Technology

Grubhub's new owner offers glimpse of potential U.S. strategy

Just Eat Takeaway.com is prioritizing lower fees and fully employed drivers in its European markets as it focuses on growing share.
Just Eat Takeaway and Grubhub logos
Photograph: Shutterstock

Just Eat Takeaway.com on Wednesday laid out its plan to gain market share by expanding its delivery network, investing in customer acquisition and lowering fees across its 23 global markets—which will soon include the U.S.

The Amsterdam-based delivery company is in the process of acquiring Grubhub in a $7.3 billion transaction set to be completed in the first half of this year. And the strategy detailed on JET’s 2020 earnings call with investors provides a glimpse at how it might approach the new market: namely, growth at all costs.

In the U.K., where JET is the market leader by transactions, that has included adding big brands like McDonald’s to its platform and then offering delivery at a lower price than its competition.

“One of our pillars of our delivery strategy is to be the price leader in our industry,” said CFO Brent Adriaan Wissink on the call, according to a transcript from financial services site Sentieo. “This means offering lower delivery fees across our markets compared to the competition, including free delivery.”

In the U.S., where delivery and service fees vary by market and providers woo customers with frequent deals and promotions, none have emerged as a clear price leader.

JET, which like Grubhub began as an online marketplace for restaurants that typically provided their own delivery, has also been working to grow its own driver network. Under that business, called Scoober, drivers are considered full-time employees. They are paid a set hourly wage and receive benefits such as paid sick days, holiday pay and electric bikes for doing deliveries in urban markets.

That is different from the prevailing driver model in the U.S., where third-party delivery drivers are treated as contractors. 

JET now employs 20,000 Scoober couriers and plans to expand the model to all of its European markets.

Those investments contributed to a loss of 151 million euros ($181 million U.S.) in 2020 on revenues of 2.4 billion euros ($2.9 billion U.S.). But executives emphasized that JET will continue to prioritize market share over profit.

“We believe that market leadership is critical to drive sufficient scale, order density and network effects to enable healthy delivery margins in the long run, and we are best placed to achieve that and, therefore, further investing in driving our market share,” said CFO Jorg Gerbig on the call.

While executives declined to comment specifically on how that strategy might apply to Grubhub, JET CEO Jitse Groen said, “We essentially do the same thing everywhere, right? We don't have a different strategy in the U.K. than we have in Germany.”

A Grubhub spokesperson also declined to comment, citing the yet to be completed transaction. Leaders at the company have previously signaled a business-as-usual approach once the deal is official.

In an interview with Restaurant Business in December, Chief Revenue Officer Seth Priebatsch said the plan under JET ownership would be to “continue running our Grubhub business as we always have.”

“Obviously some things will change, but the core of what we’re doing will really stay the same,” he said. 

Once the market leader in the U.S., Chicago-based Grubhub has seen its share slip in recent years as competitors like Uber Eats and DoorDash have grown. In January, it accounted for 17% of meal delivery sales in the U.S., well behind leader DoorDash at 56%, according to SecondMeasure.

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