Just Eat Takeaway has officially announced the sale of its U.S. subsidiary Grubhub, marking the end of an era for the food delivery service. The deal closes at just $650 million, significantly lower than the acquisition price of $7.3 billion back in 2020, during the height of the pandemic boom.
This sale also includes $500 million of attached debt and sees Just Eat receiving $150 million cash. Just Eat acquired Grubhub with ambitious plans, hoping to dominate the delivery market across several countries, including the U.S. Unfortunately, the expectations didn't pan out as Just Eat's shares fell by nearly 90% since the Grubhub acquisition.
Grubhub faced some major challenges. Though it reported €2 billion (approximately $2.17 billion) in revenue for 2023, it only made €125 million ($135 million) in earnings before interest, taxes, depreciation, and amortization (EBITDA). The situation was worsened by the fact the gross market volume of their North American orders fell by 14% compared to the previous year.
The hurdles didn't stop there. Grubhub struggled to compete against stronger rivals like DoorDash and Uber Eats. Particularly troubling was Grubhub’s Seamless brand, which took major hits due to local regulations such as capped delivery fees and setbacks related to e-bike battery usage.
Looking back, Just Eat’s decision to acquire Grubhub was heavily influenced by the rising stock market, and they believed it was smarter than relying on cash and debt to grow. This notion has now backfired. Interestingly, after the announcement of the sale, there was a slight improvement in Just Eat's shares, rising by 15%, perhaps signaling relief from investors.
The buyer of Grubhub is Wonder, which operates as a ghost kitchen chain founded by billionaire entrepreneur Marc Lore. Alongside the buyout, Wonder is raising $250 million through private funding, which might come as good news for those hoping to revitalize the struggling food delivery service.
Meanwhile, another technology giant, Meta, has found itself in hot water with the European Commission. The EU imposed nearly €800 million ($847 million) fine on Meta, accusing the company of anti-competitive practices. According to Margrethe Vestager, the outgoing EU Competition Commissioner, Facebook was tying its marketplace services to its social network unfairly, restricting competitors.
Vestager explained, "It did this to benefit its own Facebook Marketplace, gaining advantages others couldn’t match. This is illegal.” The fine, precisely €797.72 million, is part of the EU's broader initiative to clamp down on anti-competitive practices by major technology companies. Meta has vowed to appeal this decision, arguing it created its Marketplace service to meet consumer demand and questioning the evidence the EU presented of market harm.
This investigation dates back to 2019 when rivals claimed Meta was abusing its dominant position, offering free services yet profiting from user data. These investigations are among the last significant actions carried out under Vestager’s tenure, highlighting her long-standing efforts to enforce competition laws against tech giants like Apple, Google, and Microsoft.
Meta contends it competes against many other popular online marketplaces across Europe, such as eBay and Marktplaats. The fine not only reflects EU's policy changes but is also set against the backdrop of anticipated shifts within the Commission itself as new appointments are coming soon.
The recent decisions by the EU and the sale of Grubhub highlight the challenging waters these tech companies navigate. Just Eat and Meta may be facing different struggles, but the driving theme remains the same: the tech and food delivery markets are volatile and can shift unpredictably based on consumer demand and regulatory frameworks.
Rounding out the discussion, Just Eat's and Meta's stories serve as prime examples of how rapidly the tech and delivery industries are changing, including how global events can reshape business fortunes. Investors are now more willing to examine strategic decisions critically, as the stakes seem higher than ever. The closing of the deal with Grubhub and the hefty fine imposed on Meta represent not just corporate decisions but signify how market players adapt—or fail to adapt—to the pressures of competition and regulatory scrutiny.
