Grubhub is seeing its orders plummet as rising restaurant prices prompt diners to seek less expensive food options.
In its latest earnings report released on Wednesday (July 26), multinational food delivery giant Just Eat Takeaway shared that saw orders in its North American (which includes subsidiaries Grubhub in the United States and SkipTheDishes in Canada) decline by 15% year over year in the first half of the year, from 171 million down to 145 million.
Plus, gross transaction value fell by 12%, from about $6.5 billion to around $5.7 billion, a trend the company is trying to counteract by stepping up its discounts and savings options.
“We continue refining and optimizing our consumer pricing strategy, including the interplay of service and delivery fee levels, which will be aligned with consumer expectations with the aim to deliver great value to our consumers,” Just Eat Takeaway CEO Jitse Groen told analysts on the call. “At a time of rising inflation, we remain committed to being a very much affordable delivering provider for food and convenience for customers in all of our markets.”
Certainly, Grubhub is looking to woo customers with better deals. On Tuesday (July 25), the U.S. aggregator relaunched its subscription program with more perks and promotions.
The move comes as rising restaurant prices prompt consumers to seek more budget-friendly ways to get their meals. According to data from PYMNTS’ study “Connected Dining: Rising Costs Push Consumers Toward Pickup,” which drew from a survey of more than 2,100 U.S. consumers earlier this year, nearly half (48%) of all restaurant customers say inflation has made them more likely to choose pickup than delivery.
Plus, overall dining is down. PYMNTS’ study late last year, “The 2022 Restaurant Digital Divide: Restaurant Customers React to Rising Costs, Declining Service,” for which we surveyed more than 2,300 U.S. restaurant customers in November, revealed that roughly a third of consumers have been making purchases from restaurants less frequently amid inflation.
Now, restaurant prices are up well above the rate of food inflation overall in the United States. The latest Consumer Price Index (CPI) data from the Bureau of Labor Statistics (BLS) revealed that, in June, while food inflation rose 5.7% year over year, restaurant prices increased 7.7%.
Grubhub’s challenges come from consumers cutting back on overall food delivery spending and would-be customers opting instead for more popular competitors. Supplemental research from PYMNTS’ June study, “Connected Dining: Word of Mouth in the Digital Age,” for which we surveyed nearly 2,300 U.S. consumers, shows that 74% use DoorDash, while 50% use Uber Eats and 37% use Grubhub, as of May.
Last month, Grubhub announced that it is reducing staffing levels by 15%, a move that will impact about 400 employees.
Against this backdrop, Just Eat Takeaway continues to look for a buyer for the aggregator.
“Management, together with its advisers, continues to actively explore the partial or full sale of Grubhub,” the company stated in the news release. “There can be no certainty that any such strategic actions will be agreed or what the timing of such agreements will be. Further announcements will be made as and when appropriate.”