Should Ahold-Delhaize, Albertsons, Kroger or Walmart buy Grubhub?
Grubhub is exploring its strategic options, including a possible sale, and it appears as though there are plenty of food retailers interested in kicking the tires of the online meal ordering and delivery service, to see if it might be the right vehicle to help them drive sales going forward.
The New York Post reports that Brittain Ladd, a former executive with Amazon.com, said that Ahold-Delhaize, Albertsons, Kroger and Walmart are four retailers currently exploring how a Grubhub acquisition might affect their grocery delivery operations.
Mr. Ladd told the paper that he had contact with executives at all four companies and that they were interested in exploring a potential purchase.
“Acquiring GrubHub checks a couple of boxes for Walmart,” DA Davidson analyst Tom Forte told the Post. “I’ve long thought that Grubhub could apply its expertise beyond restaurants to grocery.”
Grubhub’s current business model works two ways. The company takes restaurant orders online. If the restaurant offers delivery, then Grubhub collects a commission for the order. If the restaurant doesn’t offer delivery, then the company keeps the delivery fee added to the order, as well.
The space where Grubhub operates has become increasingly competitive in recent years with DoorDash, Postmates, Uber Eats and others all looking for a share of the restaurant delivery market.
The Wall Street Journal reported in October that Grubhub’s reluctance to offer discounts similar to its rivals has resulted in the service growing more slowly, albeit more profitably than its competitors.
Grubhub CEO Matt Maloney has continued to maintain that unprofitable rivals will eventually flame out, but some of those same competitors are reaping the benefits of billions of dollars in venture capital to run promotions targeted to gain share. How much market share Grubhub can afford to lose, even if it is profitable, remains the question to be answered.
The company’s share price, which has risen on the news of a potential sale, is still trading at 63 percent below its highest level in 2018.
- Walmart, other grocers are considering acquiring Grubhub – New York Post
- Grubhub’s Unexpected New Menu Options – The Wall Street Journal
- Grubhub’s Profit Falls as Delivery Competition Accelerates – The Wall Street Journal
DISCUSSION QUESTIONS: Should Ahold-Delhaize, Albertsons, Kroger, Walmart or some other grocer buy Grubhub? What do you see as the benefits and risks associated with a major grocery chain operator acquiring the service?