Grubhub is taking a measured approach to integrating Eat24 into its system. Given the scale and scope of both companies, slow and steady is probably the best approach.
— Kristen Hawley
Grubhub closed its $287.5 million acquisition of Yelp’s Eat24 ordering platform earlier this month, and in today’s third quarter earnings report shared details about what to expect as the company works to integrate Yelp’s business.
Grubhub chief financial officer Adam DeWitt detailed the company’s three-step approach to integrating the companies, which he says will be completed in a year. Over the next couple of months, he says, Grubhub will work to integrate Eat24 restaurants into its platform. By the third quarter of next year, Grubhub expects to have all of its 75,000 restaurants (which includes the approximately 20,000, after accounting for overlap, it acquired with the Eat24 deal) connected to Yelp. The company will also move the Eat24 platform completely off of Yelp’s product stack and onto Grubhub’s.
“I’m really excited about the Yelp transaction platform,” said Grubhub founder and CEO Matt Maloney. He recognized that the one-year timeline isn’t aggressive, but called it a reasonable goal. “This isn’t the same as most integrations we’ve done. We want to maximize this integration,” he said.
It’s not the same in part because of Eat24’s huge presence in certain markets around the country, especially in its home base of San Francisco and other west coast cities like Los Angeles and Seattle, so Grubhub plans to spend marketing dollars to continue to push the brand. “It doesn’t make a ton of sense to push Eat24 in New York anymore,” said Maloney. “But in cities where Eat24 has a stronger presence, I see us investing more aggressively than [Yelp] has in the past.”
Just about half of the restaurants on the Eat24 platform also used Grubhub, so it makes sense to keep the brands separate as the team works to integrate. “We are in a number of markets together,” said DeWitt. “What’s interesting is that when we dig into diner data, we don’t see a lot of overlap.”
As for future growth of the now 75,000-restaurant strong Grubhub, Maloney said Grubhub isn’t behind on its number of restaurants in any given market, but the company’s growth focus will be beyond high-density urban areas. “I think there are rural areas and more distant suburban areas, away from city centers where we haven’t built our delivery infrastructure yet,” he said.
“This is not a zero sum situation. There’s significant room for us to grow as well as there is to everyone.”