Specialist
Former director at Grubhub
Agenda
- Food delivery operating environment, focusing on COVID-19 and demand trends
- Market share dynamics between Grubhub (NYSE: GRUB), Doordash and UberEats (NYSE: UBER), including commission pressure in key markets
- Unit economics and timeline to profitability
- Potential consolidation and strategic alternatives
- 2020 outlook and ability to win in key markets
Questions
1.
What is trending in the operating environment for Grubhub and other food delivery platforms?
2.
How much white space exists in the US? Which regions are underpenetrated and why? How might Grubhub approach market entry where it’s not exposed enough?
3.
Do you have any thoughts on the extent of a potential softening on orders in New York City or other hotspots due to the novel coronavirus pandemic? How could it impact Grubhub and others who centralise in big-city hubs? What can the platforms do to mitigate any downfall here?
4.
Do you think restaurants can achieve the same revenues per day relying only on takeout orders? Presumably the answer is no because there’s zero foot traffic. Will there be a point where it no longer makes financial sense for restaurants to remain open for business based on a fixed cost?
5.
You mention a few opposing drivers impacting each other. Does it all net out positive for Grubhub? Could orders of magnitude be higher over the next three months than historical performance if we take New York City, DAGs [Daily Active Grubs] and revenue?
6.
How long will the commission fee suspension be sustainable for Grubhub? What factors are considered when determining if it can be continued?
7.
What causes the market share shifts in metro hubs? You made a point around restaurant saturation and highlighted the relationship between CAC and LTV [lifetime value]. What is trending on an LTV to CAC basis from the customer side?
8.
You said the majority of consumers order once. Is that weekly or daily? What is the frequency across the industry?
9.
You use the 80/20 rule in various ways. How does it apply to the top 100 restaurants in frequency of total orders? DoorDash’s strategy would appear to be exclusivity with as many of the top 100 restaurants. How does that impact its ability to gain share of total available food delivery orders relative to Grubhub’s, for example? Is it a differentiating factor for which QSRs the platforms can be exclusive with?
10.
We discussed the saturation effects and the big push to double up restaurants. How are you anticipating Grubhub’s contribution to percent of total sales for new restaurant sign-ups? Presumably Grubhub already targeted restaurants where its model makes the most sense. Will the 2020-21 sign-ups have a less significant impact on incremental sales or gaining a larger wallet share?
11.
Does the food delivery model make structural sense from a profitability standpoint? How are you assessing the unit economics? Do you have to consider the USD 15 minimum wage and three deliveries per hour, on average, as a rough ceiling? What are the implications for Grubhub and other vendors’ profitability?
12.
You alluded to some areas in California where operations appear to be less profitable. What metrics are useful to assess profitable market opportunities for food delivery? Presumably there are a very limited number of cities, even in the US. I want to stress how suburban markets and certain urban areas are not guarantees for this business model.
