* They may be protecting their own territory from grubhub's eventual entry.
* They may simply have extra cash (or stock purchasing power) and want to use it to secure greater future cash flows rather than just sit on it.
* They may feel more able to enter other markets via grubhub than their own brand/company.
etc.
Edit: Also, acquisition premia reflect benefits that derive from taking a business business private, including control over the timing of dividends, no worries about control/governance, a larger-than-expected reduction in hard costs of compliance, and other factors, in addition to some of the benefits I mentioned above.
I would never have learned about local food places if it wasn't for that app.
But really, the economics are all in operations and scale.
Some people may complain that they can’t get delivery 10 miles away from a restaurant.. but they aren’t willing to tip or pay higher for the back and forth a driver must do to earn more than it costs to pay them. Cutting to 5 or even 3 miles for delivery ranges makes a big difference for orders per hour.
I wish everybody would stop tipping.
If nobody subsidized delivery workers' wages with tips, delivery companies would have to start paying workers enough to make it actually worth their time to begin with, and pass those costs onto VCs and eventually consumers.
More reliable income for the delivery workers, more transparent delivery pricing for consumers. What's not to like?
A similar dynamic will likely play out in other industries where tipping is common as well.
Alas, I do end up tipping in real life because I don't want delivery workers to suffer more than they have to in the mean time until not-tipping becomes the norm and wages increase as a result, so it's a bit of a chicken and egg problem.
So, tip with cash instead of not tipping at all. It costs you the same, and the delivery person is paid more.
Back when you had to pay cash on delivery, tipping was pretty common (at least for me), but right now there's just no reasonable moment to tip anymore.
Of course its trivial to include delivery cost in the price. You know where it needs to go, so you can make a good estimate of the time it takes to deliver there, and include that in the price.
Tipping isn't bad, because of it's infrequency. It's bad because it's unclear and hidden.
Consumer service business cannot pay their service employees more, than what consumers are willing to pay for the services. In most cases the business is just a venue for consumers to acquire services from individuals. In restaurants the individuals are waiter.
This is why after a couple orders right at the start of lockdown, I started calling restaurants directly. Some of them are delivering in breach of their contracts on the side, the rest I just walk over and pick up.
Exactly, when the Softbank or VC money runs out for Doordash and the like it will be total mutiny, I doubt most if any drivers, outside of the Top dasher that accepts any orders, will continue to do so when the pay rates are reflecting the true costs of all externatalities are included in the total calculus. Several drivers see their 0% acceptance rate as a badge of honor, as its their only real avenue for opposition against the low delivery pay orders.
I was interested in the logistic sides of food delivery systems, especially during the shutdown, so I started to spend an hour a day of research on DD on their subreddits, and over time that led to even doing a few dashes myself during this period... and suffice it to say, everything from their app, to customer/dasher support, to the pay model are not sustainable so long as Humans are involved in the equation.
I've spoken to local restaurant owners and cooks during the shutdown in person, having experience in the Industry, and most were reluctantly using it as crutch in difficult times but it was cutting into their over all margins, which already suck.
Now with things starting to re-open in many states I hope they start to de-couple it to be less than the 10% of their total sales for their sake.
From what I saw when they did updates, usually on Friday evenings during the dinner rush no less, the system would crash and result in any and all current orders being essentially undeliverable as the app crashed and often you couldn't log in or out of the system nation-wide for 30 mins to hours later.
Furthermore, as I was monitoring this alongside the mass unemployment numbers rising due to the pandemic I saw the influx of new users that followed: so, I noticed that many hapless, and panicked users would be unable to fulfill an order because of random situations. I started to feel really bad for them, too as most were just trying to be as honest possible.
So, while I don't suggest doing that, see disclaimer above; I think if you signed up you would eventually have an order eventually 'slip through the cracks' through not fault of your own. Customer support was based overseas, and were limited and then inundated with requests so realistically nothing was done to prevent anyone giving the order away.
What you have to also keep in mind is that these partnerships are often with franchisees' or privately owned restaurants who ultimately take the hit when food is not delivered and a refund is issued. Which is why you see vigilante like behaviour be lauded by Doordashers when they see pizza being arbitraged, and them saying 'F-Doordash.'
So, in short, if you did it long enough you wouldn't need to steal anything and your opportunity would happen anyway through not fault of your own.
I highly suggest people read the r/doordash sub-reddit, its anecdotal but also direct feedback from a wide breadth of drivers, some positive, some neutral and a lot negative ones about the absurd algorithm based compensation model: the recurring $3 for +15 mile delivery kind of deal.
So, as person who spent a lot of time in the Culinary Industry, just do the right thing and buy any food you want to donate. Playing Robinhood within this context just nets a situation in which almost nobody ever wins.
There was a user here on HN who was trying to launch his own food delivery app; I wish he'd update and see if he had any updates on his progress and if he took significant Market Share from these big players.
Unless he decided to go immoral and shaft the delivery people.(Having seen how much abuse undocumented waiters and delivery people suffer from the restaurants)
I'm not entirely sure who you're referring to in your response, or if that was even directed at my response.
Could you elaborate on what exactly it is you're talking about?
> Have you tried pizza pie?
IIRC, proper pizza delivery requires a special warming bag. These generic delivery companies that employ gig-working randos don't equip their drivers with those bags, so they suck at delivering pizza at any distance, greater "efficiency" or no.
They're available, but I don't think they're universally used. I read one article where the a pizzeria was offering bags for the drivers to borrow (because of bad reviews for cold delivery pizza), but a lot of them refused because they'd have to leave a deposit and didn't want to return to the store to return the bag.
DoubleClick
NeXT
Here are some businesses off the top of my head that are thriving because of their acquisitions.
One KPMG study found that 83 percent of these deals hadn't boosted shareholder returns, while a separate study by A.T. Kearney concluded that total returns on M&A were negative.
Basically - it's an unscientific opinion
Unrelated thing not core to the business that we sold. Acquisition we spun off at a profit.
It's not 75% exactly, but this isn't even napkin math. Just top of mind. I feel as though you're belittling my experience and my person. Why? And also, please don't.
I've told you that from my direct experience, most acquisitions I've been witness to have been well thought out, calculated moves. It turns out we're doing a good job.
Please don't be so hostile.
Android was an acquisition.
YouTube was an acquisition.
Google Docs was an acquisition.
Could you provide a source for that?
Even that article says it: if Google avoided acquisitions they wouldn’t have Android and YouTube. Disney wouldn’t have Pixar and Fox. The biggest companies in the world would be different - and for the surviving multinationals often their acquisitions defined their current business.
Some of this is successful, some of this is a failure, but it’s a game that a lot of companies needed to play to achieve their current market position.
In fact, in some markets not touching M&A means not growing your core business (eg some retailers), and some big businesses may not exist anymore if they didn’t do the acquisitions they did.
Firstly Pixar - The Pixar brand pretty much turned around the failing 'California Adventure' after the 'Pixar Pier' conversion. Toy Story alone has more rides than any other movie with Midway Mania, Slinky Dog Dash, RC Racer, Toy Soldiers Parachutes and Slinky Dog Zig-Zag Spin. The French pavilion in Epcot is getting Remy’s Ratatouille Adventure (which is already in Paris). There would be no crush coaster, no Radiator Springs Racers...
Disney probably wouldn't have entire areas of their park dedicated to Pandora and Star Wars, both of which were after the aquisitions of Fox (Avatar) and Lucasfilm (Star wars). Both Florida and California have Guardians of the Galaxy rides enabled by the acquisition of Marvel, and are planning more Marvel based attractions.
Bob Iger realised that just licencing these properties wasn't good enough - only ownership of the brand can protect Disney's long term interests ('What if pixar decides just to stop making Toy Story? Or refuses to licence their next hot property? Or gets acquired by our competitor?').
There aren’t many because most of Disney’s talent left around when Pixar was founded. Without movies to continuously hook new kids, their entire empire is a house of cards.
The history of the two studios is way more involved than what you're suggesting, and talent moves around between studios quite a lot. And 25 years is a long time; there have been entire generations of talent that have risen up since then, and trust me, they're not all at Pixar.
Source: I worked at Disney Animation for nearly a decade (and closely with Pixar during that time). I'm certainly not unbiased but probably way more informed.
Some mergers have literally saved companies, some have ruined them, some are considered 'unsuccessful' for esoteric reasons and others successful for purely numeric ones.
96% on RottenTomatoes, critically acclaimed, 12th-most profitable release of 2016.
Developing a single platform counts as that. I guess it depends on how big fixed costs are compared to variable costs more than if you're the market leader. If they're a large component of them, then an acquisition could really help.
Looks like their 2019Q4 total revenue was $1.3B, cost of revenue was $790M, and opex was $530M. I assume the hope is to save a lot on opex.
> diversify or complement a company's activities.
A US business similar to the European one fits here.
The real value is the business relationship with the delivery network. A deal that expands the delivery network and adds value to customers through reduced delivery times and improved overall service is the thing that scales.
https://www.gov.uk/cma-cases/amazon-deliveroo-merger-inquiry
Takeaway wiped out the competition in EU and it was a billion € marketing budgets battle.
There is no business model in the world that makes grubhub a 7B company. If proven wrong I will gladly eat a hat delivered by them.
From Grubhub "Revenues: $363.0 million, a 12% year-over-year increase from $323.8 million in the first quarter of 2019."
I completely understand acquisitions that create value by providing economies of scale, monopoly power or network benefits, or diversify or complement a company's activities.
But for a European market leader to buy an American market leader in what is ultimately an extremely local business... I see no real added benefit here.
Few further economies of scale when you're already at continent-size for an ultimately "local" business, no monopoly or network benefits, and zero diversification.
If this were manufacturing or retail then benefits are pretty obvious.
But in this case, what am I missing? How on earth does this justify a 27 percent premium on GrubHub? It is purely a strategic defensive move to prevent Uber from buying it, and nothing more?