Promotions Eat into Grubhub's Profit
05 Febrero 2020 - 4:10PM
Noticias Dow Jones
By Heather Haddon
Grubhub Inc. reported a loss in its most recent quarter,
evidence of the pressure on food-delivery companies vying for
customers with discounts and expansion efforts.
The Chicago-based company on Wednesday said sales rose to $341
million for the quarter that ended in December, a 19% increase from
$288 million a year earlier. The company reported 23 million active
diners at the end of last year, compared with 18 million in the
final 2018 quarter.
But Grubhub's adjusted earnings for the quarter swung to a loss
of $4.2 million from a profit of $17.6 million a year earlier.
Grubhub said in a shareholder letter that its efforts to recruit
new diners and restaurants were helping. Executives said its
financial performance was at the high end of expectations, and the
number of restaurants on its platform had more than doubled in
three months.
Shares rose 6% in after-hours trading to $59.
Grubhub is struggling alongside other players in a food-delivery
industry that is in flux. DoorDash Inc., Uber Technologies Inc.'s
Uber Eats and Postmates Inc. have spent millions of dollars to move
into new U.S. markets and grab share. Grubhub said last year that
it would sacrifice profit to compete. Some executives and investors
say they expect consolidation in the industry this year.
Grubhub said it couldn't provide exact earnings guidance for
2020, writing in a letter to shareholders that it expected profit
at least $100 million for the full fiscal year. Executives said it
isn't clear how much they will spend on efforts to gain share and
keep diners loyal.
Some delivery companies were quicker than Grubhub to strike
exclusive delivery deals with big restaurant chains. Delivering
food from chains can be less profitable than from independent
restaurants, but order volumes are often higher.
Grubhub is now adopting those tactics. The company in the past
year has struck delivery deals with McDonald's Corp., Shake Shack
Inc. and Applebee's, which is owned by Dine Brands Global Inc. It
also started offering free and low-cost delivery from KFC and Taco
Bell restaurants -- both owned by Yum Brands Inc. -- and other
chains.
Grubhub is also following competitors in a practice of adding
restaurants to its platform without any prior agreement. Some
restaurants have criticized Grubhub for posting their menus on its
app without their approval.
Looking to draw in new delivery partners, Grubhub last month
introduced a system for restaurants, stadiums and other
food-service providers to accept and process pickup orders
online.
For the quarter, Grubhub reported a loss of $27.7 million, or
negative 30 cents per diluted share, a drop from a negative $5.2
million, or a negative 6 cents, the prior year.
It reported a full-year loss of $18.6 million, down from a gain
of $78.5 million in 2018. Adjusted earnings per share were 79
cents, roughly meeting expectations.
(END) Dow Jones Newswires
February 05, 2020 16:55 ET (21:55 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.
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