Grubhub Searching for Options as Revenue Wanes Due to Massive Competition
Grubhub is sending out the warning signals and are reducing guidance for revenue and profit for its current quarter. Among other reasons the company said higher spending on promotions to attract more customers lead to this reduction.
“Right now, we are in a weird bubble that is about to burst,” Grubhub’s Chief Executive Matt Maloney said. Blaming the issues of raising capital in the private markets on the issues of the poor business planning of WeWork.
Delivery has always been a low-margin business, and restaurants are frequently fighting the high fees of outsourced delivery. That is forcing more providers to cut deals to keep restaurants using their platforms.
Grubhub’s adjusted earnings of 27 cents a share for the quarter ended in September and met analyst expectations. However it was a 40% decrease from the same period a year ago. The company’s active diners grew to 21 million and gross food sales rose from the previous year.
The company has made fewer delivery deals with big restaurant chains but still made gains during the quarter due to its higher pricing. It signed a delivery deal with Shake Shack Inc. and started delivering from McDonald’s.