What a Wonder-Grubhub Deal Would Mean
Wonderful news! Deals are happening. Exhibit A: Marc Lore’s food startup Wonder is close to a deal to buy Grubhub, The Wall Street Journal reported Tuesday afternoon. That’s an intriguing acquisition for Lore, a veteran e-commerce entrepreneur, as it’s something of a change in direction.
Those with long memories of Wonder will recall that the startup began life as a mobile kitchen and food-delivery startup, using custom-made vans to park in people’s driveways and cook meals based on celebrity chef recipes. That rather ambitious strategy proved too much even for Lore, a master salesperson, who two years ago laid off staff and pivoted to operating restaurants that doubled as kitchens preparing meals for delivery.
Wonder’s special sauce, you might say, is that it lets people choose from lots of different cuisines when they order, which Wonder makes in its kitchens. So Wonder is already in the restaurant-delivery market, but not in a way that directly competes with DoorDash or UberEats, which handle delivery for restaurants of any kind. Buying Grubhub would drastically change that situation, pitting Wonder against much bigger and more prosperous rivals.
Of course, Wonder hasn’t confirmed the deal, and without details we don’t exactly know how it will work. But you can bet that Lore has found his brand of bespoke meals—albeit based on the cooking of famous chefs—wasn’t proving compelling enough for customers who can choose from any restaurant. Whether a Grubhub purchase will make a difference, though, is a big gamble.
After all, Grubhub doesn’t appear to have been doing that well. It has been owned for the past three years by European delivery firm Just Eat Takeaway, which paid $7.3 billion in stock for the company in 2021. But for two of those three years, Just Eat Takeaway has been trying to sell it. You can’t blame the Europeans for the quick change of mind: Just Eat Takeaway quickly began seeing declining sales in North America—Grubhub’s home.
And those declines haven’t finished. In quarterly financial updates, Just Eat Takeaway has preferred to highlight its growth excluding North America. In the third quarter of this year, it reported an 11% decline in orders in North America, which followed a 9% decline in the first half. Grubhub was also burning cash as of the first half, Just Eat Takeaway said.
The Journal report said Grubhub would fetch less than $1 billion, a massive loss on what Just Eat Takeaway paid. The only bright spot for Lore might be a recently expanded deal between Amazon and Grubhub, which lets Amazon customers order from Grubhub on Amazon. Wonder just hired Amazon’s grocery chief, Tony Hoggett, further cementing ties.
Lore, of course, has a history with Amazon, having sold his Diapers.com startup to Amazon more than a decade ago. You have to wonder whether he will end up selling Wonder to Amazon, particularly if a Trump administration relaxes antitrust guidelines as much as people hope. This is one deal that’s worth watching over a good meal.