In Delivery the Covid-19 ‘hangover’ is over: Just Eat is forced to sell off Grubhub

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Just Eat’s Grubhub takeaway service leaves a bitter taste for investors

The miscalculations made during the pandemic are proving very costly. The buyer of Grubhub is Wonder, a New York-based ghost kitchen chain founded by entrepreneur Marc Lore [formerly Amazon and Walmart]

Who hasn’t overindulged in takeaway food during the pandemic and now wants to lose the excess weight that came with it? Just Eat Takeaway announced this week the long-awaited sale of its US subsidiary Grubhub.

The valuation of the sale is a mere tidbit at $650 million, consisting of $500 million in attached debt and only $150 million in cash paid to Just Eat.

Grubhub had been acquired during the 2020 frenzy at a valuation of $7.3 billion. Just Eat sold almost a third of the company’s total shares as consideration to Grubhub’s shareholders. Since the day the deal was announced, Just Eat’s shares have fallen by almost 90 per cent and its share value today is just over €2 billion. The miscalculations of the pandemic era are proving very costly and investors are showing little mercy in punishing the profligacy of the 2020 era.

Just Eat created what was a ‘quad’ strategy. It had already set up food delivery operations in the Netherlands, the UK and Germany, with the huge US market as its fourth ‘profit pool’. The US economy, however, did not work for Grubhub, apart from the pandemic boost.

For 2023, Grubhub generated EUR 2 billion in sales but only EUR 125 million in ebitda. Fre cash flow is equally poor. Worse still, the gross volume of the North American market, i.e. the total dollar value of orders, fell by 14 per cent year-on-year.

The company had been trying to get rid of Grubhub for some time and even presented group results excluding North America to avoid contaminating European operations.