideal business situation that you could have as a company in your industry where it's just exploding, like, like, you know, I don't know what you could compare it to.
And Grubhub managed to alienate all three of those important groups that you need to have. And so ultimately I just think that, just eat, takeaway the problem with them wasn't so much what they did with the company. It was what they could not do, which was, they just, they couldn't recover from the tailspin that Grubhub was already in. By the time they took that company. And I just don't think they realized how much of a lemon they were taking over. That's my take.
What happens next?
Now the question is what happens next? What's going to happen? You know, because all they've said is, okay, would we might look for a strategic partner or somebody to buy part or all of the company, you know, they they've had investors that have been pushing this and pushing and just, almost trying to force them into getting rid of this albatross has been hanging around Just Eat Takeaway's neck.
And I can't imagine it being a strategic partner type of thing. You know, they've, they've tried some things, you know, they, they tried kind of a partnership with Lyft and that ultimately went nowhere. I just, I cannot imagine. Any kind of situation where it's like this strategic partnership type of thing. The only way I could see it happening is just a total sale.
What does Just Eat Takeaway mean about a partial sale?
Now I think it could be that they could spin off the delivery part of the company. Cause here's the thing you have to remember about Grubhub Grubhub did not start out as a delivery company. They started out as an online marketing company for restaurants. They, they ultimately started out offering online, ordering and things like.
And, you know, creating a system by which restaurants could go online and then they could, you know, people could order online and, and, and that was their bread and butter, and that's where their profitability was. In fact, they didn't want to get into delivery to begin with, you know, Matt Maloney used to say it was a terrible business model.
I don't know if it was just one of those things that they were forced into it or whatever. If you look into how Just Eat Takeaway works in Europe, they do do delivery, but their primary emphasis is online ordering you know, they've got one of the things that they're trying to offer now is a I wish I could remember the term they used.
I was really fascinated by it when I first heard about it, that the idea is is they bring you, you place your. And then they let you know when your order's ready and then that's when they bring you in. So they save, you know, and I just thought that was an incredible idea because here's the thing with restaurants, you know, you go in and then you get taken to your table, and then you place your order and then you wait for the food and all of that. And you know, the restaurants can only bring so many people in because of that time that it takes for all of that. And if they could do something like this, where you can place your order before you go sit down, it's already, and it's ready for you.
By the time you get there, you know, that shortens the amount of time people are sitting there, you get a faster turnaround for restaurants. It's things like this, that jet is trying to do. And delivery's just a small part of it actually. And so when you think of it this way, I could see them trying to hang on to the online ordering part of things, but then spinning off delivery. And maybe that's how, what they mean by a strategic partnership is maybe they, they partner with. DoorDash or Uber eats to do this order and things like that.
Who could they sell to?
Now, if they do decide that they're just going to sell off, who are they going to sell to? And two things come to mind real quick. The first one is Uber, just because if you were paying attention or if you had known.
The case for (and against) a sale to Uber
When Uber, when Grubhub was sold to Just Eat Takeaway, they were in very serious discussions with Uber before that deal was made. And here's the thing though that I think, you know, I think a lot of people kind of think that the deal fell apart because they couldn't agree on a price. Right. There, there were a lot of things that I read that, you know, just talked about the exchange and.
The impressions that people had. And it, it seemed to me, and I can't prove this, but it seemed to me that the thing that collapsed the deal had more to do with the attitude. Of Grubhub leadership. I don't know if they came in thinking that they were more than what they were or, or whatever. There was kind of like an arrogance.
There was a cockiness, they wouldn't discuss certain things. Just, just different things like that, that, that ultimately, I think it was kind of more of the way they conducted themselves that killed that deal more than it was about price. So now that it's a different ownership now that it's, this selling off a part of the, you know, this, this business that they bought already, could that change things, you know, is, are they more likely to negotiate in good faith? The fact that they're selling it off, honestly You know, they got to kind of swallow their lumps a little bit with that sale, realizing that, you know, like I said, they bought a lemon and everybody knows they bought a lemon.
So could that happen? I don't know. Here's the problem though. When all of this happened before you had four major companies, you know, you had four nationwide companies that, that were in almost every market and. You had Uber eats, you had Doordash, you had Grubhub, and then you had Postmates. Well, after all of this happens, you know, and so Uber eats, Uber cannot complete this deal to take on GrubHub so they bought Postmates instead. So now we're down to three. And so if a deal happens, all of a sudden that brings you down to two major players. And I think that would be bad news for drivers. I think it would be bad news probably for the customer because you have fewer choices now. It's that true consolidation of the industry that, that just to have only two major players is it's it's not a good move.
It's not, and it probably won't pass. Antitrust regulation, you know, that the federal trade commission, I believe, has to make some, you know, do some evaluation, they've got to approve it. So there's a lot of places that it has to be approved. But if that deal means now, you've really only got two players, I just, I don't see that going through, you know, it's, it's kind of like T-Mobile bought sprint. There were four major players, you know, T-Mobile bought sprint You're never going to see T-Mobile get bought by AT&T or by Verizon or, you know, any, now that you've got three main players left, I just don't think you're going to see it squeezed down to less than three.
Could they sell to a smaller delivery company?
And I think it's the same thing in delivery that unless somebody comes along to challenge on a national basis and there's nobody out there there's really nobody that can challenge on a national basis. It's going to take a couple of years for somebody to get up to speed. Kind of like what it took for Doordash to get up to speed.
The other place that I can think of, you know, and maybe a smaller player, maybe one of these small companies like, you've got you've got one company that owns, I think it's Bitesquad and Waitr, but they've got some challenges, you know, they've got some real problems and I just, I can't see them taking on a bigger company like that.
The case for a sale to Amazon
The one place that I could think of that might do something as Amazon, Amazon used to have their restaurant delivery and it just didn't work. And I think the problem was, was they tried to get into a field that they didn't know, you know, they, they tried to get into and grow something that they didn't know. But as much as Amazon, I think, wants to get into more logistics, the opportunity to take over an existing company. Could work, they could do it.
This, this is a better opportunity to grow then I think what might be there if they were to just you know, try and build it themselves, you know, ultimately that's the why they shut down Amazon restaurants was that they just weren't getting the traction on it. But I think that they could take something that already exists.
And, you know, the, the thing that's intriguing to me about Amazon is that they're about logistics and they are, you know, and that's the thing that is completely missing on all of these companies, you know, and maybe this is their opportunity now. So I don't know.
I made the prediction. At the end of the year, at the end of last year on the rideshare rodeo podcast, I told Steve, then I said, you know, I think, I think you're going to see by the end of the year, Grubhub is either going to switch to an employee model or they're going to get spun off.
And, and it's not that I'm, you know Any kind of Nostradamus or anything like that, you know, back in October there was already news that the investors were putting pressure on Just Eat take-away to sell off GrubHub. So this is nothing new, you know? And, and that's just stuff that I had heard back then, but you know, part of that is because Just Eat takeaway is moving to an employee model.
In a lot of other places. They're, they're kind of committed to that. I think, you know, philosophically, I kind of wonder if that's part of what's getting into this whole discussion, is that I think they're realizing they probably might not be able to be competitive if they do that here in the United States.
And so I don't know. It's going to be interesting, I guess, to see what happens from here at this point. I don't know a whole lot more than anybody else, but those are some thoughts in here. I'd love to hear from people, you know, shoot me an email, Ron@Entrecourier.com or I'll get this up on a page on the website and you can leave comments on there because I would sure love to hear other people's thoughts about what might happen, you know, is, is there another player out there that that might be, that might be a real good option, you know, as far as buying them out or.
Could something similar happen to Doordash?
Or will Just Eat Takeaway, stay the course. And, and if they do, can, can they reverse this downward spiral that has been GrubHub over the last couple of years. So, and, and one last question I want to ask you and, and do, do you think you could see the possibility of Doordash being in the same kind of boat, you know, is if grab a hub went from dominant to last place in really a matter of two years, you know, they went from 50 plus percent of the market share to down on the twenties and worse. And I think right now they're sitting at like about 12%, which is just unbelievably low. Could that happen again? And could there be a nother company that could just come up out of nowhere? And I don't know about that. I, I, you know, I look at the fact that, you know, Doordash took off like crazy, but they had been around, you know, they had been around for a few years.
Before they really started just, you know, getting money, getting money, getting money and expanding, you know, it was kinda like, I think they had established themselves in some markets and it was almost like they were lurking or something, but they were already there. I don't see a company that is in that same kind of position that is like even a distant number for that, that looks like they're positioned to be able to do anything.
I don't know, maybe there's somebody that I haven't even thought of. I would love to get everybody's thoughts, you know, what could happen? Where could this go? And could Doordash make some of the same types of mistakes? I'd love to hear your thoughts anyway, that's wrapping it up for today and thanks again for joining me here, folks.
Here's the thing, you know, we're talking about all these different companies that are out there. But the important thing I want to leave you with here as I wrap up here for today's episode is these guys are your customers. These guys are not your employers. These guys are not your boss. They're your customers. Now, if there's consolidation, we have one less customer and that I think could be of concern. But I think the important thing here is, and this is the whole reason that I've started. This is just to encourage you to understand and remember that, that you're still the boss. You're still the one in control.
You still get to make decisions, keep that in mind and keep that control. Be the boss.