GrubHub looks to capitalize on economy of scale with Yelp partnership
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GrubHub looks to capitalize on economy of scale with Yelp partnership

Fast food order and delivery service GrubHub is looking to get an edge on competitors by expanding its delivery service alongside Yelp. The company has recently acquired Yelp’s Eat24 directory, and Yelp will garner an undisclosed cut of every order that GrubHub manages through its service. The result will be a delivery service that works with more than 80,000 restaurants across the U.S.

GrubHub’s share price has risen by an incredible 54% so far this year

graph 2203 grubhub

SOURCE: Yahoo Finance

The simple logic to this deal, which will see GrubHub more than double the number of Yelp restaurants it services, is that making multiple deliveries per trip will push down the overall delivery cost. This is a big factor in the food delivery market: ordering cheap fast food loses its shine if the delivery charge is prohibitive.

GrubHub’s CEO, Matt Maloney, recently told the Wall Street Journal that this could become a selling point for the company. He said: “I see a point where we could conceivably have extremely low if not free delivery for consumers.” The potential impact this could have in a competitive landscape cannot be ignored.

As other fast food delivery services like DoorDash and UberEats look to grab market share, GrubHub is looking to capitalize on more than just the convenience ticket it made its name on. Low costs are a clear and compelling opportunity way to stand out from the crowd.   

Disclosure

Dominion holds GrubHub in its Global Trends Ecommerce Fund.


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