Netherlands-Based Food Delivery Company Just Eat Takeaway.com Sells Grubhub to Wonder Group
In a move that signals the decline of the food delivery market, Netherlands-based food delivery company Just Eat Takeaway.com has announced the sale of its US business, Grubhub, to New York-based Wonder Group for $650 million. This transaction represents a stark 91% less than the $7.3 billion that Just Eat Takeaway paid for Grubhub just four years ago.
The Sale
The deal is expected to be completed in the first quarter of 2025, with Just Eat Takeaway expecting net proceeds of $50 million. Wonder Group, which has raised over $1.7 billion in funding and counts Accel, Bain Capital Ventures, Google Ventures, Nestlé, and Forerunner Ventures among its backers, will assume $500 million of Grubhub’s debt.
A Shift in the Food Delivery Market
The sale comes as food and grocery delivery becomes increasingly unprofitable for businesses that bet heavily on this model during the COVID-19 pandemic. As people sheltered in place and social distancing became a norm, many turned to ordering food and groceries online. However, once the world returned to a semblance of normalcy and post-pandemic tailwinds trailed off, the instant delivery model proved unsustainable.
A Decline in Valuations
The food delivery and quick-commerce sectors saw a massive influx of venture capital and other investment in the years following the pandemic, with startups like Getir and Flink raising millions and investing aggressively in marketing and acquisitions. However, as the market normalized, valuations plummeted. Flink is now valued at just under $1 billion, down from its peak of nearly $3 billion, while Getir has retreated, shutting down operations in the US, UK, and Europe to focus on its home market of Turkey.
Just Eat Takeaway’s Efforts
Just Eat Takeaway itself has been trying to sell Grubhub for years. The company first announced plans to sell the business in April 2022, citing a desire to focus on profitability. However, last year, CEO Jitse Groen said that selling Grubhub was proving "very difficult." The sale will increase Just Eat Takeaway’s cash generation capabilities and accelerate its growth, according to the company.
Wonder’s Plans
Wonder Group’s CEO Marc Lore stated that the company aims to create a super app for food delivery through this acquisition. "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," he said. The acquisition is seen as a strategic move by Wonder Group to expand its presence in the US market.
A Lesson for Startups
The sale serves as a cautionary tale for startups that bet heavily on the food delivery model during the pandemic. As the market normalized, many found themselves struggling to maintain profitability. This deal highlights the importance of adapting to changing market conditions and diversifying business models to ensure long-term sustainability.
Wonder Group’s Background
Wonder Group started as a food delivery business in 2018 but has since pivoted to operating delivery-focused restaurants in New York and Philadelphia. The company has raised over $1.7 billion in funding, with backers including Accel, Bain Capital Ventures, Google Ventures, Nestlé, and Forerunner Ventures.
Conclusion
The sale of Grubhub to Wonder Group marks a significant shift in the food delivery market. As businesses adapt to changing consumer behavior and market conditions, it remains to be seen how other players will fare in this increasingly competitive landscape.
Related Topics:
- Commerce
- Food Delivery
- Grubhub
- Just Eat Takeaway
- Mergers and Acquisitions
- Startups
- Wonder Group
