Uber is headquartered in San Francisco. Grubhub calls Chicago home.
But there’s an interesting Seattle connection behind news this week that Uber is looking to purchase Grubhub, a 16-year-old food delivery company that’s now valued at $5.3 billion.
Just take a look at Grubhub’s board. The chairman is Seattle technology executive Brian McAndrews, the former CEO of aQuantive who also served as a managing director at Seattle venture capital firm Madrona Venture Group.
McAndrews, who resides in Seattle and serves on the board of the United Way of King County, is well connected to many of the power players involved in this transaction. In fact, he’s joined on the Grubhub board by Zillow Group co-founder Lloyd Frink.
Prior to starting the Seattle online real estate powerhouse along with Rich Barton, Frink worked in executive roles at Expedia from 1999 to 2004. Of course, that’s the same company where Uber CEO Dara Khosrowshahi cut his teeth, first serving as CFO of Expedia parent company IAC and then going on to run the online travel company.
The Expedia mafia could very well be trying to work its magic in bringing these two companies together.
But the commonalities do not end there. If you look deeper into the ownership structure of Grubhub, you’ll discover that one of its largest backers is Caledonia Investments. The Australian hedge fund owned 16 percent of Grubhub earlier this year.
It’s also one of Zillow’s largest backers, owning 26 percent of class A shares and 12.8 percent of the total voting power.
The Zillow-Uber-Expedia-Grubhub connection runs deep. Another Seattle area executive who sits on the Grubhub board is Girish Lakshman, a board member for the past five years who previously served as Amazon’s Vice President of Worldwide Transportation Strategy and Technology.
Just last week, Uber said it was shutting down some of its Uber Eats food delivery operations in overseas markets. The company also announced that it was laying off 3,700 employees, or 14 percent of its staff. Uber — which operates a large engineering center in Seattle — has struggled to make money in the low margin food delivery business, which has led some to believe that consolidation is likely.
Uber Eats and Grubhub are the number two and three players in the market behind DoorDash, which reportedly filed to go public earlier this year.
Research released last month from Second Measure showed DoorDash growing its share to 42 percent of the U.S. food delivery business in March, while Grubhub was relatively flat at 28 percent. Uber Eats, which has a contract with Starbucks, also saw an increase to 20 percent market share. The research, which is available here, showed a 22 percent surge in meal delivery during March as stay-at-home orders were enforced.
Interestingly, Amazon abandoned its Amazon Restaurants business last summer, leaving DoorDash, Uber Eats, Postmates and Grubhub to fight for the scraps of the market.
Some lawmakers have already started to look closely at the possible combination of Uber and Grubhub, raising antitrust concerns. Ars Technica took a close look at the issue, quoting congressman David Cicilline (D-Rhode Island) who said an Uber buyout of Grubhub “marks a new low in pandemic profiteering.”
Cicilline chairs the house Subcommittee on Antitrust, Commercial and Administrative Law.
“Consolidation could make sense in our industry, and, like any responsible company, we are always looking at value-enhancing opportunities,” Grubhub said in a statement to Bloomberg. “That said, we remain confident in our current strategy and our recent initiatives to support restaurants in this challenging environment.”
Grubhub is set to hold its annual meeting on May 19. We’ll see if more develops on this story prior to that meeting.
