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Grubhub stock halted after report Uber is eyeing a takeover
- elliekelly 6y agoOffering to buy a $4.5 billion dollar company twelve hours after you’ve laid off thousands of people is kind of a dick move.
- jzig 6y agobut this way they can all be hired back as drivers
- toomuchtodo 6y agoUber is betting food delivery is here to stay at higher levels than pre-COVID, and is gobbling up market share to reach scale.
- lumost 6y agoAs an external investor why would you be on that ride for a second time? Uber has demonstrated that they are not able to deploy capital in a sustainable way to acquire market share in ride hailing, or with UberEats. As most companies that grow through acquisition fail to deliver material gains - why would the acquisition of GrubHub fair any better?
- jlbnjmn 6y agoI wonder if it's not a cost cutting move? Buy GrubHub, merge it with UberEats, and then layoff all the redundant roles? Without just looking like a sinking ship?
- sct202 6y agoProbably because Grubhub was marginally profitable until 2018/2019, until both UberEats and Doordash started to barge in throwing fresh VC money. Grubhub never made a lot of money though, so it's a little unclear how much like end state monopoly would be worth. https://www.macrotrends.net/stocks/charts/GRUB/grubhub/net-income https://www.macrotrends.net/stocks/charts/GRUB/grubhub/net-i...
- duxup 6y agoI'm not a fan of how either company treats their non employees, but you still make the business decisions that you need to to try to keep everyone else employed too.
- troughway 6y agoNo it isn’t. It’s first and foremost business. Secondly, the people who have been laid off have been given good severance packages. There is no good reason for a company to burn through money by paying people who won’t turn a profit. Equating this, in light of the generous severance pay, to a “dick move” is really myopic on a forum of a business accelerator company. What are you here for exactly? To shitpost any time a company you don’t like does something you don’t like?
- briffle 6y ago> There is no good reason for a company to burn through money by paying people who won’t turn a profit. Doesn't Uber lose money on every single ride?
- bhupy 6y agoYes, and that is why Uber has been on a cost-cutting crusade since it went public.
- jayparth 6y agoNo. Why would you think that?
- nness 6y agoBecause, historically, the core "ride" part of Uber's business only turned a profit within Q4 2019. Their IPO also indicated that only a few of their operating markets were profitable, many operating at a loss.
- elliekelly 6y ago> What are you here for exactly? Are you suggesting I don’t belong?
- seibelj 6y agoSome people let their emotions ("Firing bad! Makes me sad!") override the logic ("Uber is more efficient and is using their limited capital most effectively according to its leadership"). This is creative destruction. If the government bans companies from operating independently - responding to price signals, incentives, economic realities - then we start the process of stagnation, and stop creating new business champions.
- vmception 6y agoand also rational. they shouldn't have been trying to inefficiently create uber eats so quickly. so cut out that nonsense, and buy the established player that has probably negotiated better pricing. Uber probably outbid them in a lot of restaurants to get into those restaurants quickly.
- vikramkr 6y agoYou can buy a company in all stock, but it's quite a bit harder to buy labor with 100% stock compensation. If Uber is dipping into cash reserves for a deal like this, well, I hope for their sake this deal goes well. And if it is a all stock or majority stock deal, I wonder if Grubhub is going to ask for an even higher premium on their valuation than otherwise considering that 4.5 billion in uber stock with a lockup period of a few years at this time is probably not as valuable as the same amount in cash.
- andrewprock 6y agoUber stock is quite liquid. I would certainly be willing to entertain offers of pure stock compensation for publicly traded companies.
- vikramkr 6y agoA lockup period or vesting schedule would make it a far less liquid asset for you. If it wasn't given with a lockup period, they'd probably have to come up with some staggered way of paying out stocks rather than at the end of every month or every other week so you dont get huge periodic selling spikes as employees sell off enough to cover their tax burden and expenses when the stocks come in. They might also be running foul of minimum wage laws. I think there are a lot of obstacles that make it operationally infeasible, even if employees are willing to accept it.
- andrewprock 6y agoI would be willing to accept a lockup period roughly equivalent to the time it takes to clear a check, maybe one week.
- asdkhadsj 6y agoI hate this. The implication that companies should have any moral behavior here just enables immoral behavior. There is no dick move here. The only reason you call it that is because we have a society (America) built to give almost no support system to workers if they lose their jobs. The company isn't in the wrong for failing to pay users. Our societal structure is. Our lack of social safety nets, and communally focused behavior is. We set up a system prone to Americans getting screwed, and then are annoyed when companies screw them? This is our mess. We need to fix it, and not try to pretend companies should be moral. Doing so will only allow them to be immoral and hurt workers.
- teachrdan 6y agoI completely agree with what you said. One important consideration is how companies like Uber have contributed to a lack of support for workers who are laid off. Uber in particular has failed to pay billions of dollars into states' unemployment insurance funds. https://www.kqed.org/news/11812496/uber-and-lyft-arent-paying-for-drivers-unemployment-you-are-confirms-newsom https://www.kqed.org/news/11812496/uber-and-lyft-arent-payin...
- jorblumesea 6y agoLarge companies have outsized impact on influence public policy, using bribery aka lobbying. Collectively, billions are spent yearly to influence lawmakers. The idea that large companies "just exist" in this system and abide by its rules strikes me as naive. In many cases, companies are making the policies themselves through lobbying efforts. They also influence governing agencies that are supposed to police them. It's called regulatory capture and it's a well established phenomenon. https://en.wikipedia.org/wiki/Regulatory_capture https://en.wikipedia.org/wiki/Regulatory_capture So back to this: > We set up a system prone to Americans getting screwed, and then are annoyed when companies screw them When the companies are the ones advocating for policies that screw workers and stop lawmakers from creating proper protections, yes, annoyance is a mild way of putting it.
- twblalock 6y ago> bribery aka lobbying Nope. Lobbying is simply petitioning the government to do things. It can be used for good or evil. All that privacy legislation people like is a result of lobbying by pro-privacy organizations, for example.
- B-Con 6y agoThey decided they didn't benefit from certain job positions and did benefit by buying another company. What's the alternative action for them to take?
- lhorie 6y agoThis is a bit like saying buying croissants+coffee for breakfast after throwing out last night's leftover takeout pizza+beer is somehow a character flaw. The layoffs were in customer support, who - if you think about it - were largely twiddling thumbs due to the large loss of ridership (and therefore, of customer support demand). It's not like Uber could just magically take CSRs and somehow turn them overnight into roles that were strategically meaningful for food delivery competitiveness.
- twblalock 6y agoIf Uber goes out of business, that is equivalent to laying off 100% of their employees. I can't really fault a company in these circumstances for pivoting toward a model that will enable it to survive the downturn.
- bluedino 6y agoJust think of all the layoffs they'll get to do after they buy Uber!
- ceejayoz 6y agoDoes Grubhub have any special sauce, or would this just be a direct acquisition of market share?
- jonathanjaeger 6y agoThey just have the normal sauces from the menus on the site, but if you call the restaurants directly they can add special sauces per your request.
- ra1n85 6y agoCan confirm - only native restaurant sauces are supported. Special sauces must be sourced from your own internal sources.
- soulofmischief 6y agoYou mean my internal sauces?
- ra1n85 6y agoYes, correct, or through an open sauce repository
- deminature 6y agoEnormous marketshare on the East Coast of the US both on the restaurant and customer side, due to operating there for 20yrs. GH also has 10-20% share in most cities, so this acquisition would put Eats comfortably ahead of their main competitor DD.
- ceejayoz 6y agoWow, I had no idea Grubhub has been around since 2004!
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- nojito 6y agoRandom acquisitions is a telltale sign of a company on its last legs.
- 0xB31B1B 6y agoah yes, google, facebook and amazon have clearly died from their acquisitions as well.
- smallgovt 6y agoHow is this random? Uber has been making significant investments in the food delivery space via their Uber Eats offering. Consolidation makes sense given industry-wide razor thin margins and intense competition.
- paxys 6y agoDamn, someone should let Apple/Google/Amazon know, considering they do dozens, possibly hundreds of these "random acquisitions" every year.
- vikramkr 6y ago> "More information is available on the bloomberg terminal" And I thought "Sign up for blah news Premium(tm) for 9.99/day or whatever to access the rest of this article" was bad. At least those subscriptions aren't 20k/person/year licenses for financial services/trading software ...
- ska 6y agoOn the other hand everyone I know who has one (a bloomberg terminal) would readily pay more for it. Can't say that about most news subscriptions.
- vikramkr 6y agoThat's true. Bloomberg terminals are pretty awesome. The customer base for them are probably the customer base the most able to quantify how much value any software provides to their business, and could afford a far higher price as well. Though I imagine Thomson Reuters and other competitors might be getting in the way of bloomberg capturing more value than they already are.
- ska 6y agoI suspect the latter is true, in a way it wasn't years ago and they were just ridiculously ahead. On the cost, one person I know who uses them commented that on any given year they wouldn't have much trouble picking one day where it paid for itself (i.e. that day made the whole year subscription worthwhile).
- intopieces 6y agoIf you care about your local restaurants and have the means to do so, consider calling in your order and picking it up yourself, with mask and gloves. Services like GrubHub take a huge portion (like 30%) of the ticket price just for delivery.
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- toomuchtodo 6y agoWhat are the best apps or websites for eatery discovery that are employee owned, take very small cuts or no cut at all, or both?
- fitzn 6y agohttps://ontrayapp.com/ https://ontrayapp.com/ is not very large but it basically gives the restaurants a portal to take online orders with a minimal cut.
- MattGaiser 6y agoI’m not sure better is possible given that the delivery companies themselves aren’t making money. 30% of the bill seems to basically be what it costs to move most orders to their destinations.
- ska 6y agoI don't think the market for "gig economy" is stable & mature enough to read anything like that from the delivery companies P&L. How much are they spending on expansion and various turf wars? It's also pretty clear that delivery as a function doesn't scale linearly with check value...
- s_dev 6y agohttps://LoyLap.com https://LoyLap.com We're not "an eatery discovery app" as our app is generally used by a single end user with a single brand (a sort of pseudo white-label) but we do service a similar market and are low priced relative to GrubHub. We don't do delivery but we do click&collect, online ordering solutions, cashless transactions for gift and loyalty, branded PWAs, Clover&Poynt integrations. Employee owned.
- tren-hard 6y agoMore surprised the headline is Uber and not Lyft. What is Lyft doing to make headspace into food delivery?
- ceejayoz 6y agoLyft is probably too late to the game.
- kube-system 6y agoThey can call their competing service: Lyftovers
- koolba 6y agoGrubHub would be wise to take the money and run. If it’s cash bank it. If it’s stock, buy some Uber puts. The economics of last mile delivery can not justify these valuations so if Uber thinks they can make it happen with driver downtime then grab the cash while you can.
- lawnchair_larry 6y agoI’m pretty sure you can’t take a short position against the interests of your own company. That’s boilerplate language in the deals I’ve seen, for obvious reasons.
- busyant 6y agoI think that was hyperbole to emphasize the imprudence of the takeover offer.
- yellowstuff 6y agoCarl Icahn may have found a way around this kind of restriction after the Lyft IPO by selling in a private transaction to someone who hedged in advance of the sale, although it's not at all clear what really happened. https://www.bloomberg.com/opinion/articles/2019-05-07/lyft-s-ipo-was-a-little-awkward https://www.bloomberg.com/opinion/articles/2019-05-07/lyft-s...
- ertemplin 6y agoSome companies will allow this, but only if it's a covered call or protected put on an investment that you own. The idea is that you're limiting your risk while also limiting the potential upside of the investment.
- whatok 6y agoIt's almost certainly going to be all-stock and any takeover will prevent anyone receiving shares from buying puts or shorting stock of the acquirer for the duration of the lockup. If you are an insider buying puts now you could also potentially look at some jail time.
- christopherwxyz 6y agoWhy spend $4.5 billion to buy a company instead of spending $4.5 billion on your own to be competitive? The only answer is that Uber is attempting to monopolize the food delivery market.
- bpicolo 6y agoSelling to restaurants to convince them to onboard to your platform is a slow, expensive process that's neither easy nor guaranteed. GrubHub has acquired many other companies (e.g. Eat24) in the past purely for the relationships/business.
- dehrmann 6y agoThis. While Uber might also want to be a monopoly in this space, growing market share is a lot harder than buying it.
- nkohari 6y agoThe actual answer is that with acquisition, you're also eliminating a competitor in addition to gaining their share of the market.
- whoisjuan 6y agoWhy spend $4.5 billion to be competitive when you can instead buy a company that already did what you want to do?
- MattGaiser 6y agoSomething is going to need to give in food delivery because nobody is making a profit on it. Restaurant loses money on the percentage. Driver loses money on the vehicle depreciation much of the time. The delivery company loses money on the delivery. I just don’t think a burger can be profitably delivered 15 minutes away for 1.99.
- enlyth 6y agoWhere are these $1.99 burgers? Every app I check has like a £10 minimum order, £2.50 delivery fee, £0.50 service fee, please tip our driver prompt, and jacked up prices compared to in-store.
- MattGaiser 6y agoThe delivery fee is $1.99, not the burger.
- enlyth 6y agoSorry, I get you. Yes I agree, that's not a sustainable price to be delivering food all over the place for. The depreciation on the driver's car is probably more than that.
- jacobr1 6y agoWhat do the economics look like for the old Pizza or Chinese delivery places in a pre-app world?
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- dannyw 6y agoRestaurant: Keeps ~85-90% of order Delivery driver: Paid a portion by restaurant, paid a portion by tips Telephone: $60 / month utility bill ---- Today: Restaurant: Keeps 60-70% of order Delivery driver: Paid a portion by Uber, paid a portion by tips Uber: Paid 30% + delivery fees, service fees See the problem?
- formercoder 6y agoMarkets are so wonked that both companies would shoot up on this. No way this creates that much value.
- jannotti 6y agoIf food delivery and ride hailing continue to experience inverse demand relationships, there's a pretty big synergy here in being able to keep your drivers (oops, I mean the independent business owners you've contracted with) busy.
- ravenstine 6y agoI hope they keep GrubHub and Uber Eats separate, because UE has way stingier customers than GrubHub, in my experience. Something about the Uber brand seems to bring about all the no-tip Taco Bell orders from across town. Uber is also more likely to play psychological game with its drivers. It's been a while since I drove for these services, but I remember GrubHub being pretty straight forward with how much you are getting paid. I think Uber hid the tip amount until you picked up the food. I imagine their driver support would be abysmal.
- dehrmann 6y agoInteresting question. The backends will definitely be merged, but on the ordering side? Maybe it still makes sense to maintain separate brands. Expedia kept Orbitz up.
- ravenstine 6y agoThat would be smart of them because I know I'm not the only one that chooses not to use Uber on the grounds that they represent just about everything wrong with today's big VC funded corporations. However, I think they're more likely to just swallow GrubHub.
- vmception 6y agoI'm stingier on Uber Eats because there are so many fees! But I haven't used Seamless since 2015 so I don't know if the same happens there nowadays. All I know is that my $13 food choice costs me $22 when I go to check out, and I think twice about it, then check the promos, and then consider the price of just pickup, or order something else (lower price, or different restuarant with different delivery fees, or maybe add a $2 item to remove the $3 small order fee) You price according to what the market can bear, as a participant of the market this has stretched the rationalization of what I am willing to bear, and if it isn't economically viable then maybe lay off 3,700 employees and buy the leaner competitor, crazy idea right
- helen___keller 6y ago
- matchamochi 6y agoIt's just a market share play. None of the unit economics on these businesses make sense yet.
- s1artibartfast 6y agoI'm not sure how you can say that when Grubhub has been operating since 2004, public since 2014, and turned a solid profit up until 2019.
- anthony_r 6y agoThe short seller's biggest annoyance. Jim Chanos is probably pissed off right now that another good short will be bailed out with private capital. Uber has $9B cash on books in their latest 10-Q. I wonder if they'll burn some of that or will they issue new securities to finance this. It feels a little reckless to abandon half of your savings, especially as your cost of capital was just marked up and uncertain times are ahead.
- rmrfstar 6y agoIt's about establishing a monopsony for contract drivers. Uber and Lyft are duking it out for those monopoly dollars.
- eterm 6y agoDoes GrubHub have much of a presence outside of the US? As someone from the UK I've never heard of them (Deliveroo is everywhere here along with Uber Eats).
- kube-system 6y agoNot sure, but here in the US, GrubHub has been popular for a long time. I remember ordering from their website before ride-sharing apps even existed. Back then, GrubHub was just an online ordering service, they didn't do the delivery.
- greatgib 6y agoNow you know the truth of why they fired a lot of people. Not because of the covid but to free cash for the acquisition!
- paxys 6y agoQuite the opposite actually - layoffs are a very expensive one-time cost for a company.
- frellus 6y agoAfter laying off 14% of their workforce they're going with an acquisition? This makes zero sense. Healthy companies do not have a large restructuring and then try to burn capital on an acquisition for revenue. Restructuring to be acquired is a different story.
- cheungyinglon 6y agoIf you live in NYC and care about local restaurants, there's a nonprofit that helps you to easily find restaurants still open for pickup / delivery and to order directly: https://www.eatnyc.org/ https://www.eatnyc.org/. Restaurants keep 100% of what you pay, so it really helps our favorite restaurants stay alive. They have solid coverage in NYC, especially Manhattan.
- sharkmerry 6y agowhat an awesome idea. wonder if someone has done it for other areas
- cheungyinglon 6y agoYou should email them and ask if they can serve your area! They're pretty responsive. I emailed them at hi@eatnyc.org to request filtering by cuisine and they pushed the feature the same day.
- chadlavi 6y agoI'm seeing decent coverage for Park Slope, BK as well. Thanks for the rec!
- sgarman 6y agoIs there an SF version?
- cheungyinglon 6y agoHm, I'm not sure atm, but I think they'd be happy to help if you email them at hi@eatnyc.org.
- calciphus 6y agoGoogle maps has "takeout" as a search term, with filter by cuisine, open now, price range, distance. Plus you can usually see the menu and contact info and reviews not manipulated by Yelp sales people.
- tareqak 6y agoSince Uber has publicly stated that they will lay off 20% of their employees rather soon, how does this new decision to acquire GrubHub square with that [0]? [0] https://news.ycombinator.com/item?id=23011146 https://news.ycombinator.com/item?id=23011146
- mcnichol 6y ago"More info available on the Bloomberg Terminal" Did I get tricked into a Paywall Ad? I have been debating for a long time of creating a Hacker News feed that filters out specific domains. Bloomberg is on that list without a doubt.
- cachestash 6y agoI thought that said github at first.
- dang 6y agoWe changed the URL from https://www.bloomberg.com/news/articles/2020-05-12/uber-approaches-grubhub-with-takeover-offer https://www.bloomberg.com/news/articles/2020-05-12/uber-appr... to one that has a bit more info.
- russellbeattie 6y agoThe pandemic finally broke my online food ordering habit, which was getting ridiculously expensive over the past year. Along those lines, I refuse to support Uber in any way as I loathe Uber's company culture. So Seamless (GrubHub) will be an instant uninstall if they are unfortunately bought by Uber. Which will continue to help curb my bad habits. So bad things can be good, I guess...
- chadlavi 6y agoDamn, I would really hate for Seamless to get swept into the Uber mess. I've been using them for a decade and it would be painful to give them up. Though on the other hand, I've been doing the old school call and pick it up myself method with local restaurants during quarantine, and not only are their prices usually lower, it does feel good to know that (besides card processing fees from Visa) all that money is going into their pockets. Maybe I should just take this opportunity to stop using food apps anyway.
- cheungyinglon 6y agoNot all food apps suck! I use https://www.eatnyc.org/ https://www.eatnyc.org/ since I live in NYC. They help customers order direct and don't take any commission.
- mattzito 6y agoSeamless is just as bad: https://www.theverge.com/2020/1/29/21113876/grubhub-seamless-fake-restaurant-listings-no-permission-postmates-doordash https://www.theverge.com/2020/1/29/21113876/grubhub-seamless... https://www.theverge.com/2019/6/28/19154220/grubhub-seamless-fake-restaurant-domain-names-commission-fees https://www.theverge.com/2019/6/28/19154220/grubhub-seamless... https://www.eater.com/2020/3/31/21201207/restaurants-pay-grubhub-discount-support-for-supper https://www.eater.com/2020/3/31/21201207/restaurants-pay-gru... https://www.eater.com/2020/5/1/21243966/giuseppe-badalamenti-chicago-pizza-boss-shares-grubhub-earning-statement-on-facebook https://www.eater.com/2020/5/1/21243966/giuseppe-badalamenti...
- 6y ago
- nimbius 6y agoNot to sound like a party pooper but is it staring to seem like Ubers recent strategy is akin to chasing cars? - in 2019 Uber threw itself into bike share after cities had success with it. - Uber scooters followed immediately after Bird scooters - Uber self driving showed up almost instantly after Waymo. - Uber eats showed up almost immediately after GrubHub. Is there anything meaningfully unique this company does anymore?? I mean the self driving truck company they bought basically imploded. its got 22 individual criticisms on Wikipedia everything from murder and sexual assault to tax dodging.
- callalex 6y agoThere is a lot of money to be made in making "your idea, but more polished and well integrated into an existing ecosystem". Just look at Apple as the prime example.
- Supermancho 6y agoAmazon adding a delivery service to their Amazon Fresh + Wholefoods would crush all of the food delivery apps. Not sure why they are still trying with random restaurants, which will never give you a stable profit line.