Just Eat ($LON:JE) is going to buy Grubhub ($GRUB) in a deal worth more than $7 billion, elbowing aside Uber ($UBER) in what could have been a bidding war to scale major consumer tech businesses at a key time in the app landscape's development.
More than a decade after the first food delivery website launched, and more than 6 years after Grubhub's IPO, this particular M&A deal represents a maturation of app-based consumer technology driving traditional dealmaking strategies. But, because consumers' smartphones are (for now at least) the last battleground for brands looking to achieve scale, Just Eat-Grubhub also represents a critical litmus test for other companies in similar positions looking to avoid a partnership being squashed by regulators, too.
First - Just Eat and Grubhub's combined locations map will position it on both sides of the Atlantic Ocean and one side of the Pacific, creating massive scale as Coronavirus is forcing more consumers to order in, and positioning both companies for a joint opportunity.
And, in a statement that accompanied the deal announcement, Just Eat said the combined entity will have 70 million global users - massive scale to wield over the Postmates, Doordashes, and Uber Eats of the world. Few can boast anything even close to the scale both companies will achieve together.
Our next chart illustrates why Just Eat badly needs to add Grubhub - and how critical it was to steal scale in the global food delivery wars, especially as a growing number of US locations are signaling rising Coronavirus cases that could mandate a second lockdown on major US cities this year. Grubhub's ratings count in the Apple Store is far higher than Just Eat's, which may suggest a greater level of engagement. Ratings-wise, both apps have healthy approval in the Apple Store, neck-and-neck (not shown) just under 4.75-out-of-5.
It remains to be seen how the two companies will combine and integrate international teams; but other challenges lie ahead - notably, Doordash's IPO, which could bring to market a new competitor operating a broader business model and under a different cost structure. Notably, as hot IPOs are flowing to exchanges, there has been little news on a future Doordash offering - for now.
About the Data:
Thinknum tracks companies using the information they post online - jobs, social and web traffic, product sales, and app ratings - and creates data sets that measure factors like hiring, revenue, and foot traffic. Data sets may not be fully comprehensive (they only account for what is available on the web), but they can be used to gauge performance factors like staffing and sales.
