Market Overview

Cramer: Amazon's Exit From Food Delivery 'Doesn't Change Anything' For GrubHub

Cramer: Amazon's Exit From Food Delivery 'Doesn't Change Anything' For GrubHub, Inc. (NASDAQ: AMZN)'s exit from the food delivery business "doesn't change anything" for industry titan GrubHub Inc (NYSE: GRUB), according to CNBC's Jim Cramer.

What Happened

GrubHub's competitive positioning appears to have eased with Amazon's exit from the food delivery business — but the competitive landscape is still "relentless," Cramer said during his daily "Mad Money" show Friday.

Amazon's decision to leave the market could be seen not as a sign it "gave up," but rather as an "indictment of the whole industry."

On its end, GrubHub continues to spend "money like crazy" just to defend its market share, Cramer said.

The company hasn't seen much success and its margins have come under "serious pressure," he said.

And if GrubHub hasn't faced enough headwinds, there could be a new one as the New York State Liquor Authority presents new rules and regulations on how the company charges restaurants, Cramer said. 

Why It's Important

Some of the defining characteristics of the space are a lack of differentiation and loyalty, the CNBC host said.

Amazon may have recognized the realities of the competitive landscape, and if it is too difficult for Amazon to crack, Cramer questioned how it will be possible for GrubHub to succeed.  

What's Next

Even if the food delivery business as a whole can show signs of booming, at the end of the day there is "no real good way" to invest in it, Cramer said.

The same logic holds true today as it did in February when Cramer said to "run" from GrubHub and all of its competitors, he said Friday. 

Amazon shares were trading higher by 0.92% at $1,981.82 at the time of publication Monday, while GrubHub shares were down 1.86% at $73.96. 

Related Links:

Benchmark Says GrubHub Will Be A Winner In The Food Delivery Space

GrubHub Shares Lower As New York State Authority Could Curb Delivery Fees

Photo courtesy of GrubHub. 

Posted-In: CNBC Food Delivery Jim Cramer Mad MoneyRestaurants Media General Best of Benzinga


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