Just Eat Is Selling Grubhub to Marc Lore's Wonder for $650M
theverge.com
theverge.com
Feels like they might be buying clout in the industry by buying business that already exist in it.
GrubHub partnered with Amazon. Amazon Prime now includes a GrubHub+ account.
I have Prime, but have yet to use GH+, but that's more because I just stopped getting food delivered in general. Not because of the price (I used DD and had the DashPass which is very much worth it if you get at least 2 deliveries/month), but because I started getting deliveries with missing items. When that happens, they won't offer to do another delivery, they'll just either refund the item or I can go pick it up. Both options defeat the purpose of ordering delivery. I either don't get my food, or I have to leave the house.
Doordash prioritized selection, they did online ordering even when restaurants didn't want it. Eventually the demand was high enough that restaurants adapted. Grubhub focused on the traditional take out restaurants. Doordash also mixed in multi-delivery to handle mixed alcohol/food purchases.
Beyond this, tech always follows a power law distribution in returns. Doordash is the number one player, and as such will be about 10x bigger than the next runner up. How much of this is network effects/first preference vs. manufactured return is anyones guess, but most people do not want to spend time price matching doordash/grubhub on orders - so whoever has the bigger network/more customers will get the most folks.
I have no idea if this remains true and I'm not suggesting this is why Grubhub failed; I'm asking.
However, I wouldn't be surprised if their roll out involved capturing businesses that already offered delivery drivers until they had a critical mass of drivers in the region or something.
May be regional. I'm in the Bay Area.
- the leadership during the peak of competition for mindshare in the space was exceptionally weak and overconfident. the grubhub/seamless merger led to a completely split company culture between NY and chicago.
- when they were on top, they were a shitty company with scummy practices (even for the space) that made restaurants very skeptical of them specifically. grubhub effectively ran like a protection racket. they bought up tons of "menu pages" websites and restaurant listing sites and launched fake websites to overtake the online presence of grubhub restaurants (including replacing their phone numbers in google summaries with voip numbers, calls through which restaurants were billed an "order origination" premium for.) they broadly resisted the desire of their restaurants to share ownership of their customers (or even be able to determine who their customers were.)
- they completely lacked the ability to plan long-term or even guess the consequences of any action they would take and would do things like "suddenly, without warning restaurants, offer a 50% off deal on lunch all across new york city," leading to huge numbers of canceled and delayed orders and further eroding their public perception.
- they were already public by the time that uber eats, doordash, and postmates were really aggressively entering the food delivery space and thus had to grow and ship with realistic constraints instead of burning investor money to disrupt in hopes that they would be profitable.
probably a million more reasons beyond that, but just off the top of my head a few ways the ball was dropped/the deck was stacked against them.
The younger folks getting lunch delivered every day, they got new cars and not just new the better packages on those cars, their apartments have all sorts of amenities, great locations. I'm the "old guy" not just because of age but because I made my own sandwich and brought lunch. It's like all this is the default for them, they don't seem to notice.
They're 100% not wrong that opportunities are different compared to when I was their age, but at the same time, when I was their age I lived in a crappy apartment, drove a 15 year old basic car. My idea of going out was to some cheap place for dinner and paying for nosebleed seats on a weekday at the ballpark... these guys show up at the same fancy places I do / didn't eat at until much later in life.
I don't say this to ridicule them, but it seems like their concept of just sort of default consumerism is pretty heavy on the consuming.
This isn't the behavior I've witnessed with the younger generation, at all, unless they came from money or working in a well to do job.
I don't think we can extrapolate this one.
An example to the contrary... a few years back I worked with a college hire who got a super fat signing bonus and made a plenty hefty salary for a first job, but he rented his friend's walk-in closet and almost never ate out. Within just a few years he had enough money for a downpayment on a home in one of the most expensive housing markets in the US. I don't think this type of frugality has ever been the norm, but it does exist in all generations.
Perhaps it's just because I live in London, but this a snapshot of my social circle right now. It's also no secret that the West is suffering from a mental health crisis.
With the weight of the world looming over me, a nice meal for lunch is about the only thing keeping me together (being slightly sarcastic here).
I do wonder, was it always this way? Genuine question - did you ever feel this way in your 20s/30s? Did your friends?
I worry a lot of folks just sort of live in the reality they consume on the internet, don't make their own space of sorts.
I hope though my perspective in my earlier comment might give you some insight into the general psyche of (at least some) younger folks.
My approach to this is:
- Stop watching the news, or paying attention to politics. You have almost certainly no control over anything they are reporting and almost none of it affects you in any way. I didn't pay any attention to the presidential race, for example. None of it was going to change my vote. I didn't watch the election night coverage; I watched a ball game and went to bed. I figured I'd hear the outcome the next day, I had zero control over it anyway so why stress about it?
- Cut down on social media. It's unnatural and unhealthy. Do more stuff that requires face-to-face interactions with people. Use social media as a communications tool to set this stuff up, but don't follow celebrities or people you don't know personally. Turn off all alerts that are not from your personal contacts. Don't like or forward memes. Try going places without your phone, to build up comfort at being without it or not constantly checking it. You know that until 15-20 years ago almost nobody had a phone when they were away from home.
It seems clear to me that the 1930's everyone was down too: between The Great War, the Influenza Pandemic, and then the Great Depression everyone was clear that the world was on the wrong track and couldn't continue the way it was going. Depending on their particular biases, lots of people ended up thinking Fascism was the answer, and lots others thought that Communism was the answer, but not nearly as many thought that (small-l) liberal democratic capitalism was the way to keep going- the world of 1932 seemed to discredit that entire mode of living. A fascinating book _Fear Itself: The New Deal and the Origins of Our Time_ by Ira Katznelson argues that the American leaders who built the New Deal were aware of that, and that they created the New Deal in conscious opposition to either Fascism or Communism. Unless they acted RIGHT NOW, with a response of sufficient scale to offer something better one or the other would inevitably take power.
And today, decades after the end of the Cold War, leaders and people largely can't conceptualize any other way of organizing people and power, and if they do it's largely in dystopic stuff like "what if companies ruled everything." (This is what Francis Fukuyama meant by the End of History, not that events would stop but that the great struggle of how best to organize people and power was decided and capitalism and democracy won.) Which has meant that we're right back in the same situation, but no one seems to be taking seriously the threat of losing the fruits of the Enlightenment, so they aren't acting with sufficient vigor or scale to deal with the scope of the problem.
I guess I live like this as my parents lived like this (though they didn't really talk about it, I just followed their model I guess). As a kid we had one car, we almost never ate out, we bought our clothes at Sears. My parents both had graduate degrees and made a good living but just didn't spend money unecessarily.
I challenge the premise of your question.
I don't think financially insecure people are buying food delivery. At least not nearly as often as you might think.
I could be wrong, though. I have read that studies have shown that the majority of people buying lottery tickets can't afford to be buying them.
Unless you know where to look you will not find your local restaurants website via google. You will be redirected to grubhub or equivalent by many dark patterns on your way to the direct website.
Try it yourself. Google ‘Thai spice’ (there’s a several thousand independent Thai restaurants by this name so it’s a good example). Scroll down past the door dash promoted adverts and such till you get a result for the actual nearest restaurant by this name. Usually under a ‘places’ section.
Click ‘order’. See that this is just a redirect for door dash, grubhub etc that add a markup to the restaurant direct ordering system.
In fact try to go to the actual website. Click the name of the restaurant in the places section after a google search. On mobile you now have a new google presented summary page with a prominent order online button which is again just a redirect to grubhub/doordash/etc. On a computer it’s slightly better. You can see a website button to order directly under the places section but it’s still second rated prominence compared to the prominence of the above services. On Mobile the pattern is dark as night.
Basically that’s the revenue source. It’s a link that’s overly prominent in google that ultimately simply orders via the restaurants website with a markup. It’s free money.
People will always have a reason to order online. Restaurants themselves bear the brunt of inflation more than anyone but essentially stealing a direct link to the restaurant, capturing all those online orders and added a markup is very easy and low risk money.
I don't understand it personally but did get an insight a few years ago. I had to move out of my house whilst I was renovating it for 6 months or so. Looked at the cheapest place I could that was somewhere nice in my town. It was fine for a single man, but the kitchen - Jesus, once you stood in it you could reach every surface and cupboard from being there.
I couldn't believe how shit it was. The estate agent just said "that's how kids live these days - they eat out, or order in"
(it was a few years before lockdown)
I wonder whether the project started a couple of years ago to consolidate the systems of all the acquisitions has actually borne fruit?
Lots of internal politics, people not wanting to lose their areas, etc. I'd guess that's partly why they've also just done some more layoffs, but thats just a guess.
Am still annoyed about the edict to return to the office, despite the data, when some people like myself had moved 200+ miles during lockdown. Extremely shitty behaviour, which is now being emulated by many other companies.
Given the contract I had stated on-site, I found a fully remote role offering 30k more.
The stock price seems to have settled in the past year but I still think it's overvalued. They're slower than ever, and talent seems to be draining slowly.
* Then take some cheap but kind of profitable behavior in that industry (take local delivery over phone, send your lowest paid kitchen staffer to run it)
* Then layer on some of the most expensive labor on the planet (devs, PMs, tech company workers) to build a replacement for that behavior
* Then treat your lowest paid workers poorly, attracting regulatory scrutiny
Equally valid to ask why it was so overvalued 3 years ago.
I have never once ordered from GrubHub, Doordash, or UberEats. Even during COVID. I don't understand paying a premium to receive cold, soggy food an hour or two later. In that time I can prepare an actually good meal with better ingredients, eat it while it's still hot, and clean up. For probably half the cost.
Lots of (techies) are out of work. Those (non techies) who still have jobs are pinching pennies.
Food delivery is such an easy cost to cut. Cooking in is an option, collecting yourself is z option, picking up on the way home is an option.
So, personally, I'm not surprised demand is dropping. And I think a tightening economy is part of it.
It is the easiest discretionary spending to cut during a tighter economy.
Yes. And if you include online grocery deliver, it's a trillion dollar market.
Food in general is low margin, but everyone eats.
Not really true. Consumer spending and disposable income is up.
They cannot tax the nurse 100% (!) so the money goes up the wealth chain (to nurses landlord and electric utilities owners). And then it gets invested in things like grub hub
Now the govt could tax the wealthy - but they don’t for reaosns (usually to do with campaign finance but also other less corrupt reasons)
But here grubhub just set fire to 5.5Bn dollars. Which from MMT pov is exactly the same as taxing it
And now the govt can print 5.5bn new dollars and spend it on nurses … with in theory net zero inflation effect
And that ladies and gentlemen is how MMT looks like Keynesianism with a new coat of paint
And is also why wealth taxes - which there is a fair bit of resistance to - is more or less the same as some horrific stock market crash - just the taxes are more controlled and more targeted
And why bonds are the compromise candidate in that debate as well !
Edit: so on bonds - if inflation is at 10% as was recently then offering 100bn of 20 year treasuries at 1% is taking 100bn out of the market or removing 9% of inflation pressure for the cost of 1% pa.
It does mean that when the bond market that every government is afraid of starts charging 7% then governments response really should be - ok that’s too expensive a means of reducing inflation - we are going to tax the wealthy instead.
Which is why I find it weird most governments have been persuaded to tie one hand behind their backs …
It's just Capitalism.
Someone made a $5B bet and it didn't payoff.
It's nothing more than that.
I think it depends on how just eat financed it. If they borrowed 6bn from a bank, then the bank created 6bn from thin air, and will more or less have to write that off as just eat won’t pay it back. So the net balance will be .. err
6bn created and given to just eat: bank assets 6bn, just eat liability 6bn - total new cash in world is 6bn.
Just eat hands 6B to lucky founder, in return for a website and domain name.
Aha - the bank is the creator of the money - they magic it into existence - now if lucky founder deposits it into same bank, they have a liability of 6bn to him, and previously had a asset of 6bn of loans. Net zero. But now they have to write off the 6bn asset, so they are negative 6bn. So total money across the economy is down 6bn
This also - I think - works if just eat raised it from VCs who got it from investors - someone at some point loaned money to someone or is obliged to pay it back.
This shit is harder than it looks on Steve keens podcast
Many assumptions.
Tax isnt to curb inflation.
The wealthy do get taxed.
Everything about creating money and to whom was wrong.
Look, everything makes more sense if you ditch that entire understanding and look at it like this:
The speed that money moves in an economy is more important than the revenues the government earns. So the government’s ability to collect tax actually isnt the priority, and it isnt controversial when your entity earns and has nothing for the government to collect.
No individual politician is responsible for this view or would even lead with it, but the aggregate outcome is that the government incentivizes some forms of transactions. If you do them, it wont tax you, and if you do something else it will tax you on the remainder. For example, you just want to earn income and save? This is the most heavily taxed because money is not moving in the economy and you are penalized for trying to take no risk.
In this case in the article, taking risk is incentivized. Just Eat moved ~6bn dollars to grubhub’s prior owners a couple years ago, in exchange for shares of grubhub. This is the velocity we want.
They sold it to someone else and realized a 90% loss. That’s a side effect of taking risk and the government allows tax deductions against future gains.
Just Eat can make 5.5bn tax free now if they ever have any profitable trades. Money moving in the economy into businesses and assets is more important and incentivized.
> Tax isnt to curb inflation.
In MMT, it is for that, and only for that.
> The speed that money moves in an economy is more important than the revenues the government earns.
AFAIK, that's not known. I'd really like to hear if anybody knows more here.
>>> Tax isnt to curb inflation. Under MMT tax is for destroying money
>>> The wealthy do get taxed. But at the same rate as labour ? No. Ie capital gains vs income tax. This might be a fairness issue but it is also directly a resource allocation and incentive issue. If we want more risk to produce more value why not incentivise labour over investment - in the end who will be left to do the labour ?
>>> Everything about creating money and to whom was wrong.
Governments print money as do banks - it’s where it comes from as a debt. Not sure how else to put it
regarding speed, or velocity, there is no direct way to measure its efficacy. so there are a lot of proxies. businesses starting, hiring, GDP, home sales, mortgages, venture and private equity transactions and more. its easy to take this for granted until you go to any other monetary union and see how pitiful capital formation is where everyone is saving and hoarding.
(And if you decide to go with private money creation, it's way more complex, and I have very little confidence on you solving the problem you stated.)
> And that ladies and gentlemen is how MMT looks like Keynesianism with a new coat of paint
Your explanation doesn't sound like Keynesianism at all (with the "ism" it's that theory that Keynes didn't believe in). It sounds exactly like Monetarism (with the "ism" it's that theory that isn't derived from the MMT).
> It does mean that when the bond market that every government is afraid of starts charging 7% then governments response really should be - ok that’s too expensive a means of reducing inflation - we are going to tax the wealthy instead.
Taxing the wealthy tends to be healthy. And after several years, your tax rate may have some impact on the interest rate (nobody really knows, lots of people claim to know). But on the best case, there's a delay to take into account that your idea does not fit at all.