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Just Eat Takeaway to acquire Grubhub for $7.3B

nytimes.com

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Re: Just Eat Takeaway to acquire Grubhub for $7.3B

#61

Earlier quoted context omitted.

> The economics are that when you insert a multinational between a local restaurant and a local hungry person, revenue to the restaurant drops, prices paid by the customer rise, and service gets worse. Exactly, when the Softbank or VC money runs out for Doordash and the like it will be total mutiny, I doubt most if any drivers, outside of the Top dasher that accepts any orders, will continue to do so when the pay rat…

I wonder what would happen if I signed up for Doordash as a driver, picked up as many orders as I could in one evening, and just donated the food to the poor and needy? How long until I'm booted and banned as a driver?

Disclaimer: I'm not advocating this and I'm in no way condoning such behaviour with the following.

From what I saw when they did updates, usually on Friday evenings during the dinner rush no less, the system would crash and result in any and all current orders being essentially undeliverable as the app crashed and often you couldn't log in or out of the system nation-wide for 30 mins to hours later.

Furthermore, as I was monitoring this alongside the mass unemployment numbers rising due to the pandemic I saw the influx of new users that followed: so, I noticed that many hapless, and panicked users would be unable to fulfill an order because of random situations. I started to feel really bad for them, too as most were just trying to be as honest possible.

So, while I don't suggest doing that, see disclaimer above; I think if you signed up you would eventually have an order eventually 'slip through the cracks' through not fault of your own. Customer support was based overseas, and were limited and then inundated with requests so realistically nothing was done to prevent anyone giving the order away.

What you have to also keep in mind is that these partnerships are often with franchisees' or privately owned restaurants who ultimately take the hit when food is not delivered and a refund is issued. Which is why you see vigilante like behaviour be lauded by Doordashers when they see pizza being arbitraged, and them saying 'F-Doordash.'

So, in short, if you did it long enough you wouldn't need to steal anything and your opportunity would happen anyway through not fault of your own.

I highly suggest people read the r/doordash sub-reddit, its anecdotal but also direct feedback from a wide breadth of drivers, some positive, some neutral and a lot negative ones about the absurd algorithm based compensation model: the recurring $3 for +15 mile delivery kind of deal.

So, as person who spent a lot of time in the Culinary Industry, just do the right thing and buy any food you want to donate. Playing Robinhood within this context just nets a situation in which almost nobody ever wins.

There was a user here on HN who was trying to launch his own food delivery app; I wish he'd update and see if he had any updates on his progress and if he took significant Market Share from these big players.

Re: Just Eat Takeaway to acquire Grubhub for $7.3B

#62
post #38
post #23

Earlier quoted context omitted.

Have you tried pizza pie? But really, the economics are all in operations and scale. Some people may complain that they can’t get delivery 10 miles away from a restaurant.. but they aren’t willing to tip or pay higher for the back and forth a driver must do to earn more than it costs to pay them. Cutting to 5 or even 3 miles for delivery ranges makes a big difference for orders per hour.

>> The economics of food delivery can’t be solved with efficiency. There’s not enough pie to split. > Have you tried pizza pie? IIRC, proper pizza delivery requires a special warming bag. These generic delivery companies that employ gig-working randos don't equip their drivers with those bags, so they suck at delivering pizza at any distance, greater "efficiency" or no.

These are or were available. I’ve seen several branded bags both as a diner watching the order come in and as a customer ordering food. Whether they are given away, given upon request, or available for purchase, I have no idea. And I haven’t seen one in awhile, but I’ve also greatly reduced ordering this way and exclusively use Uber when I do.

Re: Just Eat Takeaway to acquire Grubhub for $7.3B

#63
post #38
post #23

Earlier quoted context omitted.

Have you tried pizza pie? But really, the economics are all in operations and scale. Some people may complain that they can’t get delivery 10 miles away from a restaurant.. but they aren’t willing to tip or pay higher for the back and forth a driver must do to earn more than it costs to pay them. Cutting to 5 or even 3 miles for delivery ranges makes a big difference for orders per hour.

>> The economics of food delivery can’t be solved with efficiency. There’s not enough pie to split. > Have you tried pizza pie? IIRC, proper pizza delivery requires a special warming bag. These generic delivery companies that employ gig-working randos don't equip their drivers with those bags, so they suck at delivering pizza at any distance, greater "efficiency" or no.

I see doordash/grubhub/ubereats folks with big insulated bags(or backpacks in the case of bike/moto folks) pretty regularly. Not sure if they are required(or provided or sold) but they are definitely available.

Re: Just Eat Takeaway to acquire Grubhub for $7.3B

#64
post #23
post #8

Earlier quoted context omitted.

The economics of food delivery can’t be solved with efficiency. There’s not enough pie to split.

Have you tried pizza pie? But really, the economics are all in operations and scale. Some people may complain that they can’t get delivery 10 miles away from a restaurant.. but they aren’t willing to tip or pay higher for the back and forth a driver must do to earn more than it costs to pay them. Cutting to 5 or even 3 miles for delivery ranges makes a big difference for orders per hour.

> they aren’t willing to tip

I wish everybody would stop tipping.

If nobody subsidized delivery workers' wages with tips, delivery companies would have to start paying workers enough to make it actually worth their time to begin with, and pass those costs onto VCs and eventually consumers.

More reliable income for the delivery workers, more transparent delivery pricing for consumers. What's not to like?

A similar dynamic will likely play out in other industries where tipping is common as well.

Alas, I do end up tipping in real life because I don't want delivery workers to suffer more than they have to in the mean time until not-tipping becomes the norm and wages increase as a result, so it's a bit of a chicken and egg problem.

Re: Just Eat Takeaway to acquire Grubhub for $7.3B

#65
Wow. I thought Uber were going for it? The food delivery market share war is really interesting.

For folks in the UK. The Competition Markets and Authority (CMA) delayed a decision on whether Amazon could invest $500m in Deliveroo as of yesterday[1]. Deliveroo are more established in Europe but I can now see the CMA approving Amazon investment into Deliveroo[2]. Why? Just Eat provided evidence to the CMA recently on why the Amazon investment into Deliveroo could be problematic [3]. Just Eat then go off to spend a $7b to secure the U.S market ahaha. In my opinion Takeaway.com/Just Eat are now scrambling for marketshare.

Amazon tried to enter the food delivery market back in 2014-16 and they had every right to![4]. But, competition pushed them out in my opinion. So now Amazon are wanting to re-enter via investment into Deliveroo. It's very smart move because Deliveroo service is pretty amazing already.

[1] Amazon/Deliveroo delayed decision: https://uk.reuters.com/article/deliveroo-ma-amazon/uk-regula...

[2] Amazon/Deliveroo CMA inquiry: https://www.gov.uk/cma-cases/amazon-deliveroo-merger-inquiry

[3] Just Eat CMA inquiry response: https://assets.publishing.service.gov.uk/media/5ec27cc1e90e0...

[4] Amazon close food delivery business: https://www.engadget.com/2018-11-26-amazon-closes-restaurant...

Re: Just Eat Takeaway to acquire Grubhub for $7.3B

#66

Genuine question: why? I completely understand acquisitions that create value by providing economies of scale, monopoly power or network benefits, or diversify or complement a company's activities. But for a European market leader to buy an American market leader in what is ultimately an extremely local business... I see no real added benefit here. Few further economies of scale when you're already at continent-size…

Competition... monoply. Ubers Eats and Deliveroo have massive control. I think what many of the players are concerned about is Amazon entering the market via Deliveroo investment of $500m.

https://www.gov.uk/cma-cases/amazon-deliveroo-merger-inquiry

Re: Just Eat Takeaway to acquire Grubhub for $7.3B

#67
post #20

It looks like Just Eat currently has a market cap of 5.233B pounds, 6.645B USD. How does an all stock acquisition of 7.3B USD work in this case? Is this done via issuing more than an extra 100% of stock on the expectation the new asset will counteract the dilution to keep the stock price similar?

1 example: they could take on debt from a Bank to make the purchase for example. "Just Eat Takeaway was created this year through the $7.8 billion combination of two of the earliest participants in Europe’s food-delivery market, Just Eat and Takeaway.com. It has been fighting competition in Europe from Uber Eats and Deliveroo, a London-based company whose investors include Amazon. Mr. Groen, a Dutch entrepreneur, fou…

Yup you are absolutely spot on. Just Eat also acquired City Pantry last year. They have certainly been aggressive in acquisitions. It's just seems like a game of marketshare domination to me.

https://techcrunch.com/2019/07/12/city-pantry-acquired/

Re: Just Eat Takeaway to acquire Grubhub for $7.3B

#68
post #39

Earlier quoted context omitted.

Everywhere I've worked, 75% or more of acquisitions or acquihires went extremely well and resulted in strategic benefit and/or gain of great talent. There are only a couple of instances that stand out as being a bad fit, and one of those companies later got sold to another player in the same space for a profit. So it's really never been a bad use of capital from my perspective.

Are you sure it isn't 76% with all that hard cold data you're using?

My current office was an acquisition. Two cohorts of my colleagues are from acquisitions. One of our newer major revenue streams. Acquisition.

Unrelated thing not core to the business that we sold. Acquisition we spun off at a profit.

It's not 75% exactly, but this isn't even napkin math. Just top of mind. I feel as though you're belittling my experience and my person. Why? And also, please don't.

I've told you that from my direct experience, most acquisitions I've been witness to have been well thought out, calculated moves. It turns out we're doing a good job.

Please don't be so hostile.

Re: Just Eat Takeaway to acquire Grubhub for $7.3B

#69

Earlier quoted context omitted.

I prefer Grubhub/Seamless in NYC. They're typically on bicycles or scooters and will bring the order up to your apartment door. Uber Eats people usually want you to come down outside so they don't have to double-park. I'm not giving you a $10 delivery tip to drive my Five Guys order eight blocks.. You gotta get out and come up the stairs to my door.

or you could, ya know, walk 8 blocks and keep the restaurant in business, but hey, we all have our limits.

wait... this comment is confusing. how is he not contributing towards "keeping the restaurant in business" by ordering delivery vs picking it up in person?

Re: Just Eat Takeaway to acquire Grubhub for $7.3B

#70
post #57

Earlier quoted context omitted.

>Mergers and acquisitions rarely work out for the entities as such. Could you provide a source for that?

An oft-cited HBR article, https://hbr.org/2016/06/ma-the-one-thing-you-need-to-get-rig... , states that 70-90% of acquisitions are considered failures.

One of the things that article overlooks though is that almost all multinational companies wouldn’t be what they are today without acquisition and inorganic growth.

Even that article says it: if Google avoided acquisitions they wouldn’t have Android and YouTube. Disney wouldn’t have Pixar and Fox. The biggest companies in the world would be different - and for the surviving multinationals often their acquisitions defined their current business.

Some of this is successful, some of this is a failure, but it’s a game that a lot of companies needed to play to achieve their current market position.

In fact, in some markets not touching M&A means not growing your core business (eg some retailers), and some big businesses may not exist anymore if they didn’t do the acquisitions they did.

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