Grubhub Hopes a Greater Delivery Focus Will Keep Copycats at Bay

The food delivery market is a crowded one, with new competitors emerging every day. Grubhub, which owns Seamless, may control a large portion of that market, but all that competition took a toll last year. In 2015, the company’s growth slowed significantly and their stock value followed suit. In response, Grubhub declared that they would move from handling logistics only to actually delivering the food.

Currently, Grubhub handles the physical delivery of about 8% of their orders. The other 92% are delivered by the restaurants themselves, which use the Grubhub equipment and software to take the orders. Taking over delivery gives the company greater control, and may make them more appealing to the restaurants themselves – but the strategy is not without its pitfalls. Hiring contracted companies to handle the food can be very expensive, and consumers are reticent to pay much for the convenience. In the fourth quarter of 2015, Grubhub lost $5.5 Million on delivery.

CFO Adam DeWitt claims that that loss was still a significant improvement over the third Quarter, so the momentum may be in Grubhub’s favor. That’s good news, since Uber and Amazon are no insignificant threat. Whatever their strategy this year, Grubhub’s biggest advantage may be simply that they got there first.

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