Grubhub Wants to be the Amazon Prime of Food Delivery Services post Covid-19

The Lempert Report
April 23, 2020

Grubhub CEO Matt Maloney says there is no loyalty anymore to food delivery apps

Food delivery services are all doing great right now, at times you might even have to schedule your order a day or more in advance. But that WILL change and Grubhub is thinking long term and creating a new member loyalty program. It is a monthly subscription of $9.99 per month that offers unlimited food deliveries; and the real deal is that you get 10% cash back on every delivery, VIP Access to customer service and yet undisclosed member perks, events and experiences. What it translates to is for those who spend $100 a month on food deliveries the subscription pays for itself.

Grubhub CEO Matt Maloney told the Motley Fool that there was no loyalty anymore to food delivery apps, that "promiscuous" customers were using several different services when ordering out, depending upon the food they wanted. The Motley Fool also reached out to data analytics firm Second Measure who confirmed, after reviewing credit card data that about one-fourth of all food delivery customers used more than one service when ordering food delivery.

Since the pandemic, sales of food delivery services surged for DoorDash which saw its sales for the week ending March 25 rise 72% from the previous year – Uber Eats was up 26%, Postmates up 13% - but GrubHub (and its affiliated Seamless) only grew 7%.  

Grubhub has tried to make exclusive agreements with restaurants including Dunkin Donuts and Shake Shake – potentially an interesting strategy that forces those chains customers to use its service – but the problem is that GrubHub doesn’t have the delivery coverage map that the other companies do.

Grubhub reported a fourth-quarter loss of $0.30 per share, and full-year adjusted profits are down over 80% from three years ago. The subscription idea better work, or we may not be seeing GrubHub around much longer.