According to the Wall Street Journal, food-delivery service Grubhub could be up
for sale. Whether or not that sale comes to fruition, it highlights that Grubhub and
its competitors are struggling to compete over who brings you food from restaurants.
Grubhub has seen its market share decline to about 30 percent of US sales in November,
down from more than half just two years earlier, according to data from Second Measure.
Meanwhile, venture capital-backed startups like DoorDash have moved into the lead, with
37percent of US sales. Uber Eats, Postmates, and a handful of smaller competitors are
also duking it out in cities and towns across America. Food delivery is a low-margin
business, which makes money from charging customers delivery and other service fees,
and from revenue shares with restaurants. And to sign up some bigger restaurant chains,
food delivery services have had to lower their commissions. Those margins are further
tightened as food-delivery companies seek to beat out their competition by lowering their
fees for customers and offering expensive promotions. These discounts, however, aren't
necessarily locking in customers, but rather encouraging customers to shop around. It's a
similar situation to ride -hailing, where customers are not loyal. DoorDash and Postmates
have both considered going public or joining up with bigger companies. Any consolidation
would be welcomed by the industry, though perhaps not by customers, who are currently
enjoying the major discounts that result from the competition among these companies.