Wonder is acquiring Grubhub(about.grubhub.com) |
Wonder is acquiring Grubhub(about.grubhub.com) |
all of it, including its future, was valued at $7 billion, but there was never $7 billion in cash. Maybe it was $700 million in cash paid for 10% of it, which would value the whole thing at $7 billion. If that totally-made-up 10% number happens to be the right number, then it hasn't lost much at all overall, but the investor who paid that has to share the sale price with a bunch of other shareholders who paid less. So, this owner lost money, but the firm did not necessarily.
(I'm not saying this is what happened, and maybe a quick google would get us closer to the actual numbers, I'm just saying you have to pay attention to the wording of what is being claimed; media likes to exaggerate.)
what has disappeared is "belief in the future prospects of this company to bring in profits worth $7B" which was why the last investors invested, and why the early investors set up the kitchens and other frameworks to support those hopes. And it's not that the opportunity wasn't a good one, perhaps a competitor "won", or perhaps there are too many competitors trying to share the $7B pie.
Where did the valuation go? Doordash and Uber Eats managed to eat them alive.
Every country has one platform that wins, everyone else loses the billions. There's no second place.
I wonder how this came to be - did they already have that big of a war chest, or did they hear they could buy a name brand and go back to their investors to finance it?
But also, they own physical chains, real estate ("food halls" aka bougie food courts) and now... meal delivery? It sounds like the most expensive-to-operate things all squashed into one.
edit: and they own Blue Apron?! I feel like they're going to buy Candy Crush next
It's really hard to see how this is going to work out long-term.
The deal was paid for with Wonder's bread.
Amazon currently has a partnership with Grubhub to provide Grubhub delivery as a Prime benefit.
Amazon competed strongly (some might say unfairly) many years ago with Marc's first big startup, Diapers.com, and effectively forced him to sell to Amazon.
He later started Jet.com and sold it to Walmart - in many ways as a second chance to compete with Amazon.
I feel for the restaurant owners: not only were they forced into accepting the likes of Grubhub as a middle man, that same middleman now also owns restaurants that compete directly with them. If the restaurants have any power at all they should stop using Grubhub right now. I don’t know anyone still using it (which is crazy, Seamless used to dominate NYC).
I sincerely hope the entire thing burns to the ground. The last thing I need in my life is for all the restaurants in my neighbourhood to be soulless, VC operated chains.
Also the restaurants got a chance to teach their delivery staff how to properly handle the food. Which meant that the Chinese restaurants, for example, could get away with using oyster pails instead of having to resort to the "maximum packaging waste" option.
It made my blood boil when the receipt had 3 different fees before we even got to the tip.
I am assuming, and I could be very wrong, that Wonder is smaller by market cap than Grubhub.
In this case, GrubHub had taken on a bunch of debt; Wonder agreed to assume it, and GrubHub's owners/investors get $150M in cash.
Private companies have shares. Given a per-share price, you can get a market cap. For a company with debt, like GrubHub, enterprise value is a better metric.
Is this just a race to the bottom as all these delivery companies burn cash to subsidize their failing model and hope that they can be the last one standing?
2020s app buzz: eat food at least as expensive as brick-and-mortar that is no worse in quality!
Press release copywriting is such an artform in ways I'm sure they don't intend for. I don't think I could spin "ghost kitchen ordering app" into that much bullshit. That takes real skill.
How long until it succumbs to the same fate as other PE funded companies (Foxtrot)? Then the people left holding the bag are the vendors that won’t get paid. Employees don’t get paid. Doors locked up one day with no reason.
Love how it has all of these celebrity endorsements as well to keep the facade going.
At the end of the day, it’s a glorified ghost kitchen.
[1] https://www.inc.com/rebecca-deczynski/wonder-marc-lores-fast...
I expect the value to go way down as they squeeze all sides of the equation: drivers, restaurants, and customers.
> Lore’s startup also raised $250 million in equity investment, bringing the total amount of capital it’s secured to $1.7 billion
1. Become a corporate lawyer, charge by the hour - win or lose, lawyers get paid
2. Run a soulless media company - rake in the ad dollars from both parties (during elections) and other soulless companies spending VC money on advertising (all the time)
3. Be early investor, pump and dump
> Lore was the CEO and co-founder of Quidsi, the parent company of a family of websites, including Diapers.com. Quidsi was sold in 2011 to Amazon for $545 million.
> Lore was appointed in September 2016 to lead Walmart's e-commerce division when his company Jet.com—an e-commerce website launched in 2014—was acquired by Walmart, Inc. Walmart purchased Jet for $3.3 billion.
https://www.crunchbase.com/search/funding_rounds/field/organ...
* I know a decent amount about finance, but don't practice it daily enough to find it second nature. I'd appreciate a similarly colloquial perspective from someone who reads me as naive.
I don't think anyone thinks this is "innovation"... it's just a slightly different take on Uber Eats / Spoonrocket / food courts / cloud kitchens / etc.
And if there is an "innovation", it's the vertical integration... it's a business "innovation," not a tech one.
This idea was tried years ago (they'd claim to be the first) by a company based out of Indianapolis named Clustertruck (https://www.clustertruck.com/); though their branding was more "one restaurant, 30 food truck brands". The aim was: you can order a bunch of stuff, the software in the kitchens times it to all come out at the same time, and ETAs the driver to pick it up for delivery.
The company is still around but isn't all that successful. They split the software portion into a second company, closed down a bunch of kitchens, raised prices, etc. I think the reality that hit them was: It really doesn't matter all that much that you can order tacos and pasta all in one order, except for large parties but that's an uncommon situation. The genre of food matters less than the specific food being ordered (e.g. I don't just want a burger, i want a five guys burger). Additionally, the food might have usually been delivered at a higher quality than a typical Uber Eats/etc delivery, but that's still a distance away from restaurant quality; but the prices were obviously higher than eating at a restaurant.
Uber Eats/etc are barely successful, and the only reason they can find that success is because they don't have to manage all the typically lossy parts of food delivery (restaurants & the drivers). Gig apps are good businesses because they avoid this vertical integration: No depreciating assets, little real estate, low competition, no worry about managing minimum wage workers, no health inspections, no stoves breaking down, just some software engineers and marketing (I'm simplifying but you get my gist). Why anyone would think vertically integrating something involving a restaurant is a good idea is, well, crazy. Even ghost kitchens on the typical range of delivery apps are stupid; oh sure your startup is one of the most classically unprofitable kinds of businesses on the planet, I bet that'll survive when interest rates rise.
As others have said, they appear to have physical locations and you can even go eat in person there, and they don't pick up food from 30 different restaurants to deliver to you. They seem to just get licenses to use the names and recipes of celebrity chefs or other restaurants. That raises the question of what the point of a restaurant even is. Seemingly, there has to be some quality gain from using a particular kitchen and particular staff, a particular source of ingredients, whatever it is. There has to be a reason some enterprising businessperson can't just hire random cooks, buy recipes from celebrity chefs, and recreate the experience and quality of a meal at 30 different top rated restaurants in a single kitchen.
That seems just as impossible as delivering from 30 different places at the same time.
Recipes are in many ways the least important part of what a chef provides. They're not secrets. If there's a "secret ingredient" it's that they're using more butter and salt than you'd use at home.
What a chef provides is a process. They get the ingredients ordered, at the quality level they want for a price they're willing to pay. They ensure that the ingredients show up, in the amounts needed, without waste and without falling short -- and have backup plans. They staff the kitchen, and ensure that they have all prepared their stations before service begins. They train the expediter to ensure that all of the food comes out together, without things waiting under the warmer.
The chef also provides a menu, which is more important than the recipes. It has something for every guest, and every item can be finished before the guest gets impatient.
It's not impossible for a business guy to hire a top-notch executive chef to do that work, but the business guy cannot do it. It requires years in the kitchen to know what factors are important. It requires a deep understanding of the culture of kitchen workers, and how to get the best out of them. It would require an enormous staff to do that properly, and training them extremely well.
You can see this at work at a place like The Cheesecake Factory. It's hardly great food, but it's reliably good. The menu is enormous, on par with a dozen restaurants at once. It can be done. You're just not going to do it Silicon Valley style, learning as you go.
Also, nothing you've mentioned really solves your issues. Even with DoorDash, you'll need to pick a restaurant. And DoorDash doesn't solve the problem of someone changing their mind as they are ordering.
And then you still have to wait for the food to be prepared and delivered. And there's no guarantee on when it will arrive. So it winds up being a wash.
Also, there's a reason places that don't do delivery don't do it. The cost doesn't justify it. Then there's the whole "meet me where I am" attitude. They're the ones with the service you want. You have some obligation to meet them yourself.
And if you don't want to, that's fine. We used to manage all of this well enough before
Additionally, you have to look at it from a pragmatic perspective. When I visit the East and West coast of the US, meal delivery is popular enough that you might think it's a booming business. Everywhere else it's pretty much dead though. In places where the cost of living isn't enough to compensate for a restaurant and their middleman (read: most of the US), you can't even find a driver most hours of the day. It's one of those nonsense businesses like Uber that seems like a great idea on paper but one that falls apart outside the Bay Area economy. Most places in America are not gentrified enough to pay peons gas money in exchange for hand-delivered McDonalds.
UberEats, DoorDash, whoever
edit: I did some research. Ghost kitchens are generally inspected by federal or state authorities, but laws for inspection vary widely by state, and it can be difficult for customers to see or understand inspection results. E.g. You go to a restaurant and see the health grade in the window, but when you order from an online vendor who shares the same kitchen with 5 other vendors, it's very hard to trace the food your getting to the kitchen it's being prepared in and the relevant inspection history.
more here: https://www.theregreview.org/2021/01/13/verniero-paranormal-...
Evidence needed.
The cashier at the restaurant isn't going to, (nor should they!) wait on hold for that entire hour of mostly not ordering food. Ordering via phone app doesn't care how long it takes after we start, or that we got utterly distracted and came back to it 20 minutes later.
It starts to take too long when it's more than a dozen or two people, though there usually aren't that many. At some point though, it becomes more effective to get people's dietary restrictions and make decisions for everybody, but just ordering a bunch of pizzas is considered a (delicious) failure mode to be avoided.
Doordash's app mostly doesn't help in figuring out which restaurant to go with, though it does say what got ordered last time. and has a rating and $ signs. The process becomes asynchronous. each person gets the phone and figures out what they want, without the rest of the group just staring at that one person until they finish. No one needs to manage orders beyond passing the phone around and eventually pressing checkout. The person who changes their mind just gets the phone back before the checkout button is pressed and edits the order. Doing that verbally via the phone is terrible. It's also understood that there's no changing after checkout is pressed.
To be clear, restaurants don't have to meet me on Doordash, but they do have to meet me at least halfway, which is on the Internet, and that there are local restaurants who do. They have their own webpage, they take orders there, it isn't run by Doordash, and we just send someone(s) to go pick up the food. At least one of them is operated by Square, which also runs that place's PoS system. So I'm not holding restaurants to some impossibly high bar that none of them seem to be able to meet, just discussing the reality of operating a restaurant in the digital age.
Restaurants modernized and installed telephones and credit card machines and now, they also need a digital presence to compete. There are umpteen restaurants competing for my business and if it's too much friction to eat their food, chances are I'm just not gonna eat there and my business ends up at a competitors.
I mean, they don't actually have to. There are some spots that don't have a website and still only take cash and it's word of mouth, and I frequent them infrequently, but that's their business model, so good for them, so long as it's actually working for them.
I don't really know what the difference is, but I'm guessing it's that they didn't get to have a kitchen setup that was well adapted to their menu at the ghost kitchen.
Until something goes wrong with the plan -- somebody calls out sick, the refrigerator fails, an order gets messed up and has to be re-cooked -- and the rhythm gets disrupted. The dining room is full so new orders are getting backlogged, and more mistakes get made because you're off your game...
It's not for the faint of heart. It doesn't have to be as unpleasant as some TV shows make it out to be. But it's a whole different kettle of fish from cooking at home.
Make sure you call the right number. Grubhub (and others possibly) will set up phone numbers[0] and websites[1] controlled by them and forwarded to the restaurant so they can take a cut.
[0]https://www.theverge.com/2019/8/6/20756878/yelp-grubhub-comm...
[1] https://www.grubstreet.com/2019/07/everything-you-need-to-kn...
> And to be frank, many restaurant workers don't have the best English skills and may be in a loud environment, making phone calls more difficult.
Yeah I dunno this argument feels very alien to me, because even people with poor English skills know the names of the items on their menu. It's not like I'm calling them to have an in-depth conversation, I'm just naming items off of their menu. Also I call in for pickup for like half my orders and pick up myself. At a bunch of places the food is cheaper if you just call.
When did GrubHub buy early investors' shares with company cash?
It was an all stock transaction, so they maintained an indirect stake but it was significantly diluted: https://en.wikipedia.org/wiki/Just_Eat_Takeaway.com Meanwhile Just Eat Takeaway investors got taken for a ride.
how do you know the per-share price
Same way you do for a public company. From trades and valuations. Private shares exchange hands in private transactions as well as almost every time the company raises money. If a company issues incentive stock options, they're required to calculate a 409A price, which while a bullshit number, is indeed a per-share price.
Corporations, by law, have shares.
how do you know what trades took place, and how many shares were traded, and at what price?
Basically, 'cheating' because it's not very honest, or can also be putting in extra effort to sell more and/or limit risk.
Definitely not in the same category as a fly-by-night operation in a warehouse pretending to be an established restaurant.
Also chuck e cheese, tgi fridays run these.
https://en.wikipedia.org/wiki/Pump_and_dump
Also it’s not just unrelated 3rd parties, Enron was included because: “Enron falsely reported profits which inflated the stock price, they covered the real numbers by using questionable accounting practices. Twenty-nine Enron executives sold overvalued stock for more than a billion dollars before the company went bankrupt.”
And that's all cost that is not borne by the restaurant.
And there is a limit to how much people would pay to get something delivered. So they're probably pricing the delivery, etc less than they've actually paid.
Company generally has these records. Various other sources, e.g. PitchBook, compile them. In some jurisdictions (e.g. UK and India) they have to be publicly announced, though that's becoming less common.
TL; DR It is incredibly wrong to suggest private companies don't have a market cap. As in finance 101 wrong.
no, it's not the same, because the information is not publicly available. They are the same in that in both cases you multiply two numbers together; they are not the same inasmuch as your ability to know those numbers is vastly different. To say they're the same is misleading.
Did they really go from some big number to some small number in an eyeblink with this latest transaction?