Grubhub announced today that CEO Adam DeWitt, will step down from his position. Howard Migdal has been appointed executive vice president of North America and CEO of Grubhub.
Under DeWitt’s leadership for the past 11 years as CFO, President, and most recently CEO, Grubhub has grown from $20 million to more than $2 billion in annual revenues, with a network of more than 365,000 restaurants and approximately 400,000 delivery partners in more than 4,000 cities across the United States.
Grubhub is under significant pressure to improve its sales and operations. The leading food delivery company is DoorDash with 65% market share. Uber Eats comes in second with 23% market share. Grubhub is in third place with 10% market share.
I’m often asked if I think Grubhub can survive. My answer is, it depends. If Grubhub doesn’t make substantial changes to its strategy and operating model, no, the company will surely go out of business. Let me be clear: Grubhub has several key changes they can make. I worked with a team of individuals in 2022 and our goal was to acquire the company. We conducted significant due diligence and although Grubhub is facing a challenging environment, the team believes Grubhub has potential for growth.
So what’s next for Grubhub? Arguably the best move for Grubhub is to be acquired by Uber Eats. Is it a good deal for Uber Eats? It will depend on the owner of Grubhub, Just Eat Takeaway.com and their CEO Jitse Groen. The brutal truth of the matter is that JET overpaid when they acquired Grubhub in June 2021 for $7.3 billion. Less than a year later, JET announced in April 2022 that it was considering a full or partial sale of Grubhub. I believe Uber Eats will only acquire Grubhub if they can do so for $1B or less. Acquiring Grubhub will increase Uber Eats market share of the food delivery industry to nearly 35%.
As part my research for possibly acquiring Grubhub in 2022, I discovered that Bank of America was taking bids from potential buyers of Grubhub. The team I was working with chose not to enter into a bidding contest for the company.
The smartest thing Jitse Groen can do is definitively announce if Grubhub is for sale, and hire a company to lead the sale. If Grubhub isn’t for sale, Groen needs to make that clear as well. Note to Jitse: Use the acquisition of Grubhub as a learning experience. If you choose to sell Grubhub, I anticipate you will only receive between $500M to $800M for the company.
What about DoorDash? Should they acquire Grubhub? In my opinion, no. Instead, I strongly recommend that DoorDash shake up their business model and acquire Domino’s or Instacart. I also believe Uber should consider acquiring Domino’s or Instacart.
Interestingly, one of the biggest issues facing Domino’s is a lack of drivers. Domino’s acquiring Grubhub is worth assessing.
I wish the new CEO of Grubhub the best.
