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The world of restaurant delivery options could soon get even smaller
Uber is making a play to acquire Grubhub, according to a report by Bloomberg, and an official agreement between the rideshare service and the food delivery platform could be possible “as soon as this month.”
The merger would create the country’s largest food-delivery platform in terms of market share, a potentially worrisome prospect for restaurants that already have limited options when it comes to third-party delivery services. Data from October 2019 showed that the San Francisco-based Doordash had conquered 35 percent of the delivery market, with Grubhub coming in second, at 30 percent. Uber Eats was in third, with 20 percent of the overall market share.
As the Verge points out, Uber’s acquisition of Grubhub would not only vault the new combined behemoth into the top delivery slot, but would also help curb the 80-percent drop in Uber’s riding-hailing business last quarter. During that same period, Uber reported that its Eats business grew 54 percent year-over-year, and CEO Dara Khosrowshahi noted in a press release that “while our Rides business has been hit hard by the ongoing pandemic, we have taken quick action to preserve the strength of our balance sheet, focus additional resources on Uber Eats, and prepare us for any recovery scenario.”
Delivery apps, not surprisingly, are seeing a boon time during the coronavirus pandemic as restaurants have shifted to a takeout and delivery-only model. To some extent, the increased visibility has magnified some of the problems restaurant owners have long reported about third-party apps, among them exorbitant fees and the common practice of listing restaurants without their consent (Grubhub refers to such restaurants as “non-partnered inventory”). And that’s to say nothing of the ongoing issues in treatment of a non-employee, “gig economy” workforce.
Acquisitions in the delivery space, of course, aren’t new. In August 2019, Doordash acquired the once-bespoke Caviar, mashing together services that were known for specializing in lowbrow and highbrow offerings, respectively. (That happened only after rumors swirled suggesting a possible Doordash-Postmates merger which never materialized.) Grubhub itself acquired then-rival Seamless back in 2013 — a merger that raised red flags over a possible monopoly — and then added Eat24, a delivery operation owned by Yelp, to the fold in 2017. Amazon’s attempt at the restaurant delivery market, Amazon Restaurants, threw in the towel in June 2019.
The Uber-Grubhub deal is reportedly an all-stock offer. Eater has reached out to Uber and Grubhub for comment.
• Uber Approaches Grubhub With Takeover Offer [Bloomberg]
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