Investors Beware: Just Eat’s Grubhub Deal Sours Market Sentiment!

Indulging in takeout meals during the pandemic and dealing with the aftermath of excess weight gain has left many of us reflecting on our decisions. Just Eat Takeaway recently made headlines by announcing the sale of its US subsidiary, Grubhub, for a significantly reduced value compared to its acquisition during the 2020 frenzy. The repercussions of pandemic-era miscalculations are proving to be costly, with Just Eat shareholders feeling the brunt of the impact.

Here are some key points to consider:

• The sale of Grubhub was valued at $650mn, consisting of $500mn in debt and only $150mn in cash paid to Just Eat.
• Just Eat relinquished almost a third of its overall shares to Grubhub shareholders as part of the deal, resulting in a substantial drop in share value by nearly 90% since the announcement.
• Despite creating a strategy dubbed as the “quad” strategy, with the US market as a potential profit pool, the deal with Grubhub did not yield favorable results for Just Eat.

It is crucial to note that while Just Eat struggled with the Grubhub deal, competitors like DoorDash and Uber Eats continued to thrive in the US market. Grubhub struggled with a shrinking market volume and regulatory challenges in cities like New York, which impacted its overall profitability.

In a surprising turn of events, Grubhub was acquired by Wonder, a New York-based ghost kitchen chain founded by entrepreneur Marc Lore. With a new injection of $250mn in private funding, Wonder aims to address the challenges left behind by the Grubhub acquisition. Despite the setbacks faced by Just Eat and Grubhub, the possibility of a new chapter unfolding has sparked some optimism among investors.

In conclusion, the tale of Just Eat and Grubhub serves as a cautionary reminder of the risks associated with impulsive business decisions, especially in times of uncertainty. As we navigate the aftermath of the pandemic, it is crucial for companies to reevaluate their strategies and adapt to the changing landscape of the food delivery industry.