Food-delivery companies are spending heavily on incentives to lure customers and gain market share in what one analyst called a 'race to the bottom with no clear winners'
By Heather Haddon Updated Oct. 29, 2019 6:18 pm ET Grubhub Inc. GRUB -43.30% is raising tough questions—about the future of its own industry.
“We now view this as a race to the bottom with no clear winners,” said Robert Mollins, an analyst at market-research firm Gordon Haskett Research Advisors, which cut its rating on Grubhub’s stock. The biggest food-delivery company, DoorDash Inc., is private, as is Postmates Inc. Both are exploring initial public offerings and have raised a total of nearly $3 billion in private funding, according to PitchBook. Postmates said earlier this month that it was delaying its planned offering because of market choppiness.
SoftBank Group Corp. , a lead investor in WeWork, led a round of funding and took a seat on DoorDash’s board last year. The funding was used for growth for DoorDash, which has expanded rapidly over the past year thanks in part to customer discounts and scores of new restaurant partnerships. The fund has also raised investments for Uber, whose UberEats competes with DoorDash, Grubhub and others.
“The restaurant companies have gotten smart, and they’ve realized that aligning with one delivery partner probably doesn’t make a lot of sense,” Domino’s Pizza Inc. Chief Executive Ritch Allison told investors earlier this month.
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