GrubHub took a hit in the fourth quarter as it worked to support restaurants affected by the pandemic
GrubHubtook a net loss in the fourth quarter, even as daily orders and users rose.
- The company said it aided struggling
restaurantswith fee caps and winterization grants. Food deliveryapps make most of their money by charging restaurants commissions for delivering food.
GrubHub took a bigger loss in the fourth quarter than last year, even though online orders climbed, as it continued to help out restaurants struggling to stay open during the COVID-19
The food delivery app said it took a net loss for the quarter ending December 31, 2020, of $67.8 million, a decrease from the $27.7 million loss in the same quarter last year, as the pandemic continued to "severely impact" restaurant partners, the company said in its shareholder letter.
"Our priority continues to be doing everything we can to ensure a robust and vibrant restaurant ecosystem for the long-term," the Wednesday letter read. "To that end, we continued to spend tens of millions of dollars on marketing and promotional support to drive more orders."
In November, GrubHub gave $10,000 winterization grants to independent restaurants in big cities on the East Coast. The company also continued its COVID-related temporary fee caps, saying it "effectively conveyed more than $50 million to local restaurants across the country."
Food delivery companies make most of their money by charging restaurants commission fees per orders for delivering food to paying customers. Many restaurants decried the practice when the pandemic forced online orders to become the majority of sales, and commission fees cut into their revenues.
Despite the increased net loss, the Chicago-based company said, "The strong momentum in our business we have seen all year long carried into the fourth quarter" with active diners and daily orders rising. According to the company's
The company's planned merger with European food delivery service Just Eat Takeaway.com remains on track to be completed in the first half of 2021, GrubHub said. The deal, which was struck in June, would allow the combined company become the world's largest online food delivery company outside of China.
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