Technology

Record-setting quarter brings Grubhub no closer to profitability

The company's daily orders, gross sales and user base are at peak levels as demand for delivery continues, but it is still losing money.
Grubhub sticker on door
Photograph: Shutterstock

Grubhub set records across all three of its key business metrics in the first quarter, reflecting continued demand for delivery, but the milestones brought it no closer to turning a profit.

Both gross food sales and daily average orders picked up again after slowing in the previous quarter. Gross food sales were up 60% year over year, to $2.6 billion, and daily average orders were up 44%, to 745,700. 

And Grubhub reported 33 million active diners, 1.5 million more than the previous quarter and about 9 million more than Q1 2020, an increase of 38%. 

It also added 15,000 partner restaurants to its marketplace, which now stands at 280,000. 

Much of its order and user growth came in the suburbs and smaller communities, demonstrating that Grubhub can be successful in markets of all sizes, CEO Matt Maloney said in a letter to shareholders. New diner repeat rates and order frequency remained strong and "well above" pre-pandemic levels. 

The company was "extremely pleased" with those results in what will likely be its last earnings report as a stand-alone company, Maloney said. Its acquisition by Amsterdam-based Just Eat Takeaway.com is expected to close shortly after Grubhub's special stockholder meeting in June. 

"We have incredibly strong momentum heading into our combination with JET," Maloney said.

Revenue for the quarter was up 52% year over year, to $551 million. But the bottom line was a different story. Grubhub posted a net loss of $75 million as it spent big to keep up with demand and driver shortages, more than doubling its net loss from a year ago ($33 million).

Those factors cost the company $393 million in operations and support expenses. Driver levels were affected by high demand, winter weather and stimulus checks that kept some couriers off the roads in March, the company said.

Grubhub also spent $127 million on sales and marketing for the quarter. And it said it conveyed $60 million to restaurants as the result of temporary fee caps in some markets.

As the company's revenues have increased over the past year, so have operations and marketing costs, illustrating the difficult juggling act that is third-party delivery. If one element of the three-sided marketplace is out of sync—like not enough drivers—it's costly.

Members help make our journalism possible. Become a Restaurant Business member today and unlock exclusive benefits, including unlimited access to all of our content. Sign up here.

Multimedia

Exclusive Content

Financing

Despite their complaints, customers keep flocking to Chipotle

The Bottom Line: The chain continued to be a juggernaut last quarter, with strong sales and traffic growth, despite frequent social media complaints about shrinkflation or other challenges.

Operations

Hitting resistance elsewhere, ghost kitchens and virtual concepts find a happy home in family dining

Reality Check: Old-guard chains are finding the alternative operations to be persistently effective side hustles.

Financing

The Tijuana Flats bankruptcy highlights the dangers of menu miscues

The Bottom Line: The fast-casual chain’s problems following new menu debuts in 2021 and 2022 show that adding new items isn’t always the right idea.

Trending

More from our partners