San Francisco placed a 15-percent cap on delivery app commissions last month in response to complaints from restaurant owners, New York has capped fees at 10 percent, and Chicago, where GrubHub is based, is mulling a 5-percent cap. Last August, SF-based DoorDash acquired rival Caviar, which turned out to be a boon for DoorDash as Caviar has become the go-to partner for many higher-end restaurants in the Bay Area and elsewhere that have newly entered the takeout and delivery sphere.īut GrubHub, Postmates, and DoorDash have all faced criticism in recent months as they've been profiting off of the struggling restaurant industry at a time when restaurants have laid off scores of workers and are in a desperate fight to survive. If Uber Eats and GrubHub joined forces, it would be the culmination of some long-discussed consolidation in the delivery app world, where just a few years ago there was also competition from Bay Area-based Munchery and Sprig, to name a couple more. And Uber is betting that won't change anytime soon.ĬNN quotes CEO Dara Khosrowshahi as saying in an investor call last week, "There is a silver lining to this unbelievably tragic COVID virus, which is the business that we have of Eats and the category in general, just looks like it is going to be substantially increased and some would say by multiples." But that was before the lockdowns that have suddenly made delivery businesses some of the most thriving operations in the world. Uber just announced last week that it was laying off 3,700 employees, primarily in customer support and recruiting, and last year there were also some layoffs in Eats. Uber is currently worth around $55 billion, per Bloomberg. Uber stock was also up around 7.5 percent to $34 a share. Uber's board members are said to be reviewing terms this week, per the Journal, and GrubHub's stock price jumped Tuesday morning on the news from $47 a share to nearly $64, or 36 percent. The Wall Street Journal broke the story Tuesday, and according to "people familiar with the matter," Uber approached GrubHub earlier this year and "the companies continue to discuss a possible combination." Bloomberg characterizes the deal as a takeover offer, and says it's expected to be sorted out sometime this month.Ĭhicago-based GrubHub is valued at around $4.5 billion, and under the deal, GrubHub shareholders would receive 2.15 Uber shares for every GrubHub share. Even so, the news of the California law prompted a drop in its stock price, which saw an all-time low of $135.38 after a high of $195.50.As the pandemic has shifted Uber's business thinking in the direction of more food delivery, the company has reportedly made an offer to acquire GrubHub, the app-based meal delivery rival of Uber Eats and parent company of the Seamless, MenuPages, and Eat24 brands. According to the WSJ, over 95 percent of its Q3 business came from restaurants with which it already had partnerships. Other delivery apps, like Doordash, find themselves better prepared for the new law. In California alone, Postmates said in September, 40,000 of the restaurants they list would have to either be converted into paid partnerships or removed.
Of those, only 115,000 had a partnership agreement with the app. According to the Wall Street Journal, as of September, Uber-owned Postmates, for example, boasted 700,000 restaurants on its app. The law, which took effect on the first day of 2021, could have a huge impact on the options available to diners who use these apps - as well as the apps, themselves. Its final language states that to list a restaurant on its platform, food delivery apps online company must have a contract with the restaurant “expressly authorizing the food delivery platform to take orders and deliver meals prepared by the food facility.” The legislation sailed through the approval process and was signed into law by Gov. New Laws Would Ban Delivery Apps From Adding Restaurants Without Their Permissionīy February 2020, the issue had attracted the attention of San Diego-based California State Assemblywoman Lorena Gonzalez, who proposed Assembly Bill 2149, a law that would block non-consensual app listings.
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