Grubhub announced fourth quarter and full-year earnings in potentially its last full year report before merging with Just Eat Takeaway.com.
The earnings from the Chicago-based company were somewhat mixed. Grubhub’s overall revenue was up significantly, in line with other third-party delivery platforms. The company’s gross food sales grew to $2.4 billion in the quarter, a 52 percent year-over-year surge. Revenues were just shy of that growth rate, reaching $503 million, up 48 percent. For the full year, gross food sales grew to $8.7 billion. That’s a 47 percent jump from $5.9 billion in food sales at the end of 2019.
As one would expect from a year spent indoors and many more people ordering food, all the key metrics were way up. Active diners grew to 31.4 million, up 39 percent. Daily Average Grubs (DAGs) were up 26 percent to 622,700 for the full year and higher in the fourth quarter, when DAGs reached 658,100.
Out of the context of 2020, it would be an extremely good year for Grubhub, but the year of extreme hardship for restaurants—especially the fee-paying independents—did not spare the delivery giant’s bottom line. The company reported a net loss of $67.8 million in the fourth quarter and a $155.9 million loss for the full year.
CEO Matt Maloney said in the earnings release that 2020 meant many one-time costs to support the restaurant industry.
“We remain steadfast in our support of our restaurant partners as the ongoing pandemic continues to weigh on their businesses and their local communities. From increased marketing spend and reduced commissions, to winterization grants and free digital ordering tools, we continue to be fully committed to assisting our restaurant partners,” Maloney said.
A shareholder letter highlighted a few of those expenses, including an additional $9 million spent on general/administrative expenses, a 5 percent bump in technology costs and a 68 percent jump in operational support costs driven higher by more Grubhub fulfilled orders.
“In the fourth quarter alone, we effectively conveyed more than $50 million to local restaurants across the country through COVID-related, temporary fee caps. That said, we continue to believe fee caps are neither an efficient nor the right way to support the long-term sustainability of restaurants,” read the shareholder letter, signed by Maloney and president and CFO Adam DeWitt.
DeWitt went on to say that without the support and additional fees, the economics would have looked a lot better.
“2020 was a transformative year for our marketplace. Strong new diner and restaurant additions across all of our markets coupled with increased order frequency from existing diners culminated in record gross food sales during the fourth quarter,” said DeWitt. “Absent the ongoing support spend we are providing to our restaurant partners, drivers, and diners, the business could easily support long-term economics of more than $1.50 of adjusted EBITDA per order.”
The big merger looks to be on track for “the first half of 2021,” according to Maloney. The company guided to a June end to the Just Eat Takeaway.com transaction, in a prior announcement, the companies issued a statement announcing an extension of the “long stop date” to December 31, 2021. That legal update provided some buffer time for the deal to end but did not change the timing of the merger. Both Grubhub and Just Eat Takeaway.com announced that they expected to meet that initial guidance.
Editor’s note: An earlier version of this article incorrectly stated that the merger end date had been pushed back.
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