The cut-throat food-delivery business is turning into a gladiator fight.
Wall Street cheered the acquisition of Grubhub by Dutch-based delivery giant Just Eat Takeaway.com on Thursday, sending Grubhub’s shares up by 4.7 percent while pushing shares of Grubhub’s former suitor, Uber, down 11 percent.
Uber, which owns UberEats, had been in talks to buy Grubhub before Just Eat Takeaway.com, also known as JET, swooped in and analysts say the two companies will now have to duke it out for market share.
“Grubhub’s going from a friend to a foe is not something investors wanted to see,” said Wedbush analyst Dan Ives about Uber’s plummet.
Grubhub Chief Executive Matt Maloney did nothing to dispel that notion when asked during a CNBC interview Thursday whether the acquisition will lead to a “bloodbath in terms of pricing.” “We’ll see,” he said.
The food-delivery industry has been in a race to the bottom over which company can offer the cheapest deal for consumers, including free delivery — a cost often borne by restaurants reliant on these apps.
An Uber-Grubhub tie-up would have raised antitrust concerns by members of Congress, including Amy Klobuchar (D-Minn.) and Richard Blumenthal (D-Conn,), who opposed the merger of giants.
But Big Apple legislators, who recently passed a package of bills to rein in what they claim are questionable industry practices, say they are also concerned about JET making Grubhub more powerful in its largest market of New York City.
“Considering that it took legislative action to undo Grubhub’s erroneous phone-order fee program and business-killing sky-high commissions during a global health crisis, I sincerely hope that this is not predictive of what New York’s struggling locally owned restaurants can expect from the merged company in the future,” said City Council Member Mark Gjonaj, who’s been spearheading the city’s food-delivery crackdown.
Andrew Rigie, whose NYC Hospitality Alliance represents the Big Apple restaurant industry, also said he’s concerned about the merger.
JET knows “they paid billions for Grubhub’s horrible reputation among restaurant owners in New York City and around the nation,” Rigie said.