Just Eat Takeaway has finally managed to sell Grubhub for $650 million, allowing it to close the doors on its U.S. expansion. The European meal delivery firm acquired Grubhub during the peak of its pandemic-driven success in 2020, having spent $7.3 billion deal on staking its claim. However, by 2022, it was ready to hand the business over to any interested buyer.
After a marked devaluation of the company and its assets over the years, food delivery startup Wonder has now bought Grubhub. The transaction should be complete in the first quarter of 2025, which is when Just Eat Takeaway will be free to reinvest that money into more lucrative markets where it has a greater competitive advantage.
Just Eat Takeaway Sells Grubhub to Wonder at a Great Loss
In exchange for Wonder Group’s acquisition of Grubhub, the company is expected to pay $150 million in cash and $500 million in senior notes. The transaction will be complete in the first quarter of 2025 after all regulatory approvals are secured. Once done, Just Eat Takeaway will retain no material liabilities in relation to Grubhub.
The announcement of the Wonder Group-Grubhub deal sent Just Eat Takeaway’s share soaring by 15%, setting a positive tone for the future of this acquisition.
Since having taken over the company for $7.3 billion, Just Eat Takeaway has struggled to maintain its grip on the market in the U.S. The company operates in 18 countries so it does have an expansive business, however, it has been unable to fight back competition and sustain itself against the fee caps in the U.S.
Earlier this year, the company made its exit from New Zealand and France as well, so there appears to be a strategy at work, pulling the company to focus on markets where it can prosper.
Grubhub is headquartered in Chicago and expands across 4,000 U.S. cities. According to ABC News, the company claims to have over 375,000 merchants and 200,000 delivery partners, and it is said to have generated a gross transaction value of €8.06 billion (approximately $8.53 billion) last year.
Both Just Eat Takeaway and Grubhub were some of the early entrants into the food delivery business, but ever since then, the competition has ramped up, even overtaking Grubhub in its performance in the U.S.
Grubhub and Its Competitors Struggle Against the Fee Cap
Many states regulate these food delivery services very closely, enforcing a fee cap to ensure that businesses don’t overcharge restaurants. While this protects both the restaurants and the consumers from unreasonable prices, for companies like Uber Eats and Grubhub, it affects their profit margins and quality of services.
These companies have initiated a legal battle against New York City over these fees. The city caps commissions on food orders at 15% and other charges at 5%. Grubhub, DoorDash, and Uber Eats believe that these regulations deprive them of the opportunity to contract with the restaurant and force them to operate in the city at a loss.
These companies may be united on this front, but the “food delivery war” is still going strong. DoorDash has a big lead with 67% of the sales in meal delivery spending by consumers. Uber Eats comes in second with 23%, while Grubhub only makes up for 8% of the sales.
With Wonder Group’s acquisition of Grubhub, it is likely that the new parent company will continue to push back against regulations, but Just Eat Takeaway will no longer have to be involved.
