GrubHub Chief Executive Matt Maloney plans to continue investing money in the company in an effort to stand out from the crowded food delivery market.
In an interview with CNBC's Jim Cramer on “Mad Money,” Maloney said the company will continue to be aggressive with its investments in the business even if it pressures the stock. “I have always been willing to be extremely aggressive investing in the future,” the executive said on the show Thursday (April 4), reported CNBC. As for the stock’s decline as investors fret over increased spending, Maloney said it comes with being a publicly traded company. “The market now is 10 times what I thought it was 5 years ago” when GrubHub went public, Maloney said. “And it’s because the American public has just adopted digital ordering as their preferred way to engage with their local restaurants.”
The executive said GrubHub is focusing on making money by creating interest in products for companies. He said the main aspect of its business is selling access to consumers rather than operating as a logistics firm. It does that by partnering with restaurants who take on a portion of the fee for delivery. In return, they get access to customer data.
“The gross margins on the logistics are not fabulous. The gross margins on the demand generation are fabulous, which is why I differentiate between a logistics company and a demand generation company,” he said in the interview. “That’s the profitable side. Everyone else in my industry is a logistics company, which has razor thin margins.”
Maloney’s upbeat comments come a couple of weeks after shares tanked as much as 8 percent after KeyBanc Capital Markets raised concerns about GrubHub’s ability to keep up with the competition from the likes of UberEats and DoorDash. At the time analysts at the Wall Street firm contended that “diner retention, initial diner spend and peak diner spend all appear to be deteriorating” at GrubHub.