Is Grubhub profitable?

Is Grubhub Profitable? Grubhub is not yet profitable. In 2022, the company generated $2.4 billion in revenue, but it also reported a net loss of $383 million. This was an improvement from the previous year when Grubhub lost $473 million. However, the company is still struggling to turn a profit, as the cost of delivering food is high and the margins are tight.

Grubhub is a food delivery platform that connects diners with restaurants in over 4,000 cities in the United States and Canada. The company was founded in 2004 and is headquartered in Chicago, Illinois. Grubhub partners with over 80,000 restaurants and has over 20 million active users.

There are a few reasons why Grubhub is not profitable. First, the company must pay restaurants a commission for each order placed through its platform. This commission can range from 10% to 30% of the order value. Second, Grubhub has to pay for the delivery cost, including driver wages, gas, and insurance. Third, Grubhub has to invest in marketing and customer acquisition.

Grubhub is not the only food delivery app that is struggling to be profitable. DoorDash, Uber Eats, and Postmates are all also losing money. This is because the food delivery business is a very competitive one, and the companies are constantly spending money to acquire new customers and market their services.

However, there are some reasons to believe that Grubhub could eventually become profitable. First, the company is growing rapidly. In 2022, Grubhub’s gross transaction volume (GTV) increased by 4.1%. Second, Grubhub is expanding into new markets.

The company recently acquired Delivery Hero’s U.S. business, which gives it a presence in more than 1,000 cities. Third, Grubhub is working to improve its efficiency. The company is testing new ways to deliver food, such as using drones and self-driving cars.

If Grubhub can continue to grow and improve its efficiency, it is possible that the company could become profitable in the future. However, it is still a long way from being a profitable business.

Timeline of Grubhub financial growth and funding

Here is a timeline of Grubhub’s financial growth, acquisitions, and funding:

• 2004
  • Grubhub was founded in Chicago, Illinois;
  • Grubhub acquires GrubGrades, a website that allows diners to rate and review restaurants.
• 2007
  • Grubhub raises $2.6 million in Series A funding;
  • Grubhub acquires MenuPages, a restaurant guide and food ordering service.
• 2009
  • Grubhub raises $10 million in Series B funding.
• 2011
  • Grubhub raises $30 million in Series C funding;
  • Grubhub acquired OrderUp, a food delivery service in the Midwest.
• 2013
  • Grubhub raises $70 million in Series D funding.
• 2014
  • Grubhub acquired Seamless, a food delivery service in the Northeast, for $3.9 billion.
• 2015
  • Grubhub raises $1 billion in Series E funding.
• 2016
  • Grubhub acquired Eat24, a food delivery service on the West Coast, for $300 million.
• 2017
  • Grubhub acquired LevelUp, a mobile payment app for restaurants, for $300 million.
• 2018
  • Grubhub raises $750 million in debt financing;
  • The company invested $10 million in Postmates, a food delivery service in the United States and Canada. 
• 2019
  • Grubhub acquired Tapingo, a mobile food ordering and delivery service for college campuses, for $100 million;
  • In 2019, Grubhub invested $5 million in Sprig, a food delivery service that delivers prepared meals.
• 2020
  • Grubhub raises $200 million in debt financing.
• 2021
  • Grubhub was acquired by Just Eat Takeaway.com for $7.3 billion.

As you can see, Grubhub is now one of the leading food delivery platforms in the United States. The company has grown rapidly over the past few years. The company has raised over $2 billion in funding and acquired several other food delivery platforms. 

Grubhub Financial Performance: Revenues, Expenses, and Profits

Grubhub’s financials have been mixed in recent years. The company’s revenue has been growing steadily, but it has not been able to turn a profit. In the fiscal year 2022, Grubhub’s revenue was $2.4 billion, a 5% increase year-on-year. However, the company’s net loss was $383 million (though this is an improvement from the $473 million net loss in 2021).

Grubhub’s operating margin has been declining in recent years. In the fiscal year 2022, the company’s operating margin was 47%, down from 50% in 2021. This decline is due to the increasing cost of delivery. Grubhub’s delivery fees have remained relatively stable, but the cost of paying drivers has increased.

Grubhub’s free cash flow was positive in 2022 ($100 million as against $60 million in 2021), which is a good sign. Free cash flow is the money a company has left after paying its operating expenses and capital expenditures. It is a measure of a company’s financial health.

Overall, Grubhub’s financials are mixed. The company is growing its revenue, but it is not yet profitable. The company’s operating margin has been declining, and its net loss has been narrowing. Grubhub’s free cash flow was positive in 2022, which is a good sign.

Grubhub Revenue

Let’s take a look at the company’s revenue figures.

• Revenue for the current year (ending March 31, 2023): $2.4 billion, a 5% increase year-on-year;
• Revenue for the preceding quarter (ending December 31, 2022): $673 million, a 4% increase quarter-on-quarter;
• Revenue for the same quarter in the previous year (ending December 31, 2021): $645 million

The makeup of Grubhub’s revenue for the current year is as follows:

• Food delivery revenue: $2.2 billion, or 92% of total revenue. This is the money that Grubhub collects from diners for delivering food;
• Advertising revenue: $100 million, or 4% of total revenue. This is the money that Grubhub collects from restaurants for advertising on its platform;
• Subscription revenue: $50 million, or 2% of total revenue. This is the money that Grubhub collects from diners for subscribing to its premium services, such as Grubhub+.

As you can see, food delivery revenue is the major source of Grubhub’s revenue. This is because Grubhub is a food delivery platform, and its primary business is delivering food to diners. Advertising revenue and subscription revenue are smaller, but they are growing. This is because Grubhub is looking to diversify its revenue sources and become less reliant on food delivery revenue.

Grubhub Expenses

Here is some information on GrubHub’s key expenses, such as the cost of goods sold, operating expenses, R&D, and sales and marketing expenses:

• Cost of goods sold (COGS): COGS is the cost of the food and other products that Grubhub delivers. In 2022, Grubhub’s COGS was $690 million, or 28% of its revenue;
• Operating expenses: Operating expenses are the costs incurred by Grubhub to operate its business. These expenses include things like marketing, customer support, and technology. In 2022, Grubhub’s operating expenses were $1.6 billion, or 66% of its revenue;
• Research and development (R&D) expenses: R&D expenses are the costs incurred by Grubhub to develop new products and services. In 2022, Grubhub’s R&D expenses were $40 million, or 1.7% of its revenue;
• Sales and marketing expenses: Sales and marketing expenses are the costs incurred by Grubhub to promote its services to diners and restaurants. In 2022, Grubhub’s sales and marketing expenses were $580 million, or 24% of its revenue.

In addition to these expenses, Grubhub also has other expenses, such as depreciation and amortization, interest expenses, and taxes. These expenses are not directly related to Grubhub’s revenue, but they are still important to consider when evaluating the company’s financial performance.

Grubhub Profit

Let’s take a quick look at the YoY profitability of the company and how Grubhub seeks to maximize this.

• 2022: Net loss of $383 million;
• 2021: Net loss of $473 million;
• 2020: Net loss of $344 million;
• 2019: Net loss of $163 million;
• 2018: Net income of $98.9 million.

As you can see, Grubhub has not been profitable in recent years. The company’s net loss has been narrowing, but it is still not profitable.

There are a few reasons why Grubhub is not profitable. One reason is the high cost of delivery. Grubhub charges a delivery fee to diners, but this fee does not cover the full delivery cost. The company also has to pay drivers, and the cost of paying drivers has been increasing.

Another reason why Grubhub is not profitable is the intense competition in the food delivery market. Grubhub is facing competition from other food delivery apps, such as DoorDash and Uber Eats. This competition has led to lower prices for diners, which has made it difficult for Grubhub to generate profits.

Grubhub has taken some steps to improve its profitability. The company has been working to reduce the cost of delivery, and it has also been expanding into new markets. However, it remains to be seen whether these efforts will be enough to make Grubhub profitable.

Potential for Profitability

Here are some of the opportunities that Grubhub could pursue to achieve profitability or improve its profits in the future:

• Expand into new markets: Grubhub is currently only available in the United States and Canada. Expanding into new markets, such as Europe and Asia, could help the company grow its revenue and profitability;

• Partner with more restaurants: Grubhub currently partners with over 80,000 restaurants. Partnering with more restaurants could help the company attract more diners and increase its revenue;

• Offer new products and services: Grubhub could offer new products and services, such as grocery delivery or meal kits. This could help the company diversify its revenue streams and improve its profitability;

• Reduce the cost of delivery: The cost of delivery is a major expense for Grubhub. The company could reduce the delivery cost by using self-driving cars or partnering with other companies, such as Uber;

• Improve its marketing and sales efforts: Grubhub could improve its marketing and sales efforts to attract more diners and restaurants. This could help the company grow its revenue and profitability;

• Invest in research and development: Grubhub could invest in research and development to develop new technologies to improve its efficiency and profitability.

These are just a few of the opportunities that Grubhub could pursue to achieve profitability or improve its profits in the future. The company will need to carefully consider its options and choose the strategies that are most likely to be successful.

Conclusion

Grubhub is not yet profitable, but it has been making progress in recent years. The company is growing its revenue and reducing its costs, and it is exploring new opportunities to expand its business. If Grubhub can continue to execute its plans, it is possible that the company could become profitable in the future.