Grubhub isn’t just about hungry people. It’s a hungry brand, gobbling up three different food delivery competitors in the last quarter alone: Boston-based Foodler, Groupon’s OrderUp and most recently, Yelp’s Eat24.
The Eat24 deal closed last week on Oct. 10 and rounded out the company’s acquisition plans just in time for the end of Q2. Grubhub paid $288 million for the company — in cash — which Bloomberg notes is twice what Yelp paid when it acquired the smaller food delivery company two years ago in 2015.
At the same time, former retail rivals and now-partners Grubhub and Yelp are agreeing to a five-year alliance that includes the integration of Grubhub ordering into Yelp’s listings. Grubhub pays a “partnership fee” for orders placed through Yelp.
The OrderUp acquisition from Groupon ended on similar terms, with Groupon customers gaining coupon codes and gift cards to certain Grubhub-participating restaurants.
Both Groupon and Grubhub are Chicago-based, although OrderUp calls Baltimore home. Grubhub absorbed 27 of OrderUp’s markets, including Baltimore itself, reported The Baltimore Business Journal. OrderUp does, however, continue to operate in 11 markets, which license the platform’s technology and mobile app, though they may not be doing business under its name.
The Foodler acquisition is shrouded in mystery, despite being the first of the three to close. The terms of the cash transaction were never disclosed, and neither was the amount.
Foodler launched in Boston in 2005. It was not the first Boston food delivery mobile app platform to get guzzled down by Grubhub, either — DiningIn met the same fate in 2015.
Grubhub saw the Foodler acquisition as an opportunity to strengthen its position in New England, according to The Boston Globe. The deal was projected to add more than $80 million in annualized food sales in the current year.
And all that was just within the most recent quarter. Grubhub also operates Seamless (after a 2013 merger), Allmenus (acquired in 2011), MenuPages (previously acquired by Seamless) and others: all platforms providing comparable services, and all one-time competitors now being swallowed by the dinner delivery Goliath.
All told, Grubhub integrates with roughly 75,000 restaurants, making it the country’s most comprehensive retail restaurant network for mobile app pickup and delivery ordering.
A Threat to the Empire
However, unlike most rounds of the board game Monopoly, this monopoly has the potential to be shorter-lived than Grubhub may hope.
With all of these acquisitions, Grubhub may seem like a shoe-in for the One Food-Ordering App To Rule Them All, and that could very well be the case. But one must not forget that Amazon is also dipping its toes in the waters of food delivery, and when Amazon decides it likes a vertical, it’s rarely good news for others doing business in the space.
It remains unclear, however, just how aggressively the eCommerce giant plans to move in the sector, or how soon. Investor’s Business Daily reported in September that Amazon controlled only 11 percent of the online food delivery service market, while Grubhub commanded 34 percent.
At the same time, Grubhub stocks fared poorly after Amazon announced plans to expand online food ordering and delivery by partnering with Olo, reported the site, adding that some analysts are concerned about rising customer acquisition costs and lower Grubhub profits if Amazon gains market share. Even though Amazon is not pricing “aggressively” (yet), Investor’s Business Daily said it’s still gaining traction in the category at an alarming rate.
It’s looking like food delivery will become a monopoly eventually either way — it’s just a question of whether Grubhub retains its independence or if Jeff Bezos conquers the empire.