UberEats eyes Grubhub takeover

Reports came out this week that Uber is eyeing Grubhub for a potential acquisition, as the ride-hailing service continues to struggle under the weight of COVID-19 restrictions.

The acquisition, rumoured to be valued by Uber at roughly $6 billion, would take out a large competitor for the company in the food delivery business. Uber Eats, Grubhub, DoorDash, and others have seen enormous surges in requests for food delivery during the COVID-19 crisis but have still failed to make profits. Consolidating its market position by purchasing major competitor Grubhub could be the solution Uber Eats (and Uber) need to survive their current situation. Grubhub themselves have been doing fairly well, particularly during the first quarter of 2020. Year-over-year revenue has grown by 12%, while total food sales have increased by 8% since 2019. Stock price has also increased during 2020, and increased substantially after news of Uber looking for an acquisition became public.

Currently, DoorDash has held the top market position out of all food delivery services with 42% share, followed closely by Grubhub at 28% and Uber Eats at 20%. The merger could effectively capture nearly half of the food delivery market share.

Still, antitrust investigations could spring up if talks between Grubhub and Uber move further down the line. The chairman of the U.S. House antitrust subcommittee has publicly opposed the deal, pointing to “predatory” practices from both companies in exploiting local restaurants with exploitative fees akin to extortion. (Statista)