Dive Brief:
- Wonder, a company that operates delivery-focused food halls, will acquire food delivery provider Grubhub for $650 million from Just Eat Takeaway.com (JET), the companies said in a press release. The transaction is expected to be completed during the first quarter of 2025, subject to closing conditions and regulatory approval.
- Wonder, which has 28 locations in the Northeast, also raised $250 million in capital from new investors. The company has grown rapidly and previously raised $700 million in March with plans to reach 90 locations next year. All of its locations will be available on Grubhub for third-party delivery.
- JET originally purchased Grubhub for $7 billion in 2020 and has tried selling the company since April 2022 following criticism from activist investor Cat Rock Capital, which claimed Grubhub was reducing JET’s overall value. Selling Grubhub will help JET invest in countries where it will have a competitive advantage, in addition to improving its overall balance sheet, JET said.
Dive Insight:
Wonder said the acquisition of Grubhub aligns with its goal to unite the convenience, speed and selection of first- and third-party restaurants, groceries and meal kits in a single app. Gruhub works with 375,000 merchants and 200,000 delivery partners across the U.S.
Wonder’s platform lets customers order from upwards of 30 restaurant brands in one order, and claims orders from its food halls can happen in as little as 30 minutes. The company bought Blue Apron in 2023 for about $103 million, adding a meal kit business to its portfolio.
“As we enhance our customer experience with selection, speed, and variety, we're excited to soon offer a curated selection of Grubhub's restaurant partners directly in the Wonder app, alongside our owned and operated restaurants and meal kits,” Marc Lore, founder and CEO of Wonder, said in a statement. “Bringing Wonder and Grubhub together is the next step in our vision to create the super app for meal time, re-envisioning the future of food delivery.”
Grubhub also ramped up its expansion into grocery by partnering with independent grocers and Albertsons earlier this year. Wonder hired Tony Hoggett, former senior vice president of worldwide grocery stores at Amazon, as its chief operating officer in October.
Grubhub has also signed partnerships with various hotel companies and has a thriving campus dining business that works with 360 universities.
Despite this diversification, Grubhub has struggled with profitability. As of the first half of the year, it continued to face “ongoing headwinds” related to fee caps in New York City, one of its largest markets, but continues to make progress toward cash flow breakeven. JET reported Grubhub’s free cash flow before changes in working capital was about negative $4.3 million during this time frame.
Grubhub’s share of the U.S. food delivery market has declined steadily in relative turns since 2020, according to Bloomberg Second Measure data.
