Ever since Grubhub emerged as one of the leading food delivery services in the country, it has gotten the attention of finance enthusiasts.
In fact, one of the aspects that these people focus on the most is whether Grubhub is profitable considering its growth, something we also looked into ourselves. If you’d like to learn more about this subject, keep reading to see what we discovered!
Is Grubhub Profitable In [currentyear]?
Grubhub is still not profitable as of [currentyear]. Grubhub has not revealed when it expects to become profitable but experts have estimated that it won’t happen in the near future. Grubhub was acquired for more than $7 billion by Just Eat Takeaway but the company is now looking to sell it off because its financial performance is not as expected.
Keep reading to find out all you need to know about Grubhub and profitability, including how the company makes money, how much it makes, and more!
Has Grubhub Ever Made a Profit?
Grubhub has made a profit for several years and it started recording losses within the past few years when expenses exceeded income.
Grubhub’s track record so far with regard to profits and losses is as follows:
- 2013 – $4.3 million profit
- 2014 – $24 million profit
- 2015 – $38 million profit
- 2016 – $50 million profit
- 2017 – $90 million profit
- 2018 – $78 million profit
- 2019 – $18 million loss
- 2020 – $155 million loss
Grubhub made profits every year between 2013 and 2018. Its first reported loss came in 2019, then 2020 followed with its biggest reported loss yet.
You should note that profitability and profit are not the same concepts, meaning the data above does not contradict what we said in the first section of this article.
Profit just means a company made more money than it spent; the number doesn’t even have to be high and technically a $1 difference is a profit.
Profitability, on the other hand, is calculated on a more long-term scale, meaning a company’s profits are proportional to its size and are recorded more frequently.
Therefore, a company could record a loss every once in a while but still be profitable provided the other conditions are met.
Is Grubhub Losing Money?
Grubhub is losing money because, as we’ve established above, the company has reported losses in its last few financial years.
According to Grubhub’s financial reports, the company has had more years where it recorded losses than profits.
However, the recent losses are significant both in the dollar amount and considering the size of the company.
Grubhub was bought in 2020 for over $7 billion by Just Eat Takeaway, a food delivery service based in the Netherlands.
From this merger, the company is already considering selling it off because it’s not performing as expected.
Growth at Grubhub has slowed down since the 2020 boom that prompted Just Eat to take notice, and this is also true for its competitors like Doordash and Uber Eats.
This is a strong indicator that Grubhub is losing money and that its parent company does not have enough faith that the situation will turn around any time soon.
How Does Grubhub Make Money?
Grubhub makes money from fees charged to customers, mainly service fees, processing fees, and delivery fees.
Grubhub does not make money from tips and has instead opted to give those in their entirety to the drivers.
Customers also have the option to pay extra for Grubhub Plus, a premium subscription that grants access to perks like no delivery fees, which is a big source of revenue for the company.
Grubhub also makes money by taking a percentage of what restaurants earn from the service, mainly a 5% to 20% fee on every order for marketing.
Marketing on Grubhub refers to the level of promotion a restaurant receives in terms of things like priority in search results.
This gives them access to more customers and increased orders, but it also means they pay a higher commission and vice versa.
Grubhub also charges restaurants delivery fees if they don’t use their own network as well as a processing fee for credit cards.
How Much Money Does Grubhub Make?
As of now, Grubhub makes over $1 billion every year. Here’s how the company has performed so far:
- 2010 – $8.5 million
- 2011 – $30 million
- 2012 – $60 million
- 2013 – $170 million
- 2014 – $253 million
- 2015 – $361 million
- 2016 – $493 million
- 2017 – $683 million
- 2018 – $1 billion
- 2019 – $1.3 billion
- 2020 – $1.8 billion
Grubhub’s revenue in 2013 was nearly 3 times what it was in 2012 because that was when it acquired Seamless and boosted its income.
Grubhub is not profitable despite having made a profit in most of its years of operation. Since profitability is calculated over time and requires substantial profits sustained over a long period, Grubhub does not qualify.
Grubhub also seems to be losing money, something we arrived at by looking at its recently reported losses and the fact that its parent company is considering selling it only a few years after buying it for over $7 billion.