Grubhub Loses #1 Spot in US Online Food Delivery Market
Reportedly, Grubhub GRUB has lost its top position in the U.S. online food delivery market to its nearest competitor, DoorDash.
Per Quartz, which cited a recent report by analytics firm Second Measure, the company’s monthly sales were lower than DoorDash in May. Notably, Second Measure’s data doesn’t include sales from Grubhub’s latest acquisitions — Tapingo and LevelUp.
Moreover, per the report, DoorDash outperformed the company in terms of market share.
Although Grubhub didn’t comment on the latest Second Measure report, it is known for snubbing third-party reports, citing incorrect data.
Nevertheless, the latest data do not paint a rosy picture for shares of the company, which have declined 1.2% on a year-to-date basis compared with 5.7% growth of the industry.
Can Grubhub Revive in the Second Half of 2019?
Competition in the U.S. online food delivery market is intensifying for the company, with expanding services from the likes of DoorDash, Uber UBER arm UBER Eats, Postmates and Waitr Holdings WTRH, among others.
However, Amazon’s AMZN decision to shut down Amazon Restaurants bodes well for Grubhub. Moreover, the partnership with Dunkin’ Brands Group DNKN is likely to boost its footprint across markets like Boston, Chicago and Philadelphia in the coming months.
Additionally, partnership with Smoothie King is expected to boost Grubhub’s user base. Notably, the company ended first-quarter 2019 with 19.3 million active diners.
Moreover, momentum in gross food sales is a key catalyst. Despite stiff competition, the company is well poised on the back of an efficient delivery network and new quality-focused restaurant partners that include renowned brands like Yelp, Groupon and Yum! Brands.
However, increasing expenses due to planned expansion into new delivery markets are likely to keep margins under pressure. Furthermore, as these markets will take some time to generate volumes, higher upfront costs will hurt profitability.
Currently, Grubhub has a Zacks Rank #3 (Hold). You can see the complete list of today’s Zacks #1 Rank (Strong Buy) stocks here.
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