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GrubHub CEO Talks Potential Coronavirus Impact, Competitive Environment

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GrubHub CEO Talks Potential Coronavirus Impact, Competitive Environment

GrubHub Inc (NYSE: GRUB) CEO Matt Maloney was a guest on CNBC Wednesday to talk about the COVID-19 virus outbreak, among other hot topics impacting the food delivery industry.

Coronavirus A 'Scary Situation'

The ongoing spread of the coronavirus is "a scary situation," and the ultimate impact to GrubHub's business is unknown, Maloney said.

So far, there has been no observable impact, as the coronavirus hasn't spread in the U.S., he said. 

Some of the potential headwinds from the virus spreading are a lack of drivers, supply of restaurants and even customer demand, the CEO said. But so far, there is "nothing to do now," as there is no epidemic, he said. 

See Also: Uber Eats Top Executive Resigns

GrubHub's Supply, Incentive Strategies 

Maloney wrote a shareholder letter in conjunction with GrubHub's third-quarter report discussing a re-orientation of the food delivery industry around a "new reality."

The restaurant delivery business has become too crowded with an oversupply of delivery companies, he said. 

To address the new reality, GrubHub embarked on a new mission of being "aggressive on supply and aggressive on incentives," Maloney said.

The launch of the GrubHub+ subscription program is part of the company's new plan as it offers unlimited free delivery, 10% cashback rewards and priority customer service dedication.

GrubHub is able to offer these types of promotions to customers because it is the only food delivery company operating at a profit, the CEO said.

Granted, these investments will eat into GrubHub's bottom line, but there is some logic behind  them, he said.

"What we are doing is we are leaning into our profits and stealing share at a time when everyone else in the industry is fighting to find break-even," Maloney said.

M&A Plans

Maloney said GrubHub closed on 10 acquisitions over the last 10 years, adding that they are part of its growth strategy. The CEO said he's "very opportunistic this year about what we can do" to remain as competitive as possible.

GrubHub Price Action

The stock was down 4.93% at $49.37 at the close Wednesday. 

Photo courtesy of GrubHub. 

 

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