As Yelp’s solid second quarter earnings were reported the company announced they were selling food delivery service Eat24 to Grubhub for $287.5 million.
This comes at the end of a week which started with Grubhub announcing a strategic partnership with Groupon.
The deal with Eat24 involves a revenue split and customer and client sharing. The revenue split was not reported, but we do know that the two companies will have access to each other’s customer base and share a new total client base. Eat24 have gained 55,000 delivery listings from Grubhub while Grubhub have gained 15,000 from Eat24. Somehow this is being reported as a total of 75,000, but I’m going to hold my hands up and admit defeat on working that one out.
Grubhub’s one-two combo is issued from underneath the growing shadow cast upon it by Amazon’s and Uber’s delivery services. Grubhub paid four times Eat24’s annual revenue, which some have considered over the odds. Grubhub’s share price fell 2% on announcement while Eat24’s jumped 20%. And the deal brings Grubhub within touching distance of their $293 million cash balance.
However, if this allows the mid-sized player to reach out and compete among the big dogs, then it will have been worth it.
Grubhub seems to now be growing into something of a coalition-company, already owning Seamless, Allmenu and MenuPages.
Coupled with this, Groupon’s customers will have access to and be able to redeem vouchers for Grubhub’s clients. Grubhub’s clients will be able to feature on the Groupon platform. Groupon’s partnership with Grubhub will power Groupon to Go, built out of OrderUp, a delivery service Groupon bought in 2015.
The deals struck this week by Grubhub toy with the previous assumption some have held that it’s only a matter of time before they get stamped out by the weight and power of Amazon and Uber.