In a strategic business decision, Just Eat has finalised the sale of its American division, Grubhub, to the emerging food delivery service Wonder for a notable sum of $650 million (£502.5 million). This transaction signifies a stark reduction from the $7.3 billion (£5.73 billion) initially invested by Just Eat in acquiring Grubhub four years ago.
The sale of Grubhub marks the end of a tumultuous chapter for Just Eat, which initially saw the acquisition as a promising expansion into the lucrative United States market. However, Grubhub’s performance did not meet expectations, particularly after the pandemic-induced surge in demand for rapid delivery services began to wane. With the burgeoning competition and changing market dynamics, Just Eat’s decision to divest Grubhub could realign its resources and focus on more profitable avenues.
The announcement of the sale has been met with a significant market response, evidenced by nearly a 20% surge in Just Eat’s share price. This indicates investor confidence in the company’s future prospects post-transaction. Just Eat’s founder and CEO, Jitse Groen, highlighted that this deal would enhance the company’s cash generation capabilities and accelerate growth. He expressed gratitude towards Grubhub employees for their contributions, reinforcing a commitment to ensuring a seamless transition for the workforce involved.
Meanwhile, Marc Lore, the founder and CEO of Wonder, has clarified the strategic value of acquiring Grubhub. Lore expressed enthusiasm about the acquisition, noting that it aligns with Wonder’s mission to make quality food widely accessible, enhancing customer experience through greater selection and variety. He emphasised the vision of transforming meal delivery by integrating Grubhub’s restaurant partners into Wonder’s ecosystem, aiming to create a super app catering to diverse consumer needs.
Just Eat continues to bolster its presence in the United Kingdom, recently announcing a collaboration with Waitrose, aiming to expand their footprint in the on-demand grocery and convenience sector. This move aligns with their strategy to strengthen core markets while streamlining operations through strategic divestments like that of Grubhub.
The divestment of Grubhub by Just Eat reflects a necessary strategic shift to optimise business operations and focus on growth markets. While incurring a substantial loss, the move is embraced as a pathway to fortify Just Eat’s financial health and pave the way for future expansion efforts, particularly within its core regions.
