SKIFT TAKE – The push toward exclusive delivery deals continues. The Yum! Brands deal is a catalyst for aggressive market growth as online ordering and delivery brands compete for restaurant business and market share.
— Kristen Hawley
Grubhub is the official online ordering partner of www.yum.com, the companies announced today. As part of the deal,Yum, the parent company of KFC, Pizza Hut, and Taco Bell will purchase $200 million in Grubhub common stock, representing 2.8 percent of the overall market share. The deal will close before the end of the first quarter of the year.
As part of the partnership, Grubhub will deliver both KFC and Taco Bell. Previously, both Taco Bell and KFC worked with other delivery partners, but no partner at large scale. According to Yum! Brands, Grubhub will cover about 80 percent of KFC and Taco Bell restaurants by the end of the year.
This announcement came as Grubhub posted its fourth quarter earnings, revenues of $205.1 million, a 49 percent year-over-year increase.
“Our focus is the online business whether its pickup or delivery. Every component of our technology has been, one, focused on the restaurant space, and two, focused on a partnership model,” Grubhub chief operating officer, Stan Chia, told Skift Table in an interview today. “As we build out solutions, we’re still very considerate of a restaurant operator’s efficiency and their ability to provide food to their marketplace for online guests in a financially sustainable way. With a huge brand like Yum, with multiple stores and franchise groups, any partner needs to be really considerate of how to not disrupt their operation.”
On Grubhub’s fourth quarter earnings call, CEO Matt Maloney said that both KFC and Taco Bell have significant footprints in markets where Grubhub has less awareness, giving Grubhub an edge as it works toward more market coverage. Maloney says that Grubhub will launch in 100 new markets this year.
Grubhub isn’t taking over Pizza Hut’s operations yet, though its U.S. president, Artie Starrs, will join Grubhub’s board. Coincidentally, Starrs is the first restaurateur to join the board.
“Investors are clearly pleased by the prospect of a partnership between GrubHub and Yum! Brands as Grubhub shares are trading up nearly 29 percent this morning,” said Skift senior research analyst Seth Borko. “If Grubhub stock closes at current prices, it would represent the largest single-day gain in the company’s history as a public company.”
Last month, Grubhub announced it would also work as White Castle’s delivery partner, signaling the company was moving toward more exclusive deals with existing chains spread across the U.S.
At this year’s Consumer Electronics Show, Pizza Hut announced it has begun work on autonomous delivery vehicles, though those aren’t scheduled to hit the road any time soon.
By Kristen Hawley, Skift Table
